E-auctions required for state purchases

CHANGES to public procurement legislation to allow more light into shady corners of state procurement has long topped the wish lists of foreign investors, legitimate businesses and advocates of transparency in Slovakia. They will still have to wait a while longer, however: until at least June 2011, by which time the government of Iveta Radičová has promised to pass comprehensive legislation on public procurement, after it scrapped a draft on September 22 drawn up by the Public Procurement Office (ÚVO).

CHANGES to public procurement legislation to allow more light into shady corners of state procurement has long topped the wish lists of foreign investors, legitimate businesses and advocates of transparency in Slovakia. They will still have to wait a while longer, however: until at least June 2011, by which time the government of Iveta Radičová has promised to pass comprehensive legislation on public procurement, after it scrapped a draft on September 22 drawn up by the Public Procurement Office (ÚVO).

Despite the delay, the government on September 26 made electronic auctions obligatory for all its ministries, their organisations, a number of state-funded institutions, and companies with 100-percent state ownership under the jurisdiction of ministries. The country’s central bank has also been advised to use electronic auctions.

The move means that all ministers and managers of state administration bodies should henceforth use electronic auctions to assign state orders for the supply and purchase of goods, except in cases of competitive dialogue, negotiated procedures without a contract notice, competitive requests for proposals, orders within the dynamic purchasing system, and re-opened contests involving all framework agreement parties, Radičová’s spokesman Rado Baťo said.


Emília Sičáková-Beblavá of Transparency International Slovakia, a business and government ethics NGO, welcomed the cabinet’s decision on electronic auctions, suggesting that it will certainly help to make procurement more transparent.

However, she adds, e-auctions alone are not enough.

“The electronic auction has its place in public procurement, and has the potential to increase transparency, but it will not provide a complete substitute for a better-quality environment at public institutions,” Sičáková-Beblavá told The Slovak Spectator, adding that a professional civil servant will still have to announce the procurement and write the project documentation and cannot be replaced by an e-auction.

It is not only business ethics watchdogs, but foreign investors that have cited corruption and non-transparent public procurement as obstacles to doing business in Slovakia. As a result all legislative initiatives by the government in this area are being closely monitored.

The Radičová cabinet called the draft revision to the public procurement legislation prepared by the ÚVO insufficiently ambitious. The proposed fast-tracked revision was an initiative prompted by the government’s programme statement to launch a first package of measures to fight corruption and improve public procurement processes, ÚVO said in an official statement.

“The draft revision that we have prepared is withdrawn from the cabinet and the justice minister has been charged with elaborating a completely new law by June 2011; a complex new law, not a fast-tracked revision,” ÚVO head Roman Šipoš said, as quoted by SITA.

The revision that the ÚVO prepared also included the duty to use electronic auctions for assigning state orders for goods.

“The reason for the electronic auction was to significantly increase the use of information-communication technologies, as well as electronic public procurement – the EVO system, which is administered by the office and offers the possibility of electronic auctions,” ÚVO spokesman Branislav Zvara told The Slovak Spectator.

According to Zvara, EVO, the electronic tendering system, has been used in only 3 percent of procurement despite instructions to use it set out in a cabinet decision in 2007.



Another reason for dismissing the ÚVO proposal, according to Baťo, was the fact that the government had some doubts about the estimated cost of introducing mandatory auctions, which ÚVO set at more than €30 million, daily Sme reported.

As far as the impact on the public budget is concerned, Zvara said that the ÚVO was using statistical data for 2009. Since about 3,000 public and other procurers are currently registered, even at a price of €10,000 each this would result in costs of more than €30 million, Zvara said. He also said that cost calculations did not include the option of renting or outsourcing software for electronic auctions because it is not realistic to estimate which sort the public procurer would choose. Zvara added that the ÚVO did not consider a specific type of software or a specific IT firm.

“The employees who were preparing the fast revision to the law on public procurement … were using publicly accessible information on the market for this type of technical device,” Zvara has said.



What does it take to reform?



The Radičová government has said that it is geared up for a thorough reform of public procurement.

Sičáková-Beblavá stressed that there are many issues that should be dealt with through legislation, for example rules for procuring non-priority services, where state institutions do not have any reason – and should not be allowed – to use simplified methods of procurement. At the moment, it is very often the case that no public tender is announced, simply because it is not required.

It is also important, according to Sičáková-Beblavá, that there is a strong, high-quality team at the ÚVO, because large funds are at stake there. Until procurement also becomes a budgetary priority and there is an effort to improve personnel at key institutions and offices, “then we can hardly talk about the reform of public procurement,” she said.

As far as the draft revision to the law on public procurement is concerned, Sičáková-Beblavá said that though changes to the law are needed and it is a good initiative by part of the government, she would warn against obsessing over the legislation. She restated that the personnel and structure of the state institutions where public procurement is done are equally important. “Not even the best-prepared law on public procurement can substitute for personnel capacities in the public sector,” she concluded.

Transparency International Slovensko (TIS) has been calling for open, competitive selection for the position of ÚVO director, rather than nomination by a political party, as is currently the case. Professional experience and qualifications would thus be required from the applicants, rather than political connections.

According to TIS, about €5 billion is spent on public procurement each year; it says political nominees have not devoted enough attention to developing an impartial and professional office, and thus to enforcing the rules of public procurement.

Based on a poll by Focus prepared for TIS, 23 percent of those surveyed assumed that corrupt behaviour always takes place in public procurement in Slovakia, while 54 percent said that it happens frequently.


Get daily Slovak news directly to your inbox

Top stories

Curfew and closed schools. Slovakia goes into a mild lockdown this weekend

Nationwide testing will follow, accompanied by another curfew.

Nationwide testing - an ambitious plan with an uncertain result

Antigen tests to be used work on patients with symptoms.

Police arrest top special prosecutor, suspected of helping a mafia group

Dušan Kováčik is known for not filing any criminal lawsuits.

State prepared an €100-million injection for tourism

The sector hit hard by the coronavirus crisis should see money at the end of this year.

Illustrative stock photo