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Procurement rules changed in swift vote

ACTING in a sudden rush in mid February, the Slovak parliament – in which the governing Smer party holds an overwhelming majority – revised the country’s public procurement rules. The author of the revision, the Interior Ministry, claimed that the move was necessary to boost Slovakia’s ability to draw every possible euro from EU funds allocated up to the end of 2013. The amendment, which cleared parliament less than 48 hours after ministers approved its wording, hit a raw nerve with opposition parties and political ethics watchdogs, who said the haste with which the changes were pushed through was unjustified and meant that proper debate was avoided.

ACTING in a sudden rush in mid February, the Slovak parliament – in which the governing Smer party holds an overwhelming majority – revised the country’s public procurement rules. The author of the revision, the Interior Ministry, claimed that the move was necessary to boost Slovakia’s ability to draw every possible euro from EU funds allocated up to the end of 2013. The amendment, which cleared parliament less than 48 hours after ministers approved its wording, hit a raw nerve with opposition parties and political ethics watchdogs, who said the haste with which the changes were pushed through was unjustified and meant that proper debate was avoided.

Interior Minister and senior Smer figure Robert Kaliňák insisted that the revision to the law on procurement will enable Slovakia to draw EU funds allocated for the current programming period, which ends in December this year, more effectively. While he was not able to specify how much more money would be drawn with the help of the revision he added that “in general, we’re talking €500 million at the moment”, the TASR newswire reported.

“If there is such an enormous amount of money at our disposal, we’re obliged to do our utmost to make it available for the state,” Kaliňák said, as quoted by TASR.

Smer MPs opted for a fast-tracked revision of the procurement rules despite the fact that parliament is already discussing a thorough revision of the law on procurement, which has been fuelling fiery discussions and has attracted criticism since its very inception.


Easier procurement?


The government argues that the so-called small fast-tracked revision, which received the support of 79 MPs out of the 140 present in parliament on February 13, will ease the administrative burden in the procurement process.

Among other changes, bidders will be able to use statutory declarations to proclaim that they meet all the conditions, and detailed documentation will be submitted only by the winner, Interior Ministry spokeswoman Lucia Garajová told The Slovak Spectator.

Based on the new rules it will be possible to conclude a contract with a runner-up or third-place bidder if the winner refuses to conclude a contract, Garajová added.

According to Garajová, the revision will help to speed up the process for public procurers by boosting legal certainty through the institute of so-called ‘ex-ante control’ and by shortening the time taken by concentrating appeals procedures.

Under the current rules, an objection to a tender by any bidder can lead to suspension of the whole procurement process. Under the new rules, the tender process will be completed before any appeal is considered. The Office for Public Procurement (ÚVO) will then consider any appeals, after which a contract can be signed. But in a controversial further change, the ÚVO can decide that even contracts subject to appeal can be signed if they are in “the public interest”. Critics have questioned how “the public interest” will be defined, the Sme daily reported.

The legislation introduces penalties such as a three-year ban on participation in tenders if any cheating is detected during the process of proving that all the conditions were met, according to the SITA newswire.

Peter Kunder of Fair-Play Alliance, a political ethics watchdog, said that the proposed changes really would limit the processes which currently result in delays in signing contracts, “yet we have doubts about whether this is in line with European law”. He suggested that the revision guidelines [of the EU] do not count on ex-ante control, which makes it impossible for bidders to object to discriminatory criteria later on.

“One cannot exclude the scenario that precisely because of this the European Commission might halt funding or that in a couple of years we will receive a request to return a huge sum of money since it was not drawn in line with the rules,” Kunder told The Slovak Spectator.

Responding to criticism, Garajová said that the ministry held consultations at the level of EC representatives and that the changes the revision brings were not questioned in terms of their compatibility with EU law.

Among other changes, the ÚVO, which Kaliňák argues has long been understaffed, will be enlarged by 39 staff. He said that resources and personnel will be re-allocated from other ministries, SITA reported.

Gabriel Šípoš, the head of Transparency International Slovensko, another political ethics watchdog, said that the reduction in administration, more effective appeals procedure and increase in capacity at the ÚVO should help to speed up procurement processes. But he also suggested that the government should have acted sooner.

“It is unfortunate that the government only reacted nearly a year after the elections,” Šípoš told The Slovak Spectator.

Šípoš sees the main risks of the revision as lying in its implementation.

“Will experts be hired for the ÚVO?” Šípoš asked. “Will the procurers who now have much freer hands be better controlled or less politically determined when deciding on tenders?”

The government’s revision means there is more chance that an honest procurer will get better value for money than is the case now, “but at the same time it also increases the risk that cronyism will put down roots more easily”, Šípoš said, adding that “the quality of procurement will thus depend even more on the political culture and standards of the ruling power”.


Was the fast-tracked proceeding justified?


When asked whether the fast-tracked parliamentary procedure used to pass the changes was justified, political ethics watchdogs responded that it was not.

“It [the fast-tracked procedure] very much limits the chance of the public to react and discuss the changes; it weakens the ability of the public administration to prepare for these changes – and this is legislation which regulates the spending of €4-5 billion every year,” Šípoš told The Slovak Spectator. “It is a very bad precedent.”

Kunder of Fair-Play Alliance said that there needs to be serious reasons for limiting parliamentary discussion of revision of such a significant law.

“I do not think that the slow drawing of European funds [is sufficient justification],” Kunder told The Slovak Spectator, adding that the situation in this area is no different from one – or three months – ago. “The fact that the government has identified drawing EU funds as a huge problem only now rather attests to the chaos in the state finances.”

The public and the opposition learned about the wording of the revision only after the government passed it, Kunder said when listing his concerns about the revision.

“This is hard to understand, because it is particularly solutions prepared in a short time that need the most possible ‘eyes’ so that mistakes are avoided,” Kunder said. “These, in the case of the law on public procurement, could cost Slovakia a huge amount of money.”

The bill came in for scathing criticism from the opposition, with Freedom and Solidarity (SaS) MP Jozef Mihál arguing that the reason that the government had accelerated passage of the amendment was an imminent tender to construct the 11-kilometre Hričovské Podhradie-Lietavská Lúčka stretch of the D1 highway near Žilina, SITA reported.

Mihál believes that the government wants the amendment to come into effect as of February 18 so that the tender can be finalised before April 1 and would therefore still come within the remit of the Transport Ministry. After April 1 powers related to the drawing of European funds will be transferred from Transport Minister Ján Počiatek to Deputy Prime Minister for Investments Ľubomír Vážny.

The Transport Ministry denied such allegations on Tuesday, with ministry spokesman Martin Kóňa calling them ‘made-up’, according to SITA.

Garajová said that concerns about the amendment opening up space for corruption are unjustified. The changes that are being proposed do not interfere in the selection of bidders or the course of the competition in a way that would create room for anything other then legal decisions, Garajová told The Slovak Spectator.


Radka Minarechová contributed to the story

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