Good financial laws did not significantly improve public procurement practices in Serbia.

By: Vladimir Erceg (BCSP)
@elercad

After a series of extremely restrictive budgets, the funds for the Serbian Ministry of Interior (MoI) are increased by 14% in 2018 compared to the previous year. The result is more than the doubled budget for the police after many years.

If the number of employees in the MoI remains the same, employees can expect an increase in salaries. The awards fund was also enlarged, but funds for cost reimbursement were, however, partially reduced.

Among the capital expenditures, most important are the MoI purchase of new vehicles (7.1 million EUR), traffic camera coverage (8.1 million EUR), information system modernization (3.9 million EUR), and emergency equipment procurement (1.1 million EUR).

All these funds will be spent on public procurement. Since in the recent past the citizens of Serbia were able to follow stories in the media about a series of controversial purchases intended for the police, it’s important that these funds spend wisely.

Despite the fact that the MoI has a complete legal framework and rules for preventing corruption in public procurement in place, good laws have not led to better practice.

Poor practice is most noticeable in the area of capital procurement planning, insufficient control of confidential procurements, and deterioration in the level of competitiveness.

The Republic Commission for the Protection of the Rights has canceled (in whole or in part) 48 procurement procedures conducted by the MoI in the last four years.

The problem lies not in the number but in the value of the canceled procedures, which amounts to all of one-quarter of the total value of all the procurements made by the MoI.

Two-thirds of the value of the disputed procurements refer to footwear, uniforms, and vehicles for the police – precisely the items for which the MoI has allocated even more money in the year 2018.

The risk is higher because there are still no prescribed quality standards, and the quality is determined for purchases individually, which prevents potential bidders from preparing for these procedures in advance and offering better terms.

This practice has often led to the procurement of goods of lower quality, accompanied by the noticeable dissatisfaction of police officers.

Another prominent example of bad planning is the practice of purchasing extremely expensive toner cartridges from original equipment manufacturers, which has spread throughout the entire public sector.

This procurement will unnecessarily cost the MoI EUR 1,000,000 more in the next three years.

Replacement toners do not invalidate the warranty, and there is a large selection of replacement toner cartridges that cost 10 times less than the original ones.

The public has been denied an explanation as to why the Serbian government has proclaimed the procurement of more than 700 police patrol vehicles confidential.

After numerous procurements of patrol vehicles that have been conducted publicly, it is reasonable to doubt whether secrecy in connection with this procurement actually serves to conceal information that has nothing to do with security, and that what is being concealed are actually business secrets – for example, information about the bidders, or the terms of vehicle maintenance and warranty.

Despite the great public interest, the silence, in this case, speaks loudly about the freedom of controlling institutions to do their job and determine whether this procurement has been justifiably or unjustifiably marked as secret.

The average number of bids in MoI contracts has been reduced in the past two years which deteriorated the results in the field of competition protection in procurement procedures.

Except for the framework agreements on vehicle servicing, which are worth only four percent of the total value of procurements made for the MoI, the number of bids per contract is significantly below the already low national average.

In 2013, the MoI on average had 3.2 bids per contract, while this year the average fell to 1.9. The national average is 2.9. Also, the share of procurements with one bid has increased, as well as the percentage of contracts concluded at the maximum estimated value of the procurement in the open procedure.

All this, put together, negatively impacts the favorable nature of the bids and the overall cost-effectiveness of procurement in the MoI.

Serbia cannot afford to waste money. The MoI needs better planning, better market analysis, and clearly defined quality standards.

Help could arrive from the so far invisible Internal Audit Department of the MoI, which should review large and confidential procurements, but also from the State Audit Institution, which last audited the MoI in 2012.

It would also help if the competent committee of the National Assembly would provide support to the improvement of the practice of the MoI.

With a larger budget, in 2018 the MoI has a great opportunity to improve its procurement practices, spend the money at its disposal in a smart way, and increase the confidence of the bidders, citizens and its own employees.

This would significantly contribute to the improvement of security as the fourth priority that was mentioned in the exposé of the Prime Minister.


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TAGS: BudgetFinancial ManagementPolicy OpinionProcurementSerbia