Module 16 Tendering and Procurem by ldd0229

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									Module 16 Tendering and Procurement
16.5. Procurement and tendering in the E urope and CIS region
In 2004, new procurement directives replaced the three that had originally been adopted in the European Union at the beginning of the 1990s. Member states should have adapted their legal orders to the n ew directives by 31 January, 2006 at the latest. The two new directives are designed to simplify, clarify and update the existing European legislative procurement framework and adapt it to the new electronic age, whilst at the same time maintaining the stability of the basic underlying structure. Central to these proposals is the consolidation of the three “classic procurement directives” of the early 1990s (works, supplies and services) and their merger into a single text (known as the Classical Directiv e) and parallel amendments to the Utilities Directive. The experiences of the ten new member states (the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia) could prove valuable examples for the region, espe cially for the accession countries. All ten countries have completed the crucial transformation process, which has included changes to their regulatory, institutional and economic systems. PPP frameworks have had to be transformed as well, and pilot projects, focusing specifically on municipal services and transport, have been started in the majority of the new member states. From the legislative point of view, all EU member states have to comply with the aquis communitaire – basic directives, the EU Tr eaty and other legislation regulating the functioning of the EU. PPP procurement procedures, however, have no defined status in the regulatory framework of the European Union; as a consequence, each member state, including the new member states, has had t o develop its own legal and institutional framework for PPPs. In new member states, such developments have been influenced greatly by the EU’s financial aid requirements, existing legislative and institutional traditions. The most consolidated information on public procurement policies in the accession countries and the Balkans can be found on the Sigma website. Sigma is a joint initiative of the European Union (EU) and the Organisation for Economic Cooperation and Development (OECD), principally finance d by the European Union. Since 2001, the programme has been assisting countries of the Western Balkans in building their public institutions and systems within the framework of the Stabilisation and Association Process agreed with the EU. Tool 16a-1 bellow provides a brief overview of the procurement systems in the accession countries and the Balkans.

Further Guidance for EU Procurement
• EU Public Procurement Legislation: <http://europa.eu.int/comm/int ernal_market/publicprocurem ent/legislation_en.htm> • Sigma Programme: <http://www.sigmaweb.org> • Sigma’s Public Procurement Review of Acceding Countries in Central and Eastern Europe: Consolidated Report: June 2003 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic and Slovenia ): <http://www.sigmaweb.org/dat aoecd/12/4/34993021.pdf> • Public Procurement in Europe <http://www.minefi.gouv.fr/daj/ marches_publics/ppn/ppn anglais/11_public_procureme nt_in_europe.pdf>

Compiled by Olena Maslyukivska; Edited by M.Sohail

Tool 16a–1

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Tool 16a-1: Public procurement systems in the accession countries and the Balkans (Source: Sigma Programme) Date legal act came into force March 2004

Country

Primary legal act Public procure ment law (PPL)

Institutional arrangement

Compatibility of legal act with EC procurement directives

Recommendations

Bulgaria

Public Procurement Agency (PPA) at the Ministry of Economy

Some differences remain betwe en the PPL and EU directives. A further amendment seeks to adapt the PPL to the requirements of the new directives in view of the accession of Bulgaria to the EU in 2007.

Romania

Law 212 on Approva l of Emerge ncy Govern mental Ordinan ce (PPL) No.60/2 001 Public procure ment law (PPL) • Public Procur ement Contra ct Law

17 May 2002

Public Procurement Directorate (PPD)

The text of the PPL is based largely on the text of the EC directives (but prior to the approval of directives 17/2004 and 18/2004), and many provisions of the PPL have been taken directly from the relevant EC directives. A new PPL is to be sent to parliament by the end of 2006.

• Consider the clear separation between the advisory/monitoring and review functions of the PPA; • Further develop and adapt the organisation and capacity of the PPA with respect to the changes that will be taking place as a result of the implementation of new procedures and instruments of the EU directives; and • Create a nationwide training and information programme for the procurement community (that is, contracting entities and the private sector). • Develop/strengthen the institutional capacity of the PPD and elabore an action programme for its strengthening; • Design a training strategy based on a training-of-trainers approach; and • Improve guidance documentation and standard tender documen ts and adaptation of documentation to any changes in the PPL and implementing regulations.

Turkey

Jan. 2003

Public Procurement Authority

Jan. 2002

To a large extent the PPL follows good international procurement practice. Nevertheless, to meet the objectives of closer alignment with EC directives and common international standards, several amendments – including a further simplification – are needed in the short and medium terms: • Regulations that allow domestic preference will have to be phased out; • The utilities sector will have to be fully covered by legislation ; and • A particular problem is the inclusion in the PPL of state owned enterprises outside the areas of activity defined by the EU directive on utilities.

• Mitigate the formalistic approach and allow for more flexibility; • Further professionalise the procurement function, including the continuation of efforts to strengthen operational capacity through training and information (t argeting the private sector as well); • Further improve the central institutional organisation and its capacity, and preferably consider replacing the mechanism for its financing; and • Continue the work of harmonising procurement legislation with the EU’s acquis communautaire in this area.

Compiled by Olena Maslyukivska; Edited by M.Sohail

Tool 16a–2

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Albania Public procure ment law (PPL) 1995 Public Procurement Agency (PPA) Incompatible in terms of: • Albania’s public procurement procedures mean that bidders are not competing on price; • The procedures are very restrictive; • The PPL does not cover contract administration; • The Public Procurement Agency is not a central purchasing authority; • The PPA is poorly equipped and its staff lack training; • The PPA acts as an appeal tribunal in the complaints procedure; and • There is no provision for procurement training. The procurement decree does not provide a strong base for a sound procurement regime. The existing regulation on the level of Republika Srpska or the Federation of BiH, does not meet internationally recognised standards and is incompatible with EC procurement legislation in many aspects: • The list of contracting authorities obliged to follow the procurement rules is imprecise and incomplete (e.g. public and private entities operating in the utilities sector are not included); • There are no clear provisions on standards to guarantee the objective and non-discriminatory description of the subject of procurement (technical specification); • The qualification procedure is not described clearly and exhaustively; • Not all types of procurement notices required by EC legislation are provided (there is a lack of prior indicative notices and contract award notices, for • Review and correct procedural flaws; • Review the institutional capacity of the PPA and elaborate an action plan for strengthening its capacity to perform its functions, including the provision of adequate equipment and r esources; • In cooperation with the training institute, elaborate a national training strategy to institutionalise procurement training; and • Completely revise the complaints review article of the PPL and procedures so as to give responsibility for complaints to an independent administrative and/or judicial review body.

Bosnia and Herzogov ina

Federatio n of BiH

No legislation directly regulating public procurement procedures at the state level in Bosnia and Herzegovina No Aug. formal 2003 law on public procure ment. Govern ment decree on procedu re of procure ment of goods, services and contracti ng of works construc tion

There is no governmental institution dealing with procurement matters. There is no separate FBiH governmental institution responsible for the development and functioning of the procurement system.

• Adopt new legislation aligned to EC directives and international good practice; • Elaborate and introduce secondary legislation (including standard tender documents); • Elaborate and distribute guidelines, manuals and other explanatory materials; • Establish a central institution for public procurement in each country, which will have the capacity and resources to support the effective implementation of PPLs; • Establish an independent review body; • Provide effective support to the functioning of central procurement institutions (office equipment, IT support, training, experience-sharing, etc.); • Provide training and information for staff of procuring entities, auditors and the private sector, and prepare and publish training programmes and materials; and • Introduce coordinated purchasing, including framework agreements.

Compiled by Olena Maslyukivska; Edited by M.Sohail

Tool 16a–3

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Republik a Srpksa Law on procedu res regardin g procure ment of goods, services and works May 2001 Department for Public Procurement of the Ministry of Finance instance); • The minimum content of contract notices and tender documents is not set precisely; • Evaluation criteria are described very poorly, while wide discretion is given to the evaluation committee, and to the objectivity and accountability of the selection; • Preferential treatment (10 per cent) is given to local companies; and • The process is not guaranteed. Compatibility is high theoretically, however: • Institutional mechanisms for control and auditing are not yet in place; and • The PPL is undermined by Croatia’s failure to provide enabling elements relevant to EC directives.

Croatia

Public Procure ment Law (PPL)

Jan. 2002

Public Procurement Office, but de facto Department for Public Procurement in the Ministry of Finance

• Establish the Public Procurement Office as an independent agency with adequate resources to perform its functions; • Take further action to revise the PPL in order to align it further with the EC directives; • Establish the Review Commission immediately and give it the necessary resources, so enabling it to provide sufficient training and individual capacity development to its staff; • Consider how an internal and external audit should be organised to secure the integrity of the procurement processes; and • The government, in close consultation with all important stakeholders, should create a strategy and detailed action plan for the public procurement reform process with a clear view of the needs and measures to be taken.

Compiled by Olena Maslyukivska; Edited by M.Sohail

Tool 16a–4

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Kosovo Public Procure ment Law (PPL) June 2004 • Public Procurement Agency; • Public Procurement Regulatory Body; and • Public Procurement Rules Committee. Legal act is incompatible in some crucial aspects: • The law is rigid, costly, timeconsuming, bureaucratic and inflexible; it is a product of a particular time; • As of 2005, the system was incomplete and not robust enough to provide a clear and transparent environment. Its application is mainly for small and medium co ntracts, whilst big procurements are carried out using the rules and regulations of donor institutions; • The legitimate interests of contractors are insufficiently protected against the arbitrariness of contracting authorities; • The efficiency factor is ne glected; and • Unclear, inconsistent and incomplete drafting has caused misunderstanding and circumvention of the law’s provisions. Incompatible in terms of: • Lack of any concept of bodies being governed by public law (private utilities are not included, for instance); • Dubious exclusion of defence related procurement; • Non-implementation of all types of notices required by the dir ectives and absence of any reference to nomenclature of the Common Procurement Vocabulary; 1 • Time limits that are incompatible with those stated in the directives (too short), and different methods of calculation of time limits; • Different list of procedures , modelled on the UNCITRAL 2 Model Law on Procurement of Goods, Construction and Services rather than on the EC directives regulating public procurement; • Preference for open procedures only (use of restricted only as exceptional one); and • Incompatible provisions on standards and technical specifications. • Give extensive support to the drafting of secondary legislation to support the implementation of the PPL; • Prepare standard (model form) documentation, guidelines and instructions for potential contractors on tender preparation requirements; • Properly establish, staff, equip and fund the Public Procurement Agency, the Public Procurement Regulatory Body and the Public Procurement Rules Committee; • Continuously develop training on public procurement for both private and public sector personnel.

Macedoni a

Public Procure ment Law (PPL)

1998

No separate institution is responsible for the functioning and development of the procurement system.

• Ensure full compliance with EC public procurement legislation; • Review the PPL from two points of view: clarity and consistency of the law, and efficiency and integrity of procurement procedures; • Provide extensive support to the drafting of secondary legislation to support the implementation of the PPL; • Prepare standard (model form) documentation, guidelines and instructions for potential contractors on tender preparation requirements; • Properly establish, sta ff, equip and fund the Public Procurement Agency; and • Continuously develop training on public procurement for both private and public sector personnel.

1

Common procurement vocabulary aims at facilitating the processing of inv itations to tender published in the EC Official Journal by means of a single classification system to describe the subject matter of public contracts. <http://europa.eu.int/scadplus/leg/en/lvb/l22008.htm> 2 United Nations Commission on International Trade Law www.uncitral.org Compiled by Olena Maslyukivska; Edited by M.Sohail Tool 16a–5

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Serbia and Monteneg ro No PPL adopted at the central government level to be used by central government for contracts financed by the central government budget Public July Procure 2002 ment Law (PPL) No central public procurement institution exists.

Serbia

Public Procurement Office (PPO)

Serbia’s PPL maintains generally acceptable international standards . However: • Limitations relating to the application of restricted procedures are clearly unacceptable; • The great number of justifications for the use of negotiated procedures may lead to abuse; • The need to seek prior approval from the PPO for the use of restricted and negotiated procedures, except for in cases of extreme urgency, should be reconsidered, in particular as regards restricted procedures; • The lack of simplified procedures for contracts up to approx. €50,000 for goods and services and approx €100,000 for works is a weakness; • The lack of concrete justifications for the use of accelerated procedures, including time limits that are too short, needs to be addressed; and • There are some other questionable elements in the PPL, in particular as regards the division of tenders into separate categories during the tender evaluation process.

• The government should take further action to revise the PPL so that it will become fully aligned with the EC directives (20 04– 6); • Establish a Review Commission immediately and provide it with the resources necessary to enable it to provide sufficient training and individual capacity development to its staff; • The government should create a strategy and detailed action plan for a public procurement reform process, with a clear view of the needs and measures to be taken; • Support capacity building of purchasers and suppliers at the operational level; and • Strengthen the PPO, in particular in terms of training, organisation and IT sy stems.

Compiled by Olena Maslyukivska; Edited by M.Sohail

Tool 16a–6

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Monteneg ro Public Procure ment Law (PPL) Aug. 2001 Public Procurement Commission The Montenegrin PPL is incompatible with EU legislation in many crucial aspects: • The law is rigid, costly, time consuming, bureaucratic and inflexible; and • The law allows for the free application of non-competitive procedures. • Redraft the PPL in order to achieve full compliance with EC public procurement legislation; • Review the PPL from two points of view: clarity and consistency of the law, and efficiency and int egrity of procurement procedures; • Prepare standard (model form) documentation, guidelines and instructions for potential contractors on tender preparation requirements; • Properly staff, equip and fund the Public Procurement Commission as a central government regulatory and policymaking body in charge of public procurement matters; and • Continuously develop training on public procurement for both private and public sector personnel.

Compiled by Olena Maslyukivska; Edited by M.Sohail

Tool 16a–7


								
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