ENSURING THE EFFICIENT IMPLEMENTATION OF THE PUBLIC PROCUREMENT LAW Effects of the Law’s implementation and the role of the Public Procurement Office in the coming period

The effects of the Law’s implementation in 2004 High transparency of procedures:  28% contracts awarded in negotiated procedures without prior notice  72% contracts awarded in procedures with prior public notice

 8% savings recorded (7.7 billion dinars or 114 million US dollars)  29% overall savings over three years The effects of the Law’s implementation in 2004

SAVINGS ACHIEVED IN 2002–2004 PERIOD Year Value in dinars Value in US$ ,100,000, ,000, ,300,000, ,000, ,700,000, ,000, TOTAL 19,100,000, ,000,000.00

89% of the overall value of the contracts awarded came by the four categories of purchasing entities: Above-average savings recorded in: State administration (13%) and public utilities (12%) Below-average savings recorded in: Health-care(3%) and public firms (7%) The effects of the Law’s implementation in 2004

The public procurement system in Serbia rated by procuring entities and bidders The status of public procurement system Before the LawAfter the Law Procuring entities (from 1 to 5) 2 4 Bidders (from 1 to 5) 2 3

Source: “Evaluation of the system of public procurement in Serbia”, CESID, April Before the Law After the Law Status of public procurement rated by procuring entities Good ratings (4 & 5) IN % Poor ratings (1 & 2) IN %

The public procurement system in Serbia rated by procuring entities and bidders The present status by category (on a scale of 1 to 5) Best rated:  Transparency 4.2 (72% positive ratings and 4% poor ratings)  Competition 3.9  Number of bidders per a tender 3.8  Equality of bidders (fairness) 3.8  Control of procedures 3,7

The public procurement system in Serbia rated by procuring entities and bidders The present status by category (on a scale of 1 to 5) Rated poorest:  Simplicity of procedures 2.5 (50% negative ratings, 16% good ratings)  protection of domestic producers 2.5

The public procurement system in Serbia rated by procuring entities and bidders Indices of assessments of the present status of public procurements system (situation in 1990s = index 100) INDICATORS OF THE PUBLIC PROCUREMENT SYSTEM STATUS PROCURING ENTITIES BIDDERS OPENNESS, TRANSPARENCY HARMONISATION WITH EUROPEAN STANDARDS CONTROL OF PROCUREMENT PROCEDURES LEVEL OF COMPETITION ACHIEVED FAIRNESS, EQUALITY OF TENDERERS THE CORRUPTION SITUATION No. OF FIRMS COMPETING FOR CONTRACTS EFFICIENCY, SAVINGS PROTECTION OF THE PUBLIC INTEREST DISCRETION OF PUBLIC SERVANTS PROTECTION OF DOMESTIC PRODUCERS13193 SIMPLICITY OF PROCEDURES6992 TOTAL – AVERAGE153141

The public procurement system in Serbia rated by procuring entities and bidders Assessments of the work of the Public Procurement Office, by category (on a scale of 1 to 5) Integrity Autonomy Promptness Total % 4 and 5 51% 4 and 5

Future steps Key factors:  The real needs of the public procurement market in Serbia  Obligations assumed under Agreement on SCG Stabilization and Association with EU  Experiences of the transition countries  Expectations of procuring entities and bidders

The real needs of the public procurement market in Serbia Growing number of requests for opinions (Chart 1)

The real needs of the public procurement market in Serbia Growing number of requests for telephone consultations (chart 2) Number of consultations by phone (estimate)

The real needs of the public procurement market in Serbia Decreasing number of positive opinions for negotiated procedures due to urgency (chart 3) Number of positive opinions for negotiated procedures due to urgency in period March-May MarchAprilMay

The real needs of the public procurement market in Serbia Monitoring of public procurement procedures In the period October 2004 – March 2005, a total of 81 procurement procedures were covered by the monitoring process Total value – 7.2 billion dinars (about 90 million euros)

Obligations stemming from Agreement on SCG Stabilisation and Association with EU DEMANDS OF THE EUROPEAN COMMISSION:  Gradual abolition of preferential treatment  Strengthening of the relevant institutions and the judiciary in order to assure proper implementation of public procurement procedures

The transition countries’ experiences Comparative overview of of the sizes of public procurement markets and capacities of Public Procurement administrations, by country Country (population) No. of procuring entities No. of contracts Public Procurement Adm. staff Supreme Audit Institution Slovakia (5.5 million) 6,8525,323121Yes Czech Republic (10.2 million) 2,345 11,142160Yes Hungary (10,000,000) 1,332 3,28463Yes Albania (3.5 million) //25Yes Serbia (7.5 million) 12,000215,81526None Source: The SIGMA Programme – Support for Improvement in Governance, Assessment Reports

P. Blomberg “Lessons Learned on the basis of Ten Years of Reform of the Systems of Public Procurement in Central and Eastern Europe», Ohrid, 2004: The third phase of the development of the system of public procurement “The Millennium and Beyond – Association with the EU” is characterized by: 1) “at the normative side – continued harmonization of domestic legislation with EU regulations The transition countries’ experiences

2) At the institutional level – the existence of a strong and competent Public Procurement Office integrating an advisory and monitoring functions and which is an important factor in harmonization of the Public Procurement Law with EU directives. The continuing relatively high incidence of corruption in these countries justifies maintaining a regime of strict sanctions and upgrading control mechanisms.” The transition countries’ experiences

Among both procuring entities and bidders, 85% believe that it is necessary to upgrade control mechanisms in the area of public procurement In both groups, two-thirds hold that good control would yield additional savings of between 10 and 30% The expectations of procuring entities and bidders in the coming period Evaluation of the Public Procurement System in Serbia, CESID, April 2005

The expectations of procuring entities and bidders in the coming period Readiness to provide either full or a high level of support in countering corruption in public procurement : Institution Procuring entities (%) Bidders (%) Public Procurement Office 8979 Commission for Protection of Rights 8679 The judiciary8170 The police7160

82% of procuring entities and 79% of bidders hold that the role of the Public Procurement Office should be enhanced 75% of both groups believe the Office should be given even more autonomy The expectations of procuring entities and bidders in the coming period

There is pronounced optimism in respect to the implementation of the Law in the future 77% of procuring entities and 59% of bidders believe that discipline in applying the Law will increase The expectations of procuring entities and bidders in the coming period

 A Supreme Audit Institution should be established as soon as possible  The Public Procurement Office’s capacities should continue to strengthen  The independence and role of the Commission for the Protection of Rights should be increased  Inspectorial bodies and the police should play a more active role in controlling procurement processes  Wrongdoings in public procurement should be prosecuted by the judiciary more efficiently Conclusions and recommendations