The Decline of Transparency in Public Procurement in BiH

Banja Luka, 26^th December 2012. – Transparency International Bosnia and Herzegovina (TI BiH) has issued a report on Monitoring of the Implementation of the Law on Public Procurement, within the activities of monitoring the implementation of Anti-Corruption Reforms in BiH conducted in collaboration with the Open Society Fund (OSF).

The Monitoring findings have indicated the lack of transparency in public procurement because open participation in the overall procurement fell from about 91% in 2008, to 37% in 2011. This is primarily due to amendments to the Law on Public Procurement in 2009 which has raised the limit for direct agreements and led to a reduction of the number of public procurement conducted in open bidding procedures.

The abuses in the implementation of the Law have been caused by the arbitrary interpretation of regulations, poor coordination between the institutions at all levels, and lack of accountability of individuals in all major segments of corruption prevention in this area. The price of tender documentation or the way of its acquiring from the very start discourage some providers of goods, services or work, while during the preparation of the documentation some specific criteria have been defined  which favor certain bidders.

Adequate supervision of the public procurement process has not been established yet by the Public Procurement Agency and the Procurement Review Body, and there are no consequences for non-transparent and illegal procurement. Termination of proceedings for almost 80% of decisions on complaints of bidder does not end in their favor, but they are ended mostly by irregular canceling of procurement by contraction authorities. So far a single bidder has not been reimbursed.

There is no an adequate response from the judiciary – delay in passing judgments makes them irrelevant, because it is impossible to correct an irregular procurement process after two or three years, and numerous reports of the Audit  Services indicating irregularities in the implementation of public procurement procedures have not resulted in adequate investigations.

On top of all the above, instead of adopting a new law on public procurement, which would enhance oversight and allow more effective control, political parties, have sent to the Council of Ministers a proposal to increase taxes for appeals (from the 500KM to a whopping 25,000KM, depending on the value of procurement). Such proposed costs of the appeal would represent tremendous disincentive discrimination of aggrieved bidders in procurement process, and would send a dangerous message to the business world and to the citizens that any attempt to combat irregularities and corruption in public procurement and countering financial oligarchs, who often receive and supply contracts, is a losing battle.