TI B&H Proposed the Introduction of Anti-Corruption Mechanisms in the Law on Public Procurement

TI B&H considers that the new draft Law on Public Procurement in B&H does not provide mechanisms for successful prevention of corruption and sanctioning of irresponsible participants in public procurements, as well as transparency, efficiency and rational use of public resources.

The solutions offered by the TI BiH refer to the introduction of additional provisions with emphasis on prevention of corruption and conflict of interest of the persons responsible for conducting of public procurement. TI BiH proposed the creation of anti-corruption plans in public procurement, obligation for authorities to report any irregularities, protection of whistleblowers in the public procurement and impermissible conflict of interest situations have been clearly defined, as well as the actions of competent authority bodies in such cases.

TI BiH has also pointed out to the obligation of publishing public procurement plans for all parties, with the aim of preventing ‘ad hoc’ approach in conducting public procurement and improving transparency of such procedures, and to the necessity of publishing far more information on the Public Procurement Portal.

TI BiH also proposed the  the termination of the Procurement Review Body offices in Banja Luka and Mostar, that had been introduced by the recent amendments to the Law, having in mind that they are still not functioning , which disabled the bidders coming from the jurisdiction of Banja Luka and Mostar offices to complain and to seek legal protection.

The retention of the PRB at the present location and increase in the number of employees would result in more successful and uniform actions of competent authorities, more efficient resolution of complaints and annual savings of more than a million KM.

It has also been proposed the reduction of administrative fees for the complaints, because enormous increase in fees prescribed by the latest Amendments to the Law discourages any attempt to obtain legal protection and to fight against corruption in public procurement in B&H.

The proposed amendments specifically highlighted the need to increase the penalties for violating the Law, not only for contracting authorities, because it is ultimately paid by taxpayers, but also for the responsible persons in the contracting authority, as well as the bidders and their responsible persons. The current proposal of the Law on Public Procurement in BiH provides fines for responsible persons in the contracted authority that are lower than the fines provided by the existing Law on Public Procurement, that certainly will not raise the level of accountability. EU Public Procurement Directives also insist on the necessity of application of ‘more proportional, efficient, severe punishments’ for all violators of the Law. Penalties for the responsible persons in the existing Law have been reduced from 4,000.00 KM to the amount of 300.00 to 3,000.00 KM, which represents a step backwards in terms of accountability improvement. According to the Law in neighbouring countries proposed sanctions range up to 25,000 KM for the responsible persons in contracting authority, for bidders up to 20,000 KM and for contracted authority up to 15,000 KM. Significant sanction increase would raise the accountability of all participants in public procurement and strengthen the protection of public interest when it comes to rational spending of budget funds.

It is indicated to the necessity of reducing the percentage of direct agreements, as the current practice has shown that up to 35% of procurement funds were spent because of the application of this non-transparent procedure. Therefore, one of the proposed Amendments limits the total value of procurement through the direct agreement to 10%.

TI B&H appeals on legislators to finally seize the opportunity and improve the Law on Public Procurement and implementation of anti-corruption mechanisms, which have long been included in the public procurement laws in the region, recognizing the necessity for harmonization of laws with EU Directives and the damage that corruption in public procurement can cause to the state budget.