Public Contracting Reform, AIS recommendations for programs of the electoral subject 2021

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Following years of monitoring and risk assessment in public procurement in the areas of public health, local government, and national infrastructure, AIS has drafted 7 proposals for the reform of public procurement and contracting. These recommendations will be proposed to the main parties in elections, suggesting their involvement in their electoral program and promises. The recommendations were drafted in the framework of the Governance for Change Forum, Proposals by civil society organized by Co-Plan and partners. The proposals will be officially handed over to the political parties running in the 2021 elections.

Public Procurements and Contracting, Recommendations for Public Procurement Reform

About 30 % of the tenders in sectors like Health, National Infrastructure, and Local Government Units have marked a high risk of irregularities in procedures over the last 3 to 5 years. Lack of competition, disqualification of Economic Operators with cost-effective bids, and finally the frequent cancellations of procedures are indications of a large room for clientelism and abuse of procured funds.

The situation is even more critical in the case of Contracting being done through Special Laws without procurement, tenders, or secret contracting.

Another major issue with procurement in the country, with serious consequences for public  contracting and tenders, is the lack of control over the integrity of the contractual partners, when Contractors are Business Companies, whose Origin of Capital, or Origin of the Controlling Package, is in a country with a commercial register of shell companies, a register, where individual owners are not declared, and where confidentiality is preserved.

In such cases, in addition to the typical irregularities, we face the risk of contracting companies that are in a conflict of interest or subject to laundering money generated from crime or corruption.

The table above is based on, and illustrated with data from:

Given the above, the country needs immediately a Reform in Public Procurement. This reform is not simply of legal character. Actually, legal changes often do not lead to results. Many changes regarding public procurement will have to be made on other laws. Procurement reform must start with elements like:

  1. Prohibition of ‘contracting through special laws’ by law. The same should also apply to ‘changes to contracts by special laws’. Such laws are also known as ad hoc laws, special laws, laws used for one contract only, and contracting through political decision-making.
  2. A legal framework that guarantees control of the integrity of the Public Contractors and that of the Capital Controlling Package. The law on the declaration of end beneficial owners should immediately enter into force and must be strictly implemented, especially for contractors or subcontractors of public contracts (public assets and funds).
  3. Public monitoring, Integrity Pact or strengthening independent monitoring mechanisms and social auditing in the procurement process. Many countries that have undertaken reforms in the Public Procurement System have worked in partnership with specialised anti-corruption organizations. The external risk assessment system, independent auditing of criteria and commitment to the standards and principles of Open Contracting. Criteria in each procedure to be audited by specialized independent entities. Then the race is announced.
  4. Application Shortlisting and periodic verification of the capabilities of Economic Operators. If an operator is periodically assessed, there is no reason to assess and disqualify it on a case-by-case basis. Disqualifying the operator with higher offers for basic criteria, accompanied by lack of complaints, is often an indicator of fictitiousness and arrangements among the competing businesses. This kind of disqualification is often found in tenders for National Infrastructure the Development Fund and the Albanian Road Authority, which are also high-portfolio institutions for tenders.
  5. Transparency. No contract should become effective without having been first published. The same principle should apply to each stage of the contracting, from planning the contract to its final execution.
  6. Application of Open Contracting Partnership principles and standards. Application of algorithms for risk marking by institutions themselves.
  7. National Anti-Corruption Strategy must contain a special chapter on Anticorruption in the Public Sector

Other recommendations are also published on the AIS organization’s website