Eliza Niewiadomska EBRD Legal Transition Programme Kiev, 19 May 2012 Building Confidence in Public Procurement Review Best practice for enforcing public procurement rules from the EU Member States

General context Public procurement – a horizontal function across the public sector Efficient public procurement: deliver value for money while complying with transparency safeguards Efficient procurement in public sector is possible only within a sound government administration (the rule of law, clear allocation of roles between legislative, governing and judiciary functions, government accountable to parliament and professional civil service) Efficient procurement is hard to achieve without effective enforcement 6/2/2016 2

Market Stakeholders Professional & Accountable Contracting Entities Well-informed Local Suppliers and Contractors Active International Bidders Regulatory & Institutional Framework Legislative framework in line with international standards and good practice, adjusted to local market development and business culture: capacity of contracting entities and suppliers and contractors Credible National Regulatory Authority with sufficient capacity for effective policy development and implementation Transparency tools: unrestricted access to procurement opportunities and case law Efficient administrative monitoring procedures, delivered by experienced procurement practitioners, in order to prevent irregularities and ensure compliance of contracting entities Internal and External audit An independent review system capable of providing timely and effective remedies Sound National Public Procurement System

Prevent Correct Compensate Punish Effective Enforcement – an EBRD Core Principle Monitoring Review and remedies Internal Audit External Audit

Ex-ante assessment of compliance and performance Independent from contracting entity and bidders Compliance Assessment (legality) – To check if the public procurement rules are respected Performance Assessment (efficiency) – To assess if value-for-money will be achieved Monitoring of public procurement

Ex-post evaluation of procurement operations by internal or external auditors Compliance Audit (legality) – To check if the public procurement rules have been respected Performance Audit (efficiency) – To assess if value-for-money have been achieved Audit of public procurement

Ex-post internal assessment of compliance and performance Internal but independent from procurement function Focused on procedures and decision-making (not individuals performing functions) Aim to assess and recommend improvements (not to detect infringements) Reviewing procurement processes and public contract delivery to support management of contracting entity Internal Audit

Ex-post external assessment of compliance and performance of procurement function External and independent from contracting entity Focused on compliance and performance of decision-making and individuals performing functions Aim to assess and detect non-compliance, fraud and corruption, reporting to investigators for follow-up disciplinary or criminal investigations Reviewing procurement processes and public contract delivery to ensure discipline of public spending Reviewing procurement processes and public contract delivery to suggest systemic improvements to public clients External Audit

Right of the bidder to seek a review Right of the bidder to seek remedial action opposed to monetary compensation An dedicated independent review body, authorised to sanction remedial action Access to an appeal to the court if judicial review is not provided at the review body Where remedies procedures are not available, right of the aggrieved bidder to seek compensation Access to alternative dispute resolution, in particular when public contract has been signed Remedies - Minimum standards of the WTO GPA

an operational review and remedies body, established by law adequate judicial review procedures, or an effective appeal to the court enabled (standstill period) rules on costs, scope and on the effect of filing a request for review appropriate remedial actions: possibility to set aside individual decisions including the award decision, damages, and interim measures guaranteed consistency of review decisions guaranteed institutional and financial independency of the review body Guidelines from the European Court of Justice

Simplicity - the user-friendly procedures aligned with the local legal and business culture Speed - the less time it takes the more efficient it is; the procurement process should be completed within an original tender validity period Cost - costs of a public client and the private bidder participating in the public tender: higher costs have an adverse impact on the economic benefit of a transaction Certainty – Consistency and predictability of review decisions – Impartiality of review body – no bias against private sector – Resistance to corruption Fit to context – the review decision must: (a) achieve particular policy objectives of the law (that is, economic, social and environmental); (b) reach an appropriate balance between fulfilling the contract economic purpose and integrity requirements of the public client; (c) respond to purchase characteristics (business case) and the local market situation. The EBRD Public Procurement Review Efficiency Benchmark

Clear legislation comes first – emphasis on compliance assessment before completion of the legislative process poses a risk to the system Full implementation and stability of legal framework comes first – introducing sanctions in unstable environment is ineffective as stakeholders are punished before they manage to learn new laws Clear structures of ex-ante and ex-post enforcement mechanisms – overlapping structures are inefficient and demoralising for stakeholders; instead of increasing compliance reviewers are played against each other Credible resources for monitoring and review – reviewers and auditors who never conducted a tender are laughed at Regulated internal procurement decision-making and dedicated procurement staff at the contracting entities – otherwise internal audit brings no results Institutional cooperation of enforcement agents – with no follow-up investigations and no sanctions any monitoring or audit is ineffective Role of courts – an administrative court may be involved following different enforcement actions, as a result of the appeal by bidder or contracting entity The EU MS – lessons learned – building enforcement mechanisms

No aggregation of lots: splitting the public procurement contracts in smaller parts, with the intention to prevent its coming within the scope of the laws or the rules applicable according to the estimated value of procurement Failure to produce annual and quarterly plans for conducting public procurement and to publish these in the public procurement bulletin; Failure to appoint and fix the responsibilities of the evaluation committee members Description of the goods, works and services in a way that restricts fair competition Breach of the principle of proportionality by using the qualification criteria as a mean of restricting the fair competition Establishing criteria for awarding the public contract non-compliant with the laws Frequent application of special procurement procedures designed for specific circumstances or emergency situations Use of contract award procedures different than prescribed by the law Late or incomplete procurement notifications and reporting The EU MS – lessons learned – most frequent infringements detected by monitoring and audit - 1

Failure to publish procurement notifications Non-observance of the minimal deadlines prescribed by the law Abusing communication and information obligations resulting in infringement of the equal treatment and/or lack of the transparency Failure to manage conflict of interest Failure to produce minutes of tender opening sessions Changing the award criteria specified in the tender documentation during the public procurement procedure Incorrect application of the qualification requirements or award criteria established in the tender documentation Failure to send the notices to the bidders regarding the result of the procedure, before the conclusion of the contract Unjustified cancellation of procurement procedure No conclusion to the procedure – neither award nor cancellation of the procedure Award of a public contract where there is a conflict of interest Incomplete procurement records The EU MS – lessons learned – most frequent infringements detected by monitoring and audit - 2

Thank you. More about public procurement enforcement: SIGMA: 2012 compendium of the public internal control systems in the EU Member States2012 compendium of the public internal control systems in the EU Member States EBRD: Law in TransitionLaw in Transition