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2007 Assessment

Moldova: Integrity Indicators Scorecard

Moldova: Integrity Scorecard Report > Sub-Category: Procurement
Indicators		Score
48	Is the public procurement process effective?	63
49	Can citizens access the public procurement process?	58

Indicator and sub-Indicator Details

Is the public procurement process effective?

48a: In law, there are regulations addressing conflicts of interest for public procurement officials.

Score:

YES

Comments: The law aims to ensure the efficiency and economy in preparing necessary acquisitions for the state needs, involving a larger number of providers, and the well-governance of established rules and procedures that would guarantee fair and honest participation of the interested parts. A special agency on the material rsources, public aquisitions and humanitarian assistance is established (art.5), There are regulations addressing conflicts of interest.

References: Law on the Acquisition of Goods, Works and Services for the Needs of the State (No.1166 of 30.04.1997)

Peer Review Comments: The website of that agency is www.tender.gov.md or www.tender.md.

48b: In law, there is mandatory professional training for public procurement officials.

Score:

YES

Comments: Since 2005, with the amendmments of the Law on procurement of goods, works and services to the needs of state, the Agency of Material Reserves, Public Procurement and Material Aids has delegated a part of its functions to the beneficiaries, in order to decentralize the existing system. So, rayon administrations (districts) and Chisinau Municipality set up new positions in Public Procurement (Aquisitions), in charge to run contracts under 100.000 lei (US$8,689)). Only in 2005, they considered and agreed upon with state beneficiaries over 11,684 of contracts, estimated at 524 million lei (US$45.5 million).

References: Civil Service Law Law on the Material Resources, Works and Services for the State Needs source: www.moldova-suverana.md/index.php?start_from

48c: In practice, the conflicts of interest regulations for public procurement officials are enforced.

Score:

100

Comments: Public procurment in Moldova is suspected of corruption. Legislation on public procurement is not satisfactory, while the amendments made by the legislative to the existing laws have not deterred corruption and abuses. Experts claim that even the concept of 'public procurement' is badly defined in conceptual terms. Some of its provisions (art.3) provide a list of economic sectors in which the law shall not be applied, which is in divergence with the main principle for a market economy, thus providing free monopolies, while leaving important fields (like, medicine, transportation means, construction and infrastructure) outside of the real transparent scrutiny. Art.7 omits to define one of the most important functions for public procurement, exactely the organization of public procurement tenders, sending invitations to the enterprises which want to bid, elaboration of documents, etc. Similarly, although a state national agency on public procurement is stipulated, the law does not define what is its legal statute, structure, organization and functioning, recruitment mechanisms, internal control and responsibilities. The law provides a wrong incentive towards corruption as it suggests (art.29) that this can be initiated only by the private agents, which, in reality, is totally the opposite. Equally unclear is how decisions are made on the successful biders (art.20) by a jury, becasue there is no any provision that would regulate its formation and functioning. The Strategy on Fighting Corruption (2004) stipulates some measures of organizing public training on conflict of interests, notification of corruption cases, investigative journalism, ethical code and access to information.

References: Efim Obreja, TI-Moldova, in Businessul Moldovei, Aug. 30, 2006, www.transparency.md/docs/2006/bus_mold30aug2006ro;

Millenium Challenge Account, Preliminary Country Plan of the RM, presented by Zinaida Grecianni on Sept. 12, 2006

Peer Review Comments: In addition, many major procurement contracts are negotiated directly, by the government. The capital's administration, too, used to practice no-contest events. That happened with the reconstruction of the Military Glory Memorial, reconstruction of Pan Halipa street, reconstruction of the Komsomol Late, reconstruction of bus stops in Chisinau. The media alleged that all these contracts were won thanks to corrupt officials. The Auditors Court later published its findings, which say the contract award process was done with grave errors and public spending was exaggerate.

48d: In law, there is a mechanism that monitors the assets, incomes and spending habits of public procurement officials.

Score:

YES

Comments: From this law it is totally unclear who are the public servants that deal with the enforcement of the regulatory framework for public procurement.

References: Law on the Acquisition of Goods, Works and Services for the Needs of the State (No.1166 of 30.04.1997)

48e: In law, major procurements require competitive bidding.

Score:

YES

Comments: The law stipulates several forms of public procurement (art.18), which emphasize the competition as a basis for public procurement. Nevertheless, it includes also procurement from one source, among other forms of procurement such as: two-state tenders, limited participation tenders, tenders with price commercial offers, procurement via the National Bursery of Goods, etc.

References: Law on Procurement of Goods, Works and Services (No.1166 of 30.04.1997)

48f: In law, strict formal requirements limit the extent of sole sourcing.

Score:

YES

Comments: Announcements on public procurements are posted by law in the Public Procurement Bulletin, edited by the Agency for Material Reserves, Public Procurement and Humanitarian Aids (www.tender.md). On its website, the Agency stores the data base of the implemented (past) tenders, as well as on-going tenders. A governmental decision dated in 1999 stipulates that the 'mechanism of coordination and approval of the documents for tenders, is to be set by an inter-ministerial agreement (!), which is in blatant contradiction with the legislation (adopted in 1997), providing non-transparent incentives to the implementation of tenders.

References: Law on Procurement of Goods, Works and Services (No.1166 of 30.04.1997) Decision of the Government of RM on the management and control regime of the public procurement (No.67 of 01.07.1999)

48g: In law, unsuccessful bidders can instigate an official review of procurement decisions.

Score:

YES

Comments: By law, participants submitting their commercial offers (bids) have a legal right to contest/challenge the final decision taken by the Agency (art.46). As a first step, the unsuccessful bidders may contest/challenge this decision to the Agency, requesting explanations, although there is a list of cases when no challenges are admited (46-2). However, if the response from the Agency fails to be satisfactory, the contestor may sue the Agency, according to the Administrative Code (Contenciosul Administrativ).

References: Law on Procurement of Goods, Works and Services (No.1166 of 30.04.1997)

48h: In law, unsuccessful bidders can challenge procurement decisions in a court of law.

Score:

YES

Comments: Unsuccessful bidders can challenge procurement decisions in a court of law on administrative code (art. 50 of the Law on Public Procurement). By law (art.48), the Agency shall inform all providers about the initiated challenge, as soon as it receives it from the unsuccessful bidder, and thereof, all providers whose interests might be affected by this challenge of the decision have the right to participate in the public consideration of this request. After deliberations, the Agency issues a final decision on the case that has been considered, under conditions that this decision is not of public use if it may jeopardize public interests, contractual obligations and legislation (art.48-3).

References: Law on Procurement of Goods, Works and Services (No.1166 of 30.04.1997)

48i: In law, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

YES

Comments: Art.48 of the law stipulates only that commercial offers are not accepted if there were confirmed cases of corruption on behalf of the participant. It say nothing about the past records of the participants, whether these records may prove that they could have been displayed a law-nihilistic attitudes in the past, or their managers, representatives, have been even convicted for their fraudulent activities.

References: Law on Procurement of Goods, Works and Services (No.1166 of 30.04.1997)

48j: In practice, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

100

Comments: No track records of the companies which have been depicted by the Auditing Court as participants in corruption deals are prohibited from tenders, in a black-list of firms or another form.

References: Center for Investigative Journalism: www.investigatii.md;

Transparency - Moldova: www.transparency.md Efim Obreja, Senior Lawyer;

Alina Radu, Ziarul de Garda, July 20, 2007

Peer Review Comments: On the contrary, the violator is often hired to complete various contracts that lack transparency. The firm Stayer SRL, for example, has completed many public orders from the government, and its director Vladimir Boldovici was named last July as head of the Construction and Area Development Agency. This firm also builts the office building of the ruling Communist Party in Chisinau. See article in Jurnal de Chisinau: [ LINK ]. The Auditors Court found and the local public authorities confirmed that the damage to the public budget from this firm was enormous.

Can citizens access the public procurement process?

49a: In law, citizens can access public procurement regulations.

Score:

YES

Comments: The website has been just launched in 2007, and it is still ' under construction'. The website does not include the archive of the Bulletin of public procurement (aquisitions), which is the main informational tool of the Agency, nor it has interactive channels where citizens would be able to access or comment some of the functional aspects of the tendering procedures.

References: Website of the Agency for Material Reserves, Public Procurement and Humanitarian Aid: www.tender.md

Peer Review Comments: Actually, the website www.tender.md does have an archive, but I agree with the author, because it is irrelevant. The future contests are listed as "current tenders", and once the date remains behind, the contests are moved into "past tenders" and "archived tenders". There is no information about who won the contests, what were the conditions, or what was the cost.

Peer Review Comments: One has to bear in mind that internet usage is law; therefore citizens cannot access these regulations.

Peer Review Comments: The Law on Procurement of Goods, Works and Services (No.1166 of 30.04.1997) does not include special provisions on public acces to procurement regulations. However the Website of the Agency for Material Reserves, Public Procurement and Humanitarian Aid: www.tender.md is currently being built and already includes a large archive, which will be probably extended.

Peer Review Comments: Some laws are available in Russian.

49b: In law, the government is required to publicly announce the results of procurement decisions.

Score:

YES

Comments: The main responsible for the organization of public procurement bids is the Agency for Material Resources and Public Procurement (art.5). It publishes a monthly Bulletin where all announcements and conditions of the public procurement bids are presented to the interested agencies. In 2006, the Agency announced 2,353 tenders for the procurement of food, oil and energy resources, equipment, medicines, services, as compared with 1691 tenders in 2005. It seems that the Agency faces resistance from the state bureaucracy in organizing public tenders/bids (see: Report of activities of the Agency for 2006 - www.tender.md/rom/news/28/). Sometimes this results in long and unjustified delays of these tenders, thus artificially creating tensions and accumulation of large quantities of demands to be met by the bidders, while many beneficiaries do nu apply sanctions against unreliable providers that do not apply exactly the conditions of the tenders, etc.

References: Website of the Agency for Material Reserves, Public Procurement and Humanitarian Aid: www.tender.md

49c: In practice, citizens can access public procurement regulations within a reasonable time period.

Score:

100

Comments: Cases of public funds used to avoid the formal rules governing the organization of competitive bids are frequently reported by independent mass media.

References: Ziarul de Garda : www.garda.com.md/130/investigatii;

TACIS Study on the implementation of the Parnership and Cooperation Agreement. Comparative Study on public procurement, D. Cernei www.pca.md/files/publciations311.pdf

Peer Review Comments: Other sources of information are Jurnal de Chisinau www.jurnal.md, Timpul www.timpul.md, Center of Journalist Investigations www.investigatii.md.

Peer Review Comments: All Regulations are available on-line on the site of the National Agency fro public procurements www.tender.md

Peer Review Comments: The cases presented by the reviewer and the big, sensational ones. I think if a company asked an official for the regulations (or contacted MoJ), he or she would get them.

49d: In practice, citizens can access public procurement regulations at a reasonable cost.

Score:

100

Comments: Citizens have to purchase the Newsletter edited by the Agency for Material Reserves, Public Procurement and Humanitarian Aids. They can also access the website of the Agency(www.tender.md), where they can find out the announced bids and the on-going tenders.

References: Alina Radu - Ziarul de Garda;

Center for Investigative Journalism: www.investigatii.md

Peer Review Comments: As mentioned by the Social Scientist, the regulations and bid announcements are made public, both on the site and in the newsletter published by the national Agency for Public Procurements.

49e: In practice, major public procurements are effectively advertised.

Score:

100

Comments: Public procurement needs to be reformed and modernized. It is regarded as a major subject for improvement in the Action Plan EU/RM, which implies consistent efforts on behalf of the Moldovan authorities.

References: Law on Material Resources, Public Procurement, Humanitarian Aids;

Transparency International - Moldova, Prevenirea si combaterea coruptiei in RM: aspecte teoretice si practice: www.transparency.md/docs/2004/2004_conferinta.pdf;

Action Plan on Curbing Corruption and Rule of Law, Decision of the Government of RM of 18.11.2003

Peer Review Comments: However, the selection process is nontransparent and disputable.

Peer Review Comments: The major complaint of bidders is linked to tight timeframe, which makes it impossible sometimes to take part in a tender.

49f: In practice, citizens can access the results of major public procurement bids.

Score:

100

Comments: Usually, successful winners of the tenders organized by the Agency are published on the website (recently, since the website has been officially opened in 2007), and equally, in the monthly Bulletin on Public Procurement. There are important rumors that some of the tenders are not exactely following the formal procedures, and public money is spent in avoidance of the law. Independent mass media have vocifeoursly contested in the past years how official limousines are purchased by the State Chancellary, or how humanitarian aid is distributed, and how public officials have used their positions to facilitate/connect their business to the major bids, with no or almost no reactions from the judiciary. Often journalists have been sued for defamation, instead of fair and equitable investigation of the reported cased by responsible agencies.

References: www.investigatii.md;

Ziarul de Garda, Alina Radu;

Efim Obreja, Viorelia Gasca, Teodor Potirniche Public Procurement and Public Ethnics, A Focus on Fighting Corruption, www.transparency.md

Peer Review Comments: Citizens' access is limited by the price they have to pay for the Bulletin or poor access to internet.