Pubblicato online: 14 ott 2019
Pagine: 221 - 239
DOI: https://doi.org/10.2478/danb-2019-0012
Parole chiave
© 2019 Matej Kirn et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.
Transparent, fair and competitive public procurement generates business opportunities and contributes to economic growth and job creation on the single European market. Public procurement is one of the key points of contact between public administration and the economy. Effective public procurement is in the interest of both the public and the private sectors, as it results in savings of government resources and increased trust of private individuals in the state and its institutions. This can lead to increased cooperation between the two spheres and a larger welfare state.
The amount of resources spent through public procurement is a potential source of conflict of interest and corruption.
Such large amount of funds calls for well-considered spending decisions and for maximum efficiency and effectiveness of public spending, which in this context also means avoiding mistakes, fraud and corruption (
In Slovenia, approx. EUR 4 billion is spent through public procurement every year, which accounts for around 40% of the national budget expenditure. See Chapter III, Figure 1. See e.g. Rakar & Virant (2019), Haček & Bačlija (2014), Haček & Bačlija (2009), Court of Audit decision No. 324-11/2014/39. For instance, in the period 2008–2015 the National Review Commission took 3,259 decisions.
In view of the above, the aim of the article is to contribute to improvements in public procurement legislation and practice. The objectives of the article are to analyse the practice of supervisory bodies, to assess the frequency of violations of the principle of transparency and to propose improvements in legislation and practice.
In order to achieve the aim and objectives and based on the above presented development in Slovenia, the following hypotheses were put forward and tested:
The number of violations of the principle of transparency decreased over the years. Most violations of the principle of transparency relate to the fact that no contract notice is published on the public procurement portal. Municipal bodies violate the principle of transparency more often than state bodies. Proportion of violations at the municipal and national level are related.
The paper is structured in such a way that the second chapter presents the principle of transparency of public procurement and the elements thereof, the third chapter specifies the legal framework governing public procurement in the EU and Slovenia, the fourth chapter indicates the cases of violation of the principle of transparency in public procurement procedures in Slovenia, the fifth chapter provides an analysis of the results of the survey, the sixth chapter verifies the hypotheses, while the final chapter presents the findings and suggestions for improvement.
The principle of transparency is one of the key principles of public procurement. Without a transparent public procurement procedure, the remaining principles – such as equal treatment, non-discrimination in the contracting authority’s requirements and, most important, economy – cannot be efficiently pursued. Moreover, transparency also allows public access to information, which is a form of supervision and thus a means for enforcing the legislation. Basta Trtnik et al. (2016, pp. 180–181).
Country performance rankings by indicators
| Indicators / Country | One bidder | No calls for bid | P.rate | Cop.Proc. | Award Criteria | D.speed | Missing values | Missing calls for bids | Missing reg.n. |
|---|---|---|---|---|---|---|---|---|---|
| Belgium | |||||||||
| Bulgaria | |||||||||
| Czech Republic | |||||||||
| Denmark | |||||||||
| Germany | |||||||||
| Estonia | |||||||||
| Ireland | |||||||||
| Greece | |||||||||
| Spain | |||||||||
| France | |||||||||
| Croatia | |||||||||
| Italia | |||||||||
| Cyprus | |||||||||
| Latvia | |||||||||
| Lithuania | |||||||||
| Hungary | |||||||||
| Malta | |||||||||
| Netherlands | |||||||||
| Austria | |||||||||
| Poland | |||||||||
| Portugal | |||||||||
| Romania | |||||||||
| Slovenia | |||||||||
| Slovakia | |||||||||
| Finland | |||||||||
| Sweden | |||||||||
| Great Britain | |||||||||
| Iceland | n/a | ||||||||
| Norway | n/a |
Legend of performance level:
Table 1 shows that Slovenia performs unsatisfactory in 6 out of 9 indicators. The colour thresholds have been set on the basis of two factors: 1) qualitative policy judgment on what is good practice and 2) recent data for individual countries (see European Commisssion, 2017, pp. 2–3). European Commission (2017, p. 4).
Public procurement transparency indicators
| No. | Indicator | Weighting | Principle (Slovenian legislation) | Result for Slovenia | |
|---|---|---|---|---|---|
| % | Performance level | ||||
| 1. | One Tenderer (proportion of contracts awarded where there was just one tenderer) | 3 | competition | Unsatisfactory | |
| 2. | No Calls for Tenders (proportion of procurement procedures that were negotiated with a company without a call for tenders) | 3 | transparency | 2015: 19% | Unsatisfactory |
| 3. | Publication Rate (proportion of public procurement advertised to businesses) | 3 | 2015: 5.6% | Average | |
| 4. | Cooperative Procurement (proportion of procurement procedures with more than one public buyer) | 1 | economy, effectiveness and efficiency | Unsatisfactory | |
| 5. | Award Criteria (proportion of procedures which were awarded only on the basis of lowest price) | 1 | proportionality, economy, effectiveness and efficiency | Satisfactory | |
| 6. | Decision Speed (time between the deadline for receiving offers and the award of the contract) | 1 | economy, effectiveness and efficiency | Satisfactory | |
| 7. | Missing Value (proportion of contracts awarded without sufficient information about the value) | 1/3 | transparency | 2015: 4% 2016: 19% | Satisfactory |
| 8. | Missing Calls for Tenders (proportion of contract awards for which a call for tenders took place, but it is not clear what the name of the call was or what the conditions were) | 1/3 | 2015: 4% 2016: 19% | Unsatisfactory | |
| 9. | Missing Registration Number (proportion of procedures where the registration number was not included) | 1/3 | 2015: 100% | Unsatisfactory | |
As shown by Table 2, of the nine indicators analysed by the European Commission, five fall under the principle of transparency of public procurement according to Slovenian legislation, while the remaining four fall under other principles, in particular the principle of effectiveness.
Additionally, the indicators used in the European Commission’s survey have different weightings for the purpose of the overall performance assessment: the first three indicators, which are deemed as the most important ones, since each of them reflects several aspects of public procurement (One Bidder, No Calls for Bids and Publication Rate) are triple-weighted. The last three indicators, which concern transparency (Missing Values, Missing Calls for Bids and Missing Registration numbers), have been given a one-third weighting. For a detailed presentation of the methodology see special technical document, retrieved 13 Sep 2019 from
At the EU level, public procurement is mainly regulated by Directive 2014/24/EU and Directive 2014/25/EU. On the basis thereof, Slovenia adopted the current version of the Public Procurement Act (ZJN-3), which entered into force on 1 April 2016 and replaced the previously applicable ZJN-2 and Act Regulating Public Procurement in the Water, Energy, Transport and Postal Services Sectors Official Gazette of RS, No. 72/11. In addition to the above, the ZJN-3 transposed into Slovenian legislation also Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts and Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors.
Figure 1
In addition to the ZJN-3, public procurement is also regulated by the Legal Protection in Public Procurement Procedures Act (ZPVPJN) Official Gazette of RS, No. 43/11. Official Gazette of RS, No. 90/12.
In addition to implementing the above directives, the ZJN-3 was intended to simplify procedures and increase the legal certainty of stakeholders in public procurement procedures. According to its proposer, the new legislation would also make it easier to manage and increase effectiveness and save time and money for both the contracting authorities and the tenderers.
As regards transparency of public procurement, the ZJN-3 introduced some important changes compared to the ZJN-2. Article 21 of the ZJN-3 Article 24 of the ZJN-2.
The ZJN-3 brings changes as regards the entitled persons, the time limits, and the scope of access to tenders. The request to access the tender of the selected tenderer may be filed only by tenderers that submitted admissible tenders and which were not excluded as inadmissible. Article 35 of the ZJN-3. Ravnikar Šurk (2016, p. 55). Jeršič, (2016, p. 168).
In order to speed up the procedure and minimise administrative burden, Article 90 of the ZJN-3 provides that the contracting authorities inform the tenderers through the public procurement portal, and that a decision is deemed served with the day it is published on the public procurement portal.
In order to test the hypotheses, a research was carried out. The research covered the period of application of the ZJN-2 (2008–2015) and the beginning of application of the ZJN-3 (2016). The subject of research were 3259 decisions by the National Review Commission (hereinafter: NRC) and the Court of Audit.
This subchapter presents the results of the analysis of violation of the principle of transparency in public procurement procedures. The analysis covered the decisions issued by the NRC and the Court of Audit in the period 2008–2015 and – for the purposes of verification – also in 2016 when the ZJN-3 entered into force. Only the decisions granting the tenderers’ requests for review were considered. The requests were classified into three categories, depending on whether the NRC granted the request fully or in part, or whether the contracting authority’s decision to select a tenderer was repealed. National Review Commission for Reviewing Public Procurement Award Procedures, (2011).
Violations of the principle of transparency, 2008–2015
| Total requests | 244 | 365 | 401 | 537 | 505 | 523 | 353 | 330 |
| Requests denied | 130 | 205 | 219 | 280 | 288 | 329 | 227 | 200 |
| Requests granted | 114 | 160 | 182 | 257 | 217 | 184 | 126 | 130 |
| Number of violations of the principle of transparency | 12 | 24 | 21 | 37 | 26 | 23 | 30 | 26 |
| % (Number of violations/Requests granted) | 10.53 | 15.00 | 11.54 | 15.18 | 11.98 | 12.50 | 23.81 | 20.00 |
Figure 2
This subchapter focuses on the most frequent misapplications of the elements of the principle of transparency. The following elements were analysed: publication of contract notice, communication, definition of criteria and their implementation in the selection phase, opening of tenders, access, request for additional explanation, publication of contract award notice.
The Figure 3 shows that, in practice, the most commonly misapplied element is access to other tenders, followed by other examples of incorrect use, which are not listed in the ZJN-2 (i.e. other cases, such as changing the contract value, changing the tender after the deadline for submission), and the definition of criteria and their implementation in the selection phase. Access to other tenders gives the tenderers a competitive advantage in similar public procurement procedures in the future, which is why they often used this option and filed requests for access. However, most likely in light of possible lawsuits for the disclosure of business secrets (in fact, the tenderers tend to classify the whole or most of the tender as business secret), the contracting authorities denied access even to the part of the tender documentation that is deemed by law to be public information.
Figure 3
This subchapter analyses the violations of the principle of transparency by contracting authority at the state and municipal levels. The state level includes the bodies of the Republic of Slovenia (ministries, bodies within the ministries, government offices, administrative units, etc.), while the local municipal level includes local administration bodies. The following cases were deemed violations of the principle of transparency: failure to publish a contract notice; misapplication of the principle of transparency in communication (the contracting authorities failed to reply to the questions of non-selected tenderers, etc.); non-transparent definition of criteria and their implementation in the selection phase; irregularities in opening the tenders (some tenders were not even opened, some late tenders were taken into account, records on tender opening were not presented or were presented after the expiry of the legally provided deadline); preventing access to the tender of the selected tenderer (mainly because the tenderers wrongfully classified parts of the tender as business secrets); contracting authorities’ failure to reply to requests for additional explanation; failure to publish a contract award notice (the contracting authorities either fail to publish their decision or the publication is incomplete); other violations (e.g. changing the tender after the expiry of the deadline for submission, concluding annexes for the value of additional works exceeding the initial contract by more than 30%, incorrect or inadmissible public contract procedure, failure to exclude incomplete tenders, etc.).
As shown by Tables 4 and 5, the principle of transparency was more often violated at the municipal than at the state level. This is probably due to lower administrative capacity or difference between the actual and the optimal number of employees. Considering the study by Haček & Bačlija (2014), over 50% of the local communities have an administrative capacity that is below the average.
Violations of the principle of transparency at the municipal level
| 62 | 45 | 37 | 38 | 49 | 44 | 19 | 21 | 253 | |
| 5 | 6 | 4 | 8 | 7 | 4 | 5 | 4 | 43 | |
| 8.06 | 13.33 | 10.81 | 21.05 | 14.29 | 9.09 | 26.32 | 19.05 | 17.00 |
Violations of the principle of transparency at the state level
| 39 | 59 | 31 | 49 | 26 | 44 | 23 | 37 | 308 | |
| 1 | 5 | 4 | 9 | 3 | 3 | 3 | 5 | 33 | |
| 2.56 | 8.47 | 12.90 | 18 | 11.54 | 6.82 | 13.04 | 13.51 | 10.71 |
Figure 4
In this subchapter we focus on the statistical characteristics of violations at the national and at the municipal levels. We were wondering whether there may be a correlation between the two variables (proportion of violations at municipal and state levels during the analysed time period). Furthermore, we were wondering if both proportions significantly increased during the analysed period. For this purpose, we fitted two regression models, where time was an independent variable (for both models) and proportion of violations on both levels were responses. Statistical test for the regression coefficient gives us the answer if its value significantly differs from 0, i.e. from no effect.
Tables 6, 7 and 8 show the results of regression analysis with time as independent variable and proportion of violations at the municipal level and the dependent variable in Tables 6 and 7 summarize the regression model while the Table 8 provides us with statistical properties of the regression coefficient.
Summary of regression model
| Model | R | R Square | Adjusted R Square | Std. Error of the Estimate |
|---|---|---|---|---|
| 1 | 0.594a | 0.353 | 0.245 | 0.05538 |
Anova
| Regression | 0.010 | 1 | 0.010 | 3.273 | 0.120b |
| Residual | 0.018 | 6 | 0.003 | / | |
| Total | 0.028 | 7 | / | ||
Coefficients
| B | Std. Error | Beta | |||
|---|---|---|---|---|---|
| (Constant) | −30.946 | 17.190 | / | −1.800 | 0.122 |
| year | 0.015 | 0.009 | 0.594 | 1.809 | 0.120 |
The analysis was carried out through statistical tests in correlation and regression. From Table 6, we can deduce that the regression model explains 35.3% of the variance of the proportions of violations. Consequently, the remaining 64.7% of the phenomenon cannot be explained with the analysed variables (in our case time). From Table 7 (Anova) we see that the model regression model is not statistically significant. (
Similarly, Tables 9, 10 and 11 summarize regression model with time as independent variable and the proportion of violations at the state level as the response. The results are presented in the same form as Tables 6, 7 and 8, but for different response variable.
Regression model
| Model | R | R Square | Adjusted R Square | Std. Error of the Estimate |
|---|---|---|---|---|
| 0.449a | 0.201 | 0.068 | 0.04667 | |
Anova state level
| Regression | 0.003 | 1 | 0.003 | 1.513 | 0.265b |
| Residual | 0.013 | 6 | 0.002 | / | |
| Total | 0.016 | 7 | / | ||
Coefficients state level
| / | / | ||||
|---|---|---|---|---|---|
| B | Std. Error | Beta | |||
| (Constant) | −17.709 | 14.485 | / | −1.223 | 0.267 |
| year | 0.009 | 0.007 | 0.449 | 1.230 | 0.265 |
Then, in Table 9, we repeated statistical tests, this time we took as a dependent variable the number of violations at the state level, but the results did not differ in any way from the previous tests. The proportion of the explained variance equals 20.10, which means that unexplained variance remains almost 80%. We also found in Table 10 that this model is not statistically significant (
The other analysis we performed in the paper was correlation analysis. We examined the correlation between the proportions of violations on state level and municipal level. The result is in the Table 12.
Pearson correlation test
| Mun. level | Pearson Correlation | 1 | 0.731* |
| Sig. (2-tailed) | / | 0.025 | |
| N | 9 | 9 | |
| State level | Pearson Correlation | 0.731* | 1 |
| Sig. (2-tailed) | 0.025 | / | |
| N | 9 | 9 | |
In Table 12, however, a correlation analysis was carried out to find that there is a high/strong correlation between the number of violations at the state level and the number of violations at the municipal level (
Before starting with the analysis, the following hypotheses were put forward:
The number of violations of the principle of transparency decreased over the years. Most violations of the principle of transparency relate to the fact that no contract notice is published on the public procurement portal. Municipal bodies violate the principle of transparency more often than state bodies. Number of violations at municipal and national levels are related.
For the verification of hypotheses, we used our own analysis of NRC reports and statistical tests. Hypothesis 1, 2 and 3 were proved through the analysis of NRC, and hypothesis 4 was proved through a statistical test.
For the method of our own analysis of NRC decisions, we decided based on the following criteria:
The NRC and the Court of Audit are the most referential institutions for assessing the regularity of public procurement procedures. NRC decisions are based on assessed compliance with the legal provisions relating to public procurement, and the subjectivity factor is minimal; The authors’ own analysis of NRC decisions covers a longer period (2008–2016) and the sample sufficiently competent.
Table 13 presents the results of the authors’ own analysis. The authors’ own analysis shows that the proportions of detected violations throughout the period under consideration are 26.15%, which is converted into 100% of the total. The violations by local municipal bodies amount to 16,996% on average, which translates into 58.32% of the total. The violations by state bodies amount on average to 10,714%, which translates into 41.68% of the total. Using
Proving of hypothesis 3
| Municipal level | 16.999% | 58.32% |
| State level | 10.714% | 41.68% |
The number of violations is increasing over the years. There are several reasons for this. In the years of the economic crisis, public procurement was a very important factor in obtaining fresh income for companies. At that time, banks did not issue loans or, if they were, they were loans with a high interest rate, which was by no means favourable for companies. The second reason is that both contracting authorities and tenderers have found that violations of public procurement procedures are not severely sanctioned by NRC and the Court of Audit. The tool used by Court of Audit is to issue a negative opinion, which in practice has not any weight in penalizing offenders. In practice, there are cases where the municipalities have clearly violated legislation, but until now no one was held accountable for this. The most commonly incorrectly used institute in practice is to disable the insight into the offer of the selected bidder. An insight into the offer of other providers represents a competitive advantage in similar public procurement procedures, so providers generally used these legal options and filed requests for insight. The contracting authorities are most likely due to the possibility of lawsuits for the disclosure of business secrets – as a rule, providers indicate the whole or most of the offer as a business secret – they did not allow access to the part of the tender documentation that is determined in accordance with the legislation as a public information. The results of the analysis showed that the authorities of self-governing local communities more often violate the principle of transparency than the state authorities. This claim can be supported by information that local communities have an average management ability of 52.6%, while the remaining 47.4% have below the average. More specifically, in the survey conducted in 2014, 57% of the directors of the municipal administrations stated that it had a sufficient number of employees for performing statutory tasks, while 43% stated that they had insufficient number of employees.
Public spending is a very sensitive area in the eyes of the public, especially in times of a financial and economic crisis. Public procurement is an instrument of public spending, and transparency and efficiency of implementation are always under scrutiny. The tax-payers care about how their money is being spent and demand that the state does so transparently and efficiently.
The main findings of the study can be summarised in a few statements. The number of violations of the fundamental principle of transparency increased over the years. The increase is due to increased amount of money for public procurement in EU countries in period 2012–2015, making public procurement financially more attractive to the tenderers. Interest in public procurement increased as the private sector was unable to obtain loans during the economic crisis, and public procurement was a good opportunity to bring fresh money into a company. Another reason is the lack of or failure by the NRC and the Court of Audit to apply sanctions on the violators and to protect the rights of the tenderers. Both learned from the practices of the NRC that the sanctions imposed were not discouraging from deliberate misapplications of the principle of transparency. The institute, which in practice is mostly used improperly, is to disable access to the selected bidder’s offer (44%). The reason for frequent misapplication of these element is that it allows the contracting authority to choose – instead of the best tenderer – the tenderer with whom it has previously made an agreement or the one from which the contracting authority will have the greatest benefit.
The results further show that local municipal bodies misapply the elements of the principle of transparency more often than state bodies. This is in line with expectations, considering the level of administrative capacity of the municipalities. In Slovenia, 52.6% of the local communities have an average administrative capacity, while the remaining 47.4% have an administrative capacity index below the average. One of the main reasons for such state of affairs is that municipal administrations have fewer employees to perform legally provided tasks than state bodies.
In Slovenia there are already good IT solutions, for example Catalogue of food for public procurement which was established by the Chamber of Commerce and Industry – Chamber of Agricultural and Food Enterprises. The main advantage is that it follows changes in Slovenian public procurement legislation. It is up to date with situation on current market, which makes procurement easier, faster and more economic. In our opinion, this could be a solution for other public procurement areas.
Further improvement in public procurement transparency is expected from the electronic submission of tenders through the e-JN portal, introduced by the ZJN-3 and applied since 1 April 2018. The tenderers who submit their tenders through this portal receive a simple e-record of the opening of the tenders that is automatically generated by the portal. Tenderers also have access to the most important parts of the public procurement, which will thus definitely reduce the number of the requests for review relating to transparency of public procurement.
In principle, an improvement of the situation is possible through consistent implementation of laws and implementing regulations, which can be achieved through supervision and training of management and other employees in public administration.