Former Yugoslav Republic of Macedonia : Country Procurement Assessment Report

Abstract

The emergency nature of many of the
 measures taken to meet the challenges which Macedonia has
 faced in recent years, including the Kosovo crisis and the
 recent threat to the country's security, has
 contributed to a general laxity in the enforcement of the
 country's laws, including the LPP. Compliance with the
 procurement law has been further undermined by the absence
 of the institutional machinery necessary to support
 implementation, particularly an authoritative body to
 oversee enforcement and provide institutions operating
 under the law with guidance on its application. Whilst the
 Ministry of Finance (MOF) is formally charged with authority
 over public procurement, it is only recently that MOF has
 dedicated resources to perform key oversight functions. That
 said, the MOF unit charged with this onerous obligation, the
 Public Procurement Division of the Ministry's Legal
 Department, lacks the stature and capacity to discharge its
 functions effectively. Furthermore, the institutions which
 should play an indispensable role in performing oversight of
 public procurement, including the State Auditor's
 Office, have not yet been operating effectively. Weak
 enforcement is further exacerbated by a low level of
 awareness of the law's provisions, the roots of which
 lie partly in inadequate dissemination, and by the absence
 of sufficient numbers of public officials trained in
 procurement, a shortcoming which is particularly acute in
 self-governing units of local government. Most public
 officials who carry out procurement are inexperienced and
 lack the procurement-specific training necessary to apply
 the law accurately. There is also a severe problem of
 excessive political interference in contract award decisions
 in Macedonia. This is not only invited by the absence of an
 effective oversight institution but is, in fact, formalized
 by the common practice, enshrined in the LPP, of assigning
 to high-ranking political officials, in particular
 Ministers, the authority to award procurement contracts. The
 assessment also found evidence of many bad practices which
 are routinely applied to procurement in Macedonia. Principal
 among these is that, instead of providing bidders with
 formal, written bidding documents, public purchasers often
 only advertise an invitation to bid in a local newspaper as
 the sole means for soliciting bids. Such advertisements
 regularly include the cost estimate for the contract being
 tendered, the publication of which may facilitate collusion
 and price-fixing among bidders. Other practices which
 obstruct transparency include failing to disclose bid
 evaluation criteria to bidders in advance, the widespread
 use of subjective methods of evaluating bids and over-use of
 an "accelerated procedure" provision in the LPP,
 by which the period allowed to bidders to prepare their bids
 may be reduced from 36 days to 15 days or less. This is
 clearly open to manipulation by purchasers who want to give
 an unfair advantage to a favored bidder. Several more
 examples of bad practices identified by the assessment are
 provided in Section 2 of this report, with detailed
 recommendations to address them presented in Section 2.3.
 In order to address these weaknesses, this report recommends
 a number of short- term measures, designed to plug the most
 pressing gaps in Macedonia's national public
 procurement system, combined with longer-term
 recommendations aimed at more wide-reaching reform and
 development of the legal and institutional framework for procurement.