Report on Activities of the Public Procurement Office under the Government of the Republic of Lithuania in 1999

Introduction

In 1999 the Public Procurement Office under the Government of the Republic of Lithuania (hereinafter referred to as “the Office”) acted in compliance with activity programs of the Government of the Republic of Lithuania for 1999 - 2000, Law on Public Procurement of the Republic of Lithuania and secondary legislation related to implementation of the aforesaid law. Activities of the Office also complied with Office Provisions approved by the Government of the Republic of Lithuania and other enactments regulating national public procurement.

A year 1999 was important to the Office due to coming into force of new Law of the Republic of Lithuania on Public Procurement with the effect from October 1st, 1999. This law replaced Law on Public Procurement, which was in force for merely three years and a number of provisions thereof were not fully consistent with Directives of the European Union and current requirements. The new Law provides for a number of more detailed and expanded functions and powers designated for the Office.

In order to simplify small procurement Law on Public Procurement has significantly increased procurement threshold values regulated by this Law. Since October 1st, 1999 the Law has been regulating the procuring of goods or services the value thereof during one financial year does exceed 75 000 Litas, or procuring of works the value thereof does exceed 300 000 Litas. According to the previously existing law, the public procurement procedure was applied to public procurement the value thereof exceeded 25 000 Litas. The number of entities subjected to the Law has been extended. Taking into consideration enactments of the European Union, procurement by enterprises engaged in the sectors of water, energy, transportation and telecommunications out of their own funds shall be also regulated by this Law. In this regard the Law shall regulate the procuring of goods or services the value thereof during one financial year is no less than 1,8 M Litas, or procuring of works the value thereof is no less than 1 M Litas. The procedure for procuring of goods, services and works the value thereof is less than the foregoing thresholds has been approved by the Government’s resolution.

The new Law provides for 5 procuring methods: 1) open tenders, 2) restricted tenders, 3) negotiated procedure, 4) single-source procurement, 5) request-for-quotations (instead of the previously existing 6).

A new complaint review procedure has been introduced from January 1st, 2000. Since then complaints by suppliers (contractors) will be reviewed by the Independent Complaint Review Commission (hereinafter referred to as “the Independent Commission). The Independent Commission shall be comprised of three members, whereas each of them shall be selected by the supplier (contractor), the procuring entity and the Public Procurement Office from the list approved by the Office. The chairperson of the Commission shall be appointed by the Office. Conditions and procedure for complaint reviewing have been approved by the Government of the Republic of Lithuania. Suppliers (contractors) and procuring entities shall be entitled to appeal against actions of the Public Procurement Office and decisions of the Independent Commission in courts in the procedure established by laws. The similar complaint review procedure is currently in force in Poland and some other countries. Such procedure allows preconditions for comprehensive and non-bias complaint review and balanced decision making (in the presence of representatives delegated by two parties concerned and the Public Procurement Office). Furthermore, the new Law amended and improved some other provisions of the former law.

It should be noticed, however, that individual provisions of the new Law are insufficiently perfect and balanced as we can see form our experience and experts’ recommendations. Therefore, the Public Procurement Office together with other authorities have analysed and summarised the received proposals and initiated amendments of some articles of the new Law. The mentioned amendments and additions were adopted by Law No VIII-1526 on January 12, 2000.

Secondary legislation required for implementation of the new Law on Public Procurement was drafted and approved on the basis of the foregoing Law. These enactments have been approved by the Government of the Republic of Lithuania and the Public Procurement Office (See Table 1).

In 1999 the Office continued training of ministries, other state-owned authorities, municipalities as well as responsible staff members in procuring, supplying and contracting entities, putting emphasis on problems in implementation of provisions of the new Law. Members to the Independent Complaints Review Commission have been trained (in the form of courses) according to a specially developed program.

The Office staff paid major attention to drafting of enactments related to preparation of Lithuania for the membership in the European Union and World Trade Organisation. This work will be proceeded in the future as well.

Seeking for preconditions to develop the national system of public procurement on diverse bases and provide for long-term trends of its activity, the Office developed a program for co-ordination and supervision of implementation of Law of the Republic of Lithuania on Public Procurement and improvement of the public procurement system in 1999 - 2000. Taking into account actual financial possibilities, the Office shall take measures to implement the aforesaid program.

Key tasks of the office

The key tasks of the Office are defined in Law of the Republic of Lithuania on Public Procurement, provisions of the Office approved by the Government as well as other enactments.

the Office plays an important role in implementation of the public procurement policy and control of utilisation of the funds assigned for public procurement (alongside with other control authorities) as well as adherence to the Law in this area.

The key tasks of the Office, defined in the above mentioned enactments, are as follows:

• Drafting of enactments regulating public procurement and forwarding the same in the established procedure to be approved by the Government as well as drafting and accepting of enactment regulating public procurement within the limits of the Office authorities;
• Controlling compliance of public procurement with the Law on Public Procurement and requirements of other enactments related to implementation of this Law;
• Analysis and assessment of the public procurement system and recommendation for its improvement;
• Accumulation of information on expected and existing public procurement activities, procurement contracts in progress and results of their execution as well as presentation of such information to state (municipal) institutions and public;
• Controlling whether procurement subjects reasonably apply established methods of public procurement;
• Organisation and provision of training to officials responsible for execution of public procurement;
• Consulting and instructing procuring subjects as well as suppliers and contractors on issues related to public procurement;
• Contact keeping with authorities in other countries, EU, WTO and other international organisations in regard with settlement of public procurement issues;
• Making and amending the list of members to the Independent Complaint Review Commission, preparation of information and provision of the Commission with it;
• Evaluation of laws, resolutions, drafts of other enactments prepared by ministries and other authorities in regard public procurement issue, and provision of own conclusions;
• Taking of measures to prevent the Law infringements, in particular in cases when damage is incurred to the State or its reputation due to disallowed acts of procuring subjects or suppliers (contractors).

Major contributions in 1999

In compliance with principles of the Law on Public Procurement and the Provisions of the Public Procurement Office approved by the Government, the Office carried out its activities in 1999 in following priority trends:

• Implementation of the provisions of the Law on Public Procurement;
• Co-ordination and monitoring of procurement activity;
• Development of the public procurement system in further harmonisation of the national legislation framework with Directives of the European Union;
• Training of public procurement executive staff.

Issues on Implementation of Provisions of the Law on Public Procurement

The issues of the mentioned character are attributed to the competence of Methodological Division.

Within a reported period, in co-operation with other structural units of the Office, the Methodological Division:

• in co-operation with other ministries and state authorities developed a draft of the new Law on Public Procurement, preparation and provisions of materials required for consideration of this draft by the Government and Seimas;
• prepared a draft of the Government’s Resolution ‘On Implementation of Law on Public Procurement’, which was adopted on September 16, 1999. The approved Resolution included a list of secondary enactments, as approved on the governmental level, and indicated authorities responsible for drafting of secondary legislation. Concurrently the Public Procurement Office was delegated to develop a list of secondary legislation covered by the competence of the Office and a schedule for development of the mentioned.

Out of 11 secondary enactments to be approved by the Government’s resolutions, the Public Procurement Office prepared drafts of 7 enactments. In addition, 5 documents have been attributed to the competence of the Office and approved upon an order of the Director of the Office (See Table 1).

All the above-mentioned documents were prepared according to the schedule. The report forms and the methodology of technical requirements for public procurement procedures will be accomplished in the nearest future.

Issues on integration into the Europe Union

In the process of Lithuania’s integration into the European Union and taking into consideration that joining the European Union is a priority trend of foreign policy of Lithuania, the Office takes active participation in this process within the limits of its competence. Staff members of the Office attended Lithuanian and foreign seminars on development and harmonisation of legislation framework on integration into Europe. PHARE experts also visited Lithuania and gave consulting on harmonisation of public procurement legislation framework.

In 1999 the Office contributed to drafting and implementation of sections of new programs on integration into the European Union falling under the competence of the Office:

preparation of LPNP sector ‘Public Procurement’ in the Program on Lithuania’s Preparedness to the Membership in the European Union. This Program was agreed in a sitting of the Governmental European Integration Commission held on May 31, 1999 and approved by Resolution No 1076 of the Government of the Republic of Lithuania on September 26, 1999;

Formulation of priorities in ‘Public Procurement” sector of the mentioned Program:

• short-term priorities (1999 - 2000):
  • adoption of Law on Amendment of Law on Public Procurement,
  • drafting and adoption of enactments required for implementation of the Law on Public Procurement and documents regulating processes stipulated by the Law,
  • reinforcement of the Public Procurement Office;
• medium-term priorities (2001 - 2002):
  • drafting and adoption of additions to the Law on Public Procurement in order to implement all the requirements of the EU Directives regulating public procurement.

As for legislative harmonisation measures, here it was developed an extensive list of measures rendering the legislative harmonisation process concrete, indicating legal measures for and authorities involved in implementation of acquis communautaire in the sector ‘Public Procurement’.

A plan for acquis implementation in the sector ‘Public Procurement’ provides for measures to ensure successful implementation of acquis communautaire. AIPP measures defined for 1999 - 2002 might be conditionally divided into:

• complex organisational measures;
• measures for institution building;
• qualification improvement measures;
• single organisational measures.

AIPP provides for 10 measures in 1999 - 2002 whereas one of them ‘To form, update and maintain an information system and data base’ has been in progress since 1999. In 1999 the Office was assigned 73,5 thou Litas in total for extraordinary expenses. However, only 50 thou Litas were allowed for formation o the information system by the Office. The mentioned funds served as initial basis for formation of the information system (elaboration of provisions of the information system, acquisition of a part of the required equipment).

A process of developing the Program for Lithuania’s Preparedness to the Membership the European Union’ involved reiterative plan updating and co-ordinating with measures for activity programs implementation set forth by the Government of the Republic of Lithuania for 1999 - 2000 as well as taking into consideration recommendations of the European Committee under the Government of the Republic of Lithuania, reasonable funding opportunities and reliability of funding sources. Executive staff of the Office successfully attended a number of seminars, meetings and other events held by the European Committee on integration measures to the EU.

On April 1999 the Public Procurement Office signed a sub-project ‘Support to European Integration in Lithuania’ (SEIL) funded by PHARE. According to this sub-project the Office shall be provided with consulting assistance in the field of formation of public procurement legislation framework. Assistance of this kind was of great importance to the Office after adoption of the Law on Public Procurement, for secondary legislation set forth in the Law and required for its implementation should be elaborated within a short period of time.

In 1999 preparation of ‘Enforcement of Public Procurement Policy’, as recommended in project proposals of PHARE National Twining Program, was completed and produced to the co-ordinator of PHARE Program - the Ministry of Foreign Affairs of the Republic of Lithuania.

Implementation of the above project is expected to be accomplished by 2001. PHARE funds are considered the main funding source of the project. A part of this project should be also funded out of the national budget.

Taking into consideration urgency of the program implementation, there are three structural units of the Office involved in its preparation. The Division for Accountability and Reporting shall be responsible for implementation of ‘Formation of the public procurement information system consistent with requirements of the European Union’, the Methodological Division shall be responsible for ‘Preparation of methodological materials and recommendations’ and ‘Drawing up of standard procurement documentation’ and the Training Division - for ‘Development, implementation and improvement of the public procurement training system’.

Considering Lithuania’s integration efforts in the sector of public procurement, it should be stressed that the European Commission in its annual Progress Report published on October 13, 1999 stated significant progress of Lithuania made in the field of public procurement. Short and medium-term priorities of public procurement defined in “Joining Partnership” were assessed positively as well.

Issues on Co-ordination and Supervision of Procurement Activities

Properly organised system of co-ordination and supervision of public procurement activities is very important to ensure economical and rational utilisation of budget and other public funds assigned for public procurement.

These issues are attributed to the Division for Control and Prevention in the Office. The key tasks of the Division include controlling observance of Law on Public Procurement and secondary legislation, taking care to prevent violations of the Law.

In 1999 complaint review and preparation of related decisions and evaluation of procurements accounted for the major workload of the staff members in this Division

In 1999 the Office received 251 complaint concerning public procurement or twice as many as it was in 1998 (118). Complaints were reviewed in the procedure and schedule set forth by the Law.

214 decisions were made according to the received complaints. In 87 cases (41%) no violation of the Law have been identified, therefore, procuring entities were allowed to proceed with procuring procedures, in 76 cases (35%) procuring entities were engaged to additionally discuss tender results, in 27 (13%) cases the Office cancelled procurement tender results and 24 (11%) decision have been made to cancel complaint reviewing or deny a complaint.

Classification of the received complaints by groups of procuring entities is as follows:

Analysis of the basic trends of complaints allows for definition of the key factors giving rise to complaints. These are as follows:

• terms of a tender and evaluation criteria are insufficiently clearly set forth by a procurement entities in additional to that evaluation criteria are quite often absolutely undefined. In these cases suppliers (contractors) differently approach or understand requirements of the procurement entities in regard with the goods (services, works) to be procured. It is expected that approval of the Methodology for Identification of the Most Cost Effective Bid Evaluation Criteria by the Government of the Republic of Lithuania on December 1999 will result in simplified preparation of tender terms by procuring entities, consequently preventing misunderstandings with suppliers (contractors) in regard with evaluation criteria;
• despite criteria of evaluation are quite clearly defined in the terms of the tender, suppliers (contractors) still think their bids should be evaluated most favourably, because they offered the lowest price. However, not all requirements of the terms of the tender are fulfilled in the submitted bids.
• in cases of large and complicated procurement the procuring entities fail to apply the pre-qualification procedure specified in Art. 5 of Law on Public Procurement, although it is quite obvious from the very beginning that analysis of the bids of some potential suppliers (contractors) will leave no actual perspectives for them to win the tender;
• a complainer (supplier, contractor) fails to indicate grounded motives of the complaint and files the complaint usually seeking to impair potential competitors;
• a supplier (contractor) thinks that the procuring entity evaluates the bids subjectively;
• procuring entities infringe requirements of Art. 14 of Law on Public Procurement by indicating exact brands, models of the goods, works or services, or origin of the goods in the terms;
• procuring entities raise unreasonably high formal and qualification requirements for tenderers (amount of the authorised capital; amount of works accomplished or goods sold within a certain period of time; submission of different, and often unnecessary, certificates, quality certificates, etc.). Acting this way, if a procurement is not a complicated one, the number of tenderers is restricted;
• procuring entities establish such technical characteristics of goods to be procured in tender terms, that a single manufacturer (supplier, contractor) may actually comply with them.

Analysis of the number and nature of the lodged complaints shows, tenders for construction contracts and acquisition of complicated equipment (medical, computer and communication) accounts for the major part of all complaints. Reviewing the mentioned complaints, the key problem lays in their specifics: tender terms usually are quite complicated, it takes a lot of time to get deep in tender documents, qualification requirements, evaluation criteria and their application as well as evaluation of particular tender bids. This problem is dealt by the Office in close co-operation with relevant branch ministries (the Ministries of Environment, Transport, Health Care), specialists and experts of other organisations.

It is quite common that awarding tenders to the bidders of the most beneficial bids (according to criteria laid down in Art. 28, paragraph 5, subparagraph 2), the procuring entities indicate formulas in which quite low specific weight falls onto the bid’s price (20-40%). Therefore, the winning tender is quite often awarded to a supplier which biding price is much higher. Such evaluation results are particularly targeted by the Office.

Few of the most common cases, when procuring entities fail to observe requirements of Art. 22, paragraphs 4 and 5 (failure to indicate criteria to be considered by the procuring entity in establishment of the most suitable bid as well as relative meanings of such criteria) and Art. 28, paragraph 4 (bids may be evaluated and compared only on the basis of the evaluation criteria, which have been indicated in the tender documents) result as a consequence in a quite subjective character of the evaluation.

It should be noted that in 1999 8 decisions of the Office have been appealed in the Highest Administration Court and other judicial institutions. In two cases decisions of the Office have been judged to remain binding, one appeal has been taken back by the appellant, two decision of the Office have been disallowed by the court and hearing of three appeals is still in progress.

In 1999 the Office developed and presented information and conclusions on complaint reviewing to the Chancellor of the Seimas - 1, Committees of the Seimas - 1, members of the Seimas - 2, the Inspector of the Seimas - 1, the Government - 6. Extensive information concerning preconditions for cases of corruption in public procurement has been developed for the Centre of Criminality Prevention.

Within the accounting period the Office paid much attention to improvement of one of its priority activities, i.e., improvement of co-ordinating and preventive activities. This work was orientated towards examination, analysis and evaluation of information provided by the subjects of procurement with regard to the arranged and performed public procurement.

In 1999 procuring entities delivered for evaluation information on about 1563 procurements, out of which procurement of goods amounted to 1023, procurement of services - 168 and procurement of works - 372.

Having analysed the received information the Prevention Unit of the Office recommended procuring entities to repeat the procuring procedures (23 cases) or recommended procurement commissions to analyse and evaluate tender bids additionally (46 cases). Some procuring entities have been indicated that in organising and performing public procurement they partially fail to observe the Law and requirements of related enactments.

After evaluation of shortcomings in activities of procuring entities related to public procurement, it was stated that non-compliance with Articles 22, 27, 28, 29 account for the major part of violations. Relative meanings of evaluation criteria are not always indicated in tender documentation. In cases of the mentioned violations of Art. 22, para. 5, the procurement commissions fail to provide objective evaluation of bids and select the most suitable supplier or contractor. In order to further improve this field of activity, on March 26, 1999 the Office passed Order No 10 to approve methodological provisions (Valstybes Zinios No 32-937, 1999) to be complied with by procuring entities in preparation of tender documents and bid evaluation.

In its procurement-related preventive activities, the Office revealed insufficiencies in the work of procuring entities and commissions, paid attention of relevant organisation to the necessity to eliminate the existing shortcomings, get deeper in the Law and strictly adhere to the Law and provisions of secondary legislation concerning arrangement and performing of procurement tenders. Taking into consideration comments and requirements of the Office, most of procuring entities started producing for evaluation much more precise and better professionally prepared tender material what consequently reduced a number of infringements and non-adherence to the Law. The Office was provided with information on elimination of the revealed shortcomings.

In 1999, just as a consequence of preventive operations, quite a number of procuring entities were engaged to repeat analysis of the procurement procedures. Correction of the procurement procedures according to the Office’s recommendations, a real economic effect was achieved in 9 procurements, i.e., price for the procured goods, works and services was reduced, concurrently saving 4,32 M Litas of budget and other public funds (for comparison, we can say that estimate of the Public Procurement Office for 2000 amounts to 0,96 M Litas).

Training and Consulting Issues

As the new Law on Public Procurement came into force in 1999, a number of cardinal changes took place in the system of organisation and performance of procurements, and in particular as concerns integration into the European Union and reviewing of complaints and claims.

Therefore, training and consulting of procuring entities, suppliers (contractors) and other involved into public procurement was already intensified in the stage of the Law drafting. A training mechanism and its trends were orientated towards peculiarities and specifics of implementation of provisions in the new Law. As the Law came into force, training seminars, courses, regional and branch conferences, lectures, discussions were held on a regular basis. Executive staff members of the Office, experts of the Training Division and other divisions gave lectures in various training events.

Key trends and forms in the organisation of training were as follows:

• co-ordination of training activities;
• preparation of typical training programs;
• organisation of conferences, seminars and other forms of training;
• preparation of information concerning public procurement;
• preparation of visual training aids;
• qualification improvement of the Office staff members;
• training of members to the Independent Commission;
• consulting of procurement subjects (procuring entities, suppliers (contractors), officials involved in supervision and control of public procurement, other legal and natural persons).

In 1999 the Training Division of the Office held 33 seminars for public procurement participants. The seminars were attended by more than 2000 persons (See Table No 2).

A number of inquiries from and oral consultations to procuring entities, suppliers and contractors has significantly increased. In 1999 consultations by phone and directly in the Training Division exceeded 10 thousand (three times more compared to 1998). 423 inquiries have been responded in writing (186 in 1998). A major portion of inquiries was submitted by municipalities and other organisation subordinated to them. The Training Division prepared about 50 visual training aids (transparencies).

In 1999 contributions were made to introduce a new complaint review system. In Law on Public Procurement issues on complaint and claim reviewing, recovery measures and responsibilities of those involved in the procurement process are regulated by 10 Articles (Articles 36 - 45). A program, tests, questions and other documentation were prepared for training of members to the Independent Commission. Related training courses were attended by 44 persons and 43 of them were awarded a right to take a position of a member to the Independent Complaint Review Commission to review complaints according new requirements of Law on Public Procurement from the beginning of 2000.

The Training Division keeps regular contacts with public procurement authorities in Poland, Latvia, Estonia and other countries. Particular attention is paid to close contacts with experts from the European Union, World Trade Organisation, PHARE programs and other international organisations. Such co-operation provides with opportunities to accumulate and analyse legislative and methodological materials on public procurement possessed by other countries and international organisations as well as to use such material in public procurement arrangements in Lithuania.

After coming into force the new Law on Public Procurement demand for training in public procurement is increasing. Therefore, it would be reasonable for the Training Division to prepare new training programs, develop and improve training forms and its system.

Issues on Accountability and Analysis

Accumulation of information on public procurement and its further circulation to state (municipal) organisations and public - is one of important functions of the Office. This work in the Office is loaded on the Division for Accountability and Analysis, which simultaneously monitors compliance with requirements of Law on Public Procurement in providing of informative announcements by procuring entities, gives consultations to representatives of procuring entities on issues related to filling in reports and informative announcements.

The Division accumulates information and data on procuring entities, procurement prices, suppliers involved in the procurement procedures, applied methods of public procurement, utilised funds, etc. in 1999. Since Q III, 1999 accumulation of information has been started on invitations to take part in procurement procedures published in Informative Announcements annexed to Valstybes Zinios (the Gazette), and since Q IV - information related to suppliers’ (contractors’) complaints. The latter includes the number of received complaints, complaining suppliers (contractors), procuring entities actions or decisions thereof have been appealed, subjects of complaints, decisions of the Office and other similar information.

The accumulated data and information on public procurement is used for different purposes. One of them is statistical analysis of public procurement. Analysis data gives general view on procurement performed in Lithuania and utilised funds, it shows the number of public procurement, their total value, amount and nature of funds to be used, methods of public procurement, provides other information.

The accumulated information is circulated to state-owned and municipal institutions, when this is required to carry out their direct functions. The procedure for circulation of such information is regulated by Resolution No 1479 of the Government of the Republic of Lithuania, as per December 27, 1999.

At a behest of the Government information was developed in regard to the level of centralisation in procurement of goods and services in ministries and authorities.

Law on Public Procurement sets forth provision of information on public procurement to the general public. This contributes to implementation of the public procurement transparency principle, reduces potential cases of corruption.

In 1999 information on public procurement was circulated in:

• Internet Web-side of the Ministry of Economy (address www.ekm.lt) and included drafts of normative enactments drawn up by the Office, orders of the Office Director and enactments approved by orders, whereas legislative norms are stipulated, amended or nullified.
• Valstybes Zinios or its annex Informative Announcements in the end of each quarter. This information includes summarised data on the public procurement.

In 1999 the Public Procurement Office received 7082 reports on the procedures of public procurement or by 1076 more compared to 1998. 184 reports indicated that procurement failed due to a number of different reasons. Value of total public procurement in 1999 amounts to 2439851,3 thou Litas and exceeds the value of public procurement in 1998 by 240424,5 thou Litas. The highest procurement value, i.e., 1233582,5 thou Litas was in Q II, 1999 (See Figure 1). (nuoroda neveikia)

By the utilised funds, the value of 6898 public procurements in 1999 consists of the following:

• 400776,7 thou Litas out of the national budget (1391 procurements);
• 175517,4 thou Litas out of municipal budget (681 procurements);
• 26559,4 thou Litas of the State Social Insurance budget (101 procurement);
• 123597,2 thou Litas out of Compulsory Health Insurance Fund (773 procurements);
• 571800,2 thou Litas out of other national funds (1705 procurements);
• 370578,7 thou Litas out of loans received on behalf of the state (71 procurement);
• 63878,8 thou Litas out of loans guaranteed by the state (70 procurements);
• 2885,6 thou Litas out of charity and sponsorship on behalf of the state (25 procurements);
• 97187,9 thou Litas out of funds of business activities of enterprises funded out of state and municipal budgets and national funds (264 procurements);
• 542499,8 thou Litas out of enterprises’ funds (1643 procurements);
• 64569,6 thou Litas out of other funds (174 procurements).

Public procurement values for goods, services and works in 1999 are indicated in Figure 2, while the values and quantities of the mentioned procurements in Q I-IV, 1999 - in Figures 3 and 4 respectively. Procurement of petrol, petroleum, gasoline, and other light and medium oil products accounts for the major part of the procurement value of goods and totally amounts to 90528,3 thou Litas (290 procurements). Financial intermediation services account for the major part of service procurement and totally amount to 65128 thou Litas (45 procurements). Laying, repair and reconstruction of highways, roads, streets, other transport and passenger pathou account for the major part of procurement value of works and totally amount to 680675,0 thou Litas (859 procurements).

Values and quantities of public procurement by different methods of procurement are indicated in Figures 5 and 6.

Goods were mostly procured (1159) by an open tender (total procurement value - 693070,1 thou Litas). Works account for 490 public procurement of the mentioned type (total procurement value - 930212,1 thou Litas).

Work procurement by restricted tenders accounts for 788 procurements (total value - 137254,2 thou Litas). This method of procurement was mostly applied in cases of service procurement - 248 times (total value of such procurement - 19473,6 thou Litas).

Method of two-stage tender was applied for 1 procurement of goods.

Method of competitive negotiations was mostly applied for procurement of works (244). Total value of the mentioned procurement - 33439,0 thou Litas.

Method of request-for-quotations was mostly applied for procurement of goods (1315; total procurement value - 90000,4 thou Litas) and works (1050; total procurement value - 155194,7 thou Litas).

Single source procurement was applied 322 times for the procurement of goods (total procurement value - 99207,2 thou Litas), 219 times for works (total procurement value - 48511,8 thou Litas) and 152 times - for services (total procurement value - 47082,8 thou Litas).

Value of procurement by different procurement entities in 1999 is indicated in Figure 7.

Total values of public procurement performed in different counties of Lithuania are illustrated in Figure 8.

By the received reports 4,5 suppliers (contractors) at an average participated in each procurement’s procedures. Analysis by the methods of procurements shows that most suppliers (contractors) took part in procurements by open tender (6,8 participants per tender at an average). In on the average, 4 suppliers (contractors) took part in a tender by competitive negotiations, 3,8 - by restricted tender and 3,7 - by request-for-quotations.

In 1999 average duration of procurement procedures by open tender since the moment of publishing an invitation in Informative Announcements annexed to Valstybes Zinios up to conclusion of the contract was 77,7 days.

Most of reports received in 1999 were correctly filled in and tables in compliance with the forms approved by Order No 59 passed by the Office Director on December 15, 1998.

In the process of accumulating public procurement information and forwarding it to (municipal) state-owned institutions and general public as well as in implementation of other functions such as analysis and evaluation of the procurement system, monitoring of adherence to Law on Public Procurement and requirements of enactments related to its implementation in procurement performance, the Office faces a necessity to create a computerised information system on public procurement. It was in 1998 when the Office defined assignation demand to implement the computerisation program in 1999 - 2001 according to the Program for Improvement of the Public Procurement System of the Republic of Lithuania in 1999 - 2001 developed in compliance with the principles of programmed formation of the national budget. 5 personal computers and related standard software were purchased in 1999. Unfortunately, other funds required for creation of the software were not assigned in 1999. Funds for creation of the information system are not assigned in 2000, either. According to elaborated specifications of the information system draft, preparation only of the most necessary parts of the system would require about 82 thou Litas.

In 1999 the Office was forced to settle urgent tasks related to accumulation, search and summary of information. A new database of reports was created at the beginning of the year. This dbase served for initial accumulation of registration data, other key data and information on subordination of procuring entities indicated in the received reports.

Major efforts were taken to assure reliability of the data. For this purpose, new error searching algorithms were created and applied.

In Q II, 1999 a complaint review database was created to accumulate data on suppliers’ (contractors’) complaints received in Q IV.

In addition, a database for invitation to take part in public procurement announced in Informative Announcements annexed to Valstybes Zinios was created in 1999.

If compared to the former law the existing Law on Public Procurement provides for more methods of public procurement performance thereof requires publishing of tender invitation in Informative Announcements annexed to Valstybes Zinios. The Law also sets forth significantly increased number of informative announcements to be published in the mentioned annex. In addition, the Law introduces such types of announcements as pre-informative announcements on expected public procurements in the current fiscal year, informative announcements on the concluded procurement contracts and results of their execution.

The Office started related preparations for this work in advance. It developed and approved standard forms for procuring entities to fill in data required for announcements, introduced a public procurement coding system and carried out other preliminary work. The public procurement coding system provides with an opportunity to identify procurement by a code of procurement and combine all the information possessed in regard with a particular procurement.

Structure and Institutional Activities of the Office

Organisational structure of the Office and its staff were approved on March 27, 1998. Within the accounting period the structure and total number of staff members did not change.

The structure of the Office and list of staff members were developed taking into consideration official post tasks and functions as well as particular workload for each structural unit set forth by Law on Public Procurement and provisions approved by the Government.

In compliance with the above-mentioned principles, 4 functional divisions and 2 independent units for finance and economic services have been established within the Office:

• Methodological Division - 5 staff members;
• Division for Control and Prevention - 9 staff members (the Division includes the Sector for Prevention);
• Training Division - 6 staff members;
• Division for Accountability and Analysis - 6 staff members;
• Finance and Accounting Sector - 2 staff members;
• Administration and Economy Sector - 5 staff members.

There are 35 staff members in total set forth for the Office, the recruiting thereof was accomplished in 1999.

As the public procurement system is developing and scope of procurement is increasing (5321 procurement in 1998 and 6898 - in 1999), workload of the Office is concurrently increasing with every year and its activities become more and more wide and complicated. Flows of correspondences are also increasing. In 1999 the Office received 11860 letters of notice (9089 in 1998) and sent 2654 (1966 in 1998).

In order to increase effectiveness, quality of activities and balanced decision-making of the Office, there was formed the Methodological Council comprised of management of the Office, heads of the divisions and other experts. Provisions of the Council were approved on July 27, 1999. The Methodological Council deals with collegial discussions of most important strategic problems analysed and settled in the Office and its divisions, issues on functioning and improvement of the public procurement system, formation of the Office position in regard with issues most often raised by persons involved in a public procurement process, assessment of drafts of laws, resolutions and other important instrument in progress, discussions of the received complaints, assessment of publications in the media, consideration of other activity-related Office problems. The Council holds meetings on a weekly basis and its recommendations and decisions are executed in relevant minutes.

In 1999 funding assigned to the Office amounted to 1291,5 thou Litas. In 2000 these funds were reduced up to 959 thou Litas, whereas only 80 thou (or three times less compared to 1999) have been assigned for acquisition of inventory, other goods and services.

Director A. Minkevičius

Table 1 LIST OF ENACTMENTS DRAWN UP BY THE PUBLIC PROCUREMENT OFFICE IN 1999

Table 2 SEMINARS ON PUBLIC PROCUREMENT HELD IN 1999