Report on Activities of the Public Procurement Office under the Government of the Republic of Lithuania in 2000

Introduction

In 2000 the Public Procurement Office under the Government of the Republic of Lithuania (hereinafter referred to as “the Office”) acted in compliance with Law on Public Procurement of the Republic of Lithuania, secondary legislation related to its implementation, international treaties entered by the Republic of Lithuania, resolutions of the Government of the Republic of Lithuania and other enactments governing public procurement on the national level.

In order to implement the State’s policy of public procurement, the Office seeks to ensure implementation the program of the Government of the Republic of Lithuania in the field of public procurement as well as implementation of other related measures of enforcement.

Carrying its activities, the Office thrives to ensure monitoring of enforcement of Law on Public Procurement, co-ordinate activities of national authorities in public procurement, save state and municipal funds used in procurement.

In order to restrict to a maximal extent likely infringements, abuse or corruption in public procurement, ensure transparency in publicity of public procurement, the Office emphases further improvements of administrative and preventive work in public procurement, assurance of fair competition and equal rights for economic entities. The Office looks for opportunities to establish a public procurement information system meeting the best practice of the European Union.

In 2000 the Office carried out its functions following new Law on Public Procurement No. VIII-1210 that came into force on October 1st, 1999 and pursuant to amended Law on Public Procurement No. I-1491, which remained in force almost three years. The new Law, in drafting of which the Public Procurement Office made important contributions, has brought principles of organisation and performance of public procurement much nearer to the legal framework of the European Union, eliminated a number of bottlenecks and uncertainties that existed in the former law. To some extent this had to do with too complicated procedure of performing procurements of low value, absence of proper governing in some spheres of procurement (water management, energy, transport and telecommunication enterprises), etc.

Secondary legislation needed for the implementation of the Law was drafted and approved in established procedure on the basis of new Law on Public Procurement. The said enactments were approved by the Government of the Republic of Lithuania or - pursuant to the competence - by the Public Procurement Office.

Moreover, a new mechanism has been formed for monitoring of performance of public procurement, prevention of the Law infringements and complaint review procedure, in addition to training arranged for procuring organisations, suppliers, contracting officers responsible for public procurement, improved procedure of information accumulation on public procurement and provision of such information for state authorities and public, updated system of the procuring entities, funds used for public procurement and coding of procurement objects.

Taking into consideration that membership in the EU is one of the priority trends in the foreign policy of Lithuania, the Office is playing an active role in this process within the limits of its competence. It should be noticed that efforts of the Office in drafting and harmonising the legal framework were positively approached by the European Commission in its publications in Progress Reports in 1999 and 2000. These instruments specify that the Public Procurement Office is one of authorities effectively operating in Lithuania in the field of integration. No material reproaches were expressed in an audit report of the State Control Authority for the year 1999 and in auditor’s opinion developed by the Ministry of Finance on December 2000, either.

In order to give conditions to develop the public procurement system in Lithuania on combined principles and set forth its activity trends for a longer period of time, the Public Procurement Office elaborated a strategic activity plan for a period from 2001 to 2003 and is taking measures to implement this plan with due regard to actual financial possibilities. The strategic activity plan was developed on the basis of program ‘Enforcement of Law on Public Procurement, co-ordination and supervision of procurement-related activities and improvement of the public procurement system’ that was being implemented in 1999-2000.

New tasks raised for the Office by the Government served as a basis for preparation and adoption of Order No. 7 ‘On Urgent Measures to Improve the Public Procurement System’, passed by the Director of the Office on January 18, 2001. This order lists basic measures related to improvement of the legal framework of public procurement, control and prevention operations, development of the training system, formation of a modern information system.

Though new Law on Public Procurement is in force less than for two years, a deeper analysis of the Law and comments of foreign experts showed that quite a number of provisions of the Law are not in full compliance with the legal framework of the European Union. Moreover, some other material bottlenecks and imperfections impeding normal course of public procurement were not omitted in the current wording of the Law, either. This led to a necessity to make decisions concerning amendment and modification of this Law.

The Office has summarised recommendations of procuring entities, suppliers and contractors, reviewed experience in organisation of public procurement and, acting in co-operation with the ministries and other authorities concerned, in 2000 elaborated and presented a draft of amendments and modifications of the Law of the Republic of Lithuania on Public Procurement.

Taking into consideration complexity of legislation drafting and necessity to involve a wider group of experts into this work, the Office proposed to form a competent work group, able to develop a balanced and harmonised draft of the Law. It would be reasonable to develop and adopt drafts of amendment and modification of the Law in two phases. Phase 1 should cover amendment of such provisions of the existing law, which are already impeding normal functioning of public procurement in the country. Phase 2 should cover elaboration of the final amendment and modification draft of the Law the provisions thereof would be in full compliance with the legal framework of the European Union.

Key goals of the office

Key goals of the Office are defined in Law on Public Procurement, Provisions of the Office, as approved by the Government, and other enactments.

International practice shows that nearly one third of budget revenues are used for public procurement. Therefore, the Office is given an important and responsible role in supervising adherence to Law on Public Procurement and requirements of secondary legislation with regard to implementation of the Law, in monitoring (together with other control authorities) of economical and rational utilisation of state and municipal budget funds allotted for public procurement and in co-ordination of public procurements carried out by national authorities.

Key goals of the Office defined in the above-mentioned enactments are as follows:

• drafting of enactments governing public procurement and submission thereof in the established procedure for the Government’s approval; drafting and adoption of enactments regulating public procurement pursuant to the authorities of the Office;
• supervising adherence to Law on Public Procurement and requirements of secondary legislation with regard to implementation of the Law;
• accumulation of information on expected and actual public procurement, procurement contracts and results of performance thereof as well as submission of the same to the state (municipal) authorities and the public;
• analysis and evaluation of the procurement system; preparation of recommendations with regard to improvements of such system;
• arrangement of training and tutoring of officers of procuring authorities in charge for procurement;
• consulting of the procuring entities and suppliers (contractors) or arrangement of such consultations on procurement-related issues;
• contact keeping with relevant foreign authorities, EU organisations, WTO and other international organisations in dealing with procurement issues;
• making and amending the lists of members to the Independent Committee for Public Procurement Complaint Review (ICRC), arrangement of suppliers’ (contractors’) complaint review in the Independent Committee, provision of information to the Committee;
• evaluation of draft laws, resolutions, other enactments on public procurement developed by ministries and other authorities, and presentation of the Office’s comments in this regard;
• taking of statutory measures to prevent infringements of laws, especially in cases when illegal acts of the procuring entities or suppliers (contractors) incur damage to the state, hinder publicity and fair competition among economic entities.

Major activities in 2000

In compliance with the key goals defined by Law on Public Procurement and Provisions of the Office approved by the Government, the Public Procurement Office carried out the following major activities in 2000.

Improvement of Legal Framework of Public Procurement

Issues in this field are attributed to the Methodological Division.

Basic activities of the Division in 2000 were focused on further drafting of legislation, evaluation of the public procurement system and presentation of recommendations concerning improvement of the system.

A draft of amendment and modification of Law of the Republic of Lithuania on Public Procurement has been developed and submitted for co-ordination with the Ministry of Economy on January 12, 2001. This draft contains recommendations to amend and supplement provisions of twenty-one article of the existing Law. Relevant reasoning that describes necessity to adopt the Law is specified in the explanatory letter to the Law Draft. Foreign experts were also consulted in order to prepare the recommendations.

In addition, the following instruments were developed during 2000:

• draft of the Government’s resolution ‘On the Approval of the Procedure for Indexing of Public Procurement Threshold Value Regulated by Paragraph 1 of Art. 1, Paragraph 3, Art. 32 and Paragraph 1, Art. 33 of Law of the Republic of Lithuania on Public Procurement’;
• draft of the Government’s resolution ‘On Resolution No. 1475, dated December 22, 1998, of the Government of the Republic of Lithuania ‘On the Approval of the Provisions for Complaint Review of Suppliers (Contractors) Concerning Violations of Law of the Republic of Lithuania on Public Procurement’ and a draft of annulment of paragraph 3.2 of Resolution No. 1002, as per September 16, 1999, ‘On Enforcement of Law of the Republic of Lithuania on Public Procurement’;
• Order No. 23 of the Director of the Public Procurement Office, dated March 27, 2000, ‘On Formation of the Public Procurement Committee and Organisation of its Activities’;
• Order No. 25 of the Director of the Public Procurement Office, dated April 6, 2000, ‘On Amendment and Modification of Order No. 59, as per Dec. 15, 1998, Order No. 17, as per May 17, 1999, and Order No. 61, as per Dec. 30, 1999’;
• Order No. 90 of the Director of the Public Procurement Office, dated October 9, 2000, ‘On the Approval of the Methodology for Preparation of Technical Requirements Specified in Procurement Documents’;
• Order No. 130 of the Director of the Public Procurement Office, dated December 20, 2000, ‘On the Procedure of Public Procurement, Procedures, Drafting and Submission of Reports’. This instrument defined the procedure for report making and presenting as well as approved new forms of reports.

In co-operation with the Ministry of Defence and Ministry of Economy, the Public Procurement Office elaborated a draft of amendments of Law on Public Procurement that was consequently submitted to the Committee of the National Security and Defence of the Seimas of the Republic of Lithuania. The given block of recommendations provided for amendment of 15 articles of the Law.

As for international co-operation, staff members of the Office take part in international projects funded by PHARE on public procurement issues. In 2000 they participated in a part of SEIL Project ‘Public Procurement Strategy in Lithuania’.

In this field the Office focuses on implementation of the Twinning Program ‘Reinforcement of Public Procurement Policy’. In the first semester of 2000 an agreement version was developed together with the twinning partner - representatives of the Swedish National Public Procurement Board. Implementation of the program was started on August 2000; its value amounts to 0,75 M EUR, duration - 18 months. The program involves 16 experts from Sweden and 8 experts from Italy, while Lithuania is represented by the experts of the Office. The first phase of the program (out of 8 phases) was completed in 2000. The following activities have been carried out within the framework of this program:

• analysis of the existing Law on Public Procurement (classical and utility sectors); preparation of recommendations on likely amendments of the Law, analysis of the EU Directives regulating public procurement with regard to their implementation in European countries; review of the structure of the Law in progress;
• arrangement of 7 meetings of experts in procuring entities in Lithuania;
• arrangement of meetings with the Office Divisions to discuss improvement of the Division activities; preparation of the analysis of institutional building needs for all structural units of the Office; activity plan of institutional building is in progress;
• further review of issues on formation of the information system and its funding sources; preparation of tender documentation drafts (tender invitations, specifications, terms and conditions of contracts);
• reports to the Mission of European Commission in Lithuania on the course of implementation of theTwinning Program by PHARE are in progress;
• arrangement of a training visit to Sweden for a group of staff members of the Office. During the visit the group got familiar with the public procurement authority in Sweden, its legislation framework, experience in development and improvement of the legislation framework, information system (databases, their potentials). The acquired experience would be useful in harmonisation of the legislation framework of Lithuania with requirements of the EU legislation and formation of the public procurement information system.

Integration into the European Union

In the process of integration of Lithuania into the European Union, the Office activities are focused on that in negotiation section “Free Movement of Goods”, Chapter 24 “Public Procurement”, Lithuania is obligated to ensure full compliance of Lithuanian regulations governing public procurement with European Acquis up to 2003.

In the framework of the Program on Lithuania’s Preparedness for the Membership in the European Union (PLPM), as approved by the Government, the Office takes an active part in preparation and regular updating of this part of the Program. Documents required for this program were prepared in 2000 as well.

Every quarter the Office gives information to the European Committee at the Government of the Republic of Lithuania on the course of implementation of the PLPM measures, fills in TAEIX progress database (harmonogram). Staff members of the Office attend sittings of the Governmental Committee on European Integration, analyse materials of the sittings, present appropriate recommendations on public procurement issues. A representative of the Office is a member of the Lithuanian negotiable position in preparation of Section “Free Movement of Goods”.

Control and Prevention in Public Procurement

During the reported period the Office continued putting efforts in one more important trend of its activities, i.e., reinforcing control and preventive actions in terms of Law on Public Procurement, co-ordinating public procurement performance, monitoring economical and rational utilisation of state and municipal budget funds allotted for public procurement.

The mentioned functions in the Office are vested to the Control and Prevention Division, which includes the Prevention Sector.

After coming into force of new Law on Public Procurement (Jan. 1st, 2000), in fact a new mechanism, supported with a relevant legislation framework, has been formed for monitoring public procurement performance, prevention of infringements of the Law and claim and complaint review procedure.

According to Law on Public Procurement, from the beginning of 2000 review of suppliers (contractors) complaints is vested to the Independent Committee for Public Procurement Complaint Review (further - “the Independent Committee”). Such Committee is comprised of three members to review each particular complaint. The Committee is formed of three panel members, graduates of training courses arranged pursuant to a special program and attested in the established procedure. A supplier (contractor), procuring entity and Public Procurement Office each select one Committee member from the panel list.

In order to implement the new complaint review procedure there were developed the Requirements for the members to the Independent Committee for Public Procurement Complaint Review and Making of the List of Committee Members, as approved on November 12, 1999 by Order No. 53 of the Director of the Public Procurement Office. Consequently, the list with 63 members to the Independent Committee was approved on December 28, 1999 by Order No. 59 of the Director of the Office.

The aforesaid actions were followed by drafting of the Provisions of the Independent Committee, the procedure for payment of complaint review costs by the Independent Committee, as approved on December 24, 1999 by Resolution No. 1467 of the Government of the Republic of Lithuania, and the procedure for remuneration of the members to the Independent Committee approved by Resolution No. 1468 of December 24, 1999.

As it is indicated in the approved Provisions of the Independent Committee, its activities are organised by the Public Procurement Office. The Office drafted standard documents needed for the work of the Independent Committee (models of Committee decisions, minutes, orders, time cards to account working hours of the Committee members, standard correspondence forms and other documents).

There are 11 steps set forth in the PLPM for a period from 2001 to 2003. The Office is responsible for implementation of such steps. Out of the said 11 steps, 10 steps are included in the Plan for Acquis Implementation Measures (PAIM) and 1 - in the Plan for Law Harmonisation Measures (PLHM).

One of the most significant jobs carried out by the Office in terms of harmonisation of the Lithuanian national legislation framework with the EU legislation framework, is to develop (together with other Lithuanian authorities) amendments of the existing Law of the Republic of Lithuania on Public Procurement in order to ensure full compliance of its provisions with Directives of the European Union. It should be noticed that the EU directives regulating public procurement are currently subjected to amendments by the European Commission, and this will cause significant difficulties in proper and timely harmonisation of enactments. Lithuanian authorities have not been furnished an official version of directives subjected to the amendments and, therefore, they have only to comply with consultations provided by the EU experts.

In order to ensure scheduled harmonisation and coming into force of the Law, the Office tabled its proposals to daft Law on Amendment and Modification of Law on Public Procurement (or a new edition of the Law) ahead of the deadlines. The mentioned proposals specify that a conclusive draft of the amended law should be submitted to the Government by the end of 2001 instead of the end of 2002, as it was indicated in the first version.

In organisation of the work of the Independent Committee, the Office:

• conducts preliminary evaluation of the complaints received (their conformity to the established requirements, deadlines to file, motives of the complaint and its appurtenance to the competence of the Independent Committee);
• is involved in formation of the composition of the Independent Committee: prepares recommendations on nominees to chairmen of the Committee taking into consideration the subject matter of the complaint, work schedule of the Committee members and other objective circumstances, co-ordinates nominees selected by procuring entities and suppliers (contractors), drafts relevant orders of the Director of the Office;
• ensures timely review of complaints and provision of required documents (as well as legal assistance, if required) to the Committee members reviewing the complaints. One of the staff members of this Division is appointed to act as a secretary of the Committee.

In 2000 the Office arranged review of 74 complaints by the Independent Committee, in addition to 10 complaints received by January 1st, 2001, i.e., before coming into force of Title III of Law on Public Procurement.

In 2000 complaint review in the established procedure resulted in the following decisions:

It should be noticed that the number of complaints received in 2000 decreased almost twice. This might be regarded as a positive phenomenon in organisation and performance of public procurement of goods, works or services. Basic reasons for decrease in number of complaints are as follows:

• intensive training, improvement of professional skills of persons involved in the process of public procurement in a form of seminars and courses. Regular oral and written consultations gave procuring entities an opportunity to better and more responsibly prepare procurement documentation, what resulted in minimisation of law infringements both in preparation of the procurement documentation and adoption of decisions by the procurement commission;
• Law on Public Procurement and the newly approved procedure for complaint review defined stricter and much more specific requirements raised for the content of complaints;
• the Independent Committee usually reviews the motives of complaints, therefore, the claimants should file well-reasoned complaints. As a result, a number of complaints with vague motives (often filed just in order to cause problems to competitors or procuring entity) has significantly decreased (according to the former edition of the Law and provisions of other enactments, the Office had to review actually all complaints that had been filed);
• today complaints are reviewed in open sessions;
• decrease in the number of complaints was also linked to the fact that a claimant had to pay a fixed contribution (3000 LTL) to cover costs of the complaint review.

Despite the fact that the new complaint review procedure is in force just for one year, experience of 2000 has already revealed some material defects of this procedure.

In the process of complaint review by the Independent Committee, Committee members selected by the supplier (contractor) and procuring entity often represent the interests of the delegating participants in the public procurement process, while a representative selected by the Public Procurement office - according to his/her status in the Committee - actually has no chances to determine an objective decision that would meet the interests of the state.

Therefore, in drafting amendments of and insertions to the existing Law on Public Procurement as well as amendments of Resolution No. 1467 of the Government of the Republic of Lithuania, dated December 24, 1999, governing the functions of the Independent Committee and complaint review procedure, the Office provided for recommendations to broaden the rights of the Office and give it more important role in the stage of complaint review.

When carrying out its functions related to control and prevention in 2000, the Office sought to give this sector a priority and look for new and more effective methods and forms of control and preventive work. It was taken into consideration that irrational utilisation of public funds in public procurement has not been eliminated, while public procurement, if improperly and unqualifiedly arranged and carried out by procuring entities and procurement commissions, precondition violations of Law on Public Procurement.

Provisions of Law on Public Procurement, Criminal Code and Code of Administrative Violations of Law specify that managing officers of procuring entities or persons authorised by them to manage the procurement commissions shall be exposed to appropriate fines for violations of the procedure defined by Law on Public Procurement. Accordingly, in consideration of experience of foreign and national control authorities, the Office developed procedures and regulations for inspection and engrossment of the procedure applied in performance of public procurement, documenting of administrative violations and review of fines.

Regulations for Inspection of the Procedure of Public Procurement and Documenting of the Inspection Results as well as a model protocol of an administrative violation of law were approved on April 10, 2000 by Order No. 27 of the Director of the Public Procurement Office. The procedure for settlement of cases of administrative violations of law and imposition of fines for administrative violations of law in the field of public procurement was approved on May 11, 2000 by Order No. 41 of the Director of the Office.

The aforesaid documents related to the inspection of public procurement activities (procedures, regulations, model forms) were announced in Publication Informaciniai Pranesimai (Information Announcements).

Acting in compliance with the approved program, staff members of the Control and Prevention Division arrange planned and operation inspections of public procurement activities in procuring entities, evaluate procurement documentation of the procuring entities and acts and decisions of the procuring commissions by random procedure. Preventive measures are employed in order to restrict to a maximal extent likely infringements, abuse or corruption phenomena in all levels of public procurement.

Analysing tender invitations published by procuring entities in Informaciniai Pranesimai, annexed to Valstybes Zinios (the Gazette), the Office by random procedure requests the procuring entities to present the following procurement documentation for inspection: decision on selection of a method of public procurement, tender documents (terms and conditions), minutes of a sitting of the procurement commissions, other procurement-related documents. In case any violations of the Law are figured out, the Office obligates the procuring entity to revise or cancel decisions or acts that have been found in conflict with the procedure of public procurement.

In 2000 283 cases of the received information were reviewed. After analysis of the public procurement procedures, the Office obligated the procuring entities to take the following measures:

• to review the submitted bids repeatedly - 28 cases;
• to carry out procurement procedure repeatedly - 23 cases;
• to revise procurement documentation - 32 cases.

Summarising its evaluation, the Office draw attention of the procuring entities to the revealed specific violations of the Law or discrepancies in the documentation of the procuring entities in conflict with the requirements of the public procurement procedure.

Analysis of procurement documentation of the procuring entities showed that requirements of Art. 7 of the Law are most often subjected to violations, i.e., when determining whether or not a potential supplier (contractor) is competent, reliable and capable of fulfilling the terms and conditions of the procurement. Criteria and procedures applied to evaluation of qualification data of the suppliers (contractors) are often omitted in the tender documentation.

Requirements of Art. 19 of the Law are often disregarded as well. Criteria defined in the tender documentation (terms and conditions) often do not meet ‘Methodology for Defining Evaluation Criteria of the Most Cost-Effective Bid’, as approved by Resolution No. 1503 of the Government of the Republic of Lithuania on December 30, 1999, and the procedure for ‘Discounting Rates Applied to the Prices Offered by Suppliers (Contractors)’, approved on November 10, 1999 by Order No. 52 of the Director of the Public Procurement Office. (It should be noted that according to a number of persons involved in the public procurement process, introduction of the discounting rates in practice was a failure).

In evaluation and comparison of suppliers’ (contractors’) bids, some procurement commissions formed by procuring entities fail to adhere to evaluation criteria and conditions defined in the tender documentation (Art. 26 of the Law).

The above-listed defaults were figured out after examination of the tender documentation of the governing organisations of the Ministry of Agriculture, Klaipeda Municipality, Klaipeda Electrical System, Elektrenai Municipality, Shore Security Border Police Team, clinics of Kaunas University of Medicine, Department of Civil Defence, Customs Department at the Ministry of Finance, Marijampole Strict Control Penitentiary.

Experts of the Office carried out an analysis of effective application of Law on Public Procurement in the units within the system of the Ministry of Defence in carrying out public construction, reconstruction and repair work. The analysis aimed to assess potential chances to save budget funds for investments by application of the proceedings indicated in Law on Public Procurement.

During the analysis there were selected 32 construction objects, which were assigned 143,2 M Litas in 1999. When procedures of the Law were applied, contracting entities offered to carry out the work for 93,1 M Litas. Accordingly, conditional savings of the funds amounted to 50,1 M Litas, i.e., the offered price to procure construction works were by 35 per cent lower compared to the funds planned for investment. Analogously, investment assignment in the selected 48 construction objects in 2000 amounted to 266,2 M Litas, while contracting entities offered to carry out the work for 174,7 M Litas. In this case, conditional savings amounted to 91,5 M Litas (34,4 per cent).

Acting in compliance with its authorities, the Office will proceed with measures of control and prevention, look for new methods and opportunities to save public funds assigned for public procurement. Preparation of preventive perspective and strategic programs and measures as well as implementation of such programs will be targeted most of all. Analysis of preventive activities will enable application of more effective forms of control. Urgent measures to improve the public procurement system, as approved on January 18, 2001 by Order No. 7 of the PPO Director, should contribute to the mentioned purposes.

According to the existing Law on Public Procurement, the Office is delegated a number of new functions in the field of control and prevention.

For example, in order to perform particular procedures, procuring entities and public procurement commissions should obtain the Office consent (paragraph 3 of Art. 26, paragraphs 2 and 7 of Art. 34, paragraph 3 of Art. 37).

In order to implement the said provisions of the Law, the Office developed the procedure for filing and reviewing applications of such a form. This procedure was approved on May 11, 2000 by Order No. 38 of the PPO Director. In 2000 185 applications were reviewed and 114 of them satisfied.

It should be noted that in order to consent to rejection of all the bids (paragraph 3 of Art. 26 of the Law), the Office should conduct a detail analysis of procurement documentation and bids, in addition to inspection in sites, which are often necessary in order to correctly evaluate arguments provided by the procuring entity in order to obtain the Office consent to reject all the bids (paragraph 2 of Art. 26 of the Law). Preparation of the Office conclusions with regard to its consent to increase contract values (paragraph 7, Art. 34 of the Law) is also quite time-consuming, for this involves researches of particular markets and analysis of other information.

Development of Training System

Issues on organisation and development of the public procurement training system are vested to the Training Division.

Coming into force of new Law on Public Procurement brought a number of cardinal changes and novelties in the organisation and implementation of the procurement system. First of all this has to do with claim and complaint review, methods of procurement, fixing of a threshold value, regulation of procurement in the sectors of water management, energy, transport and telecommunication taking into consideration requirements of the EU directives, etc.

As a consequence, the Office had to brisk up training and consulting of procuring entities, suppliers, contractors and other persons involved in the public procurement process. It should be noticed that intensive training of experts in public procurement took place when the Law was just in progress, and this prevented from material problems in the way to the new procurement principles and application of new procedures.

Basic trends and forms of training organisation were as follows:

• consulting of persons involved in the public procurement process (procuring entities, suppliers (contractors), control and supervision executives and other legal and natural persons);
• development of standard training programs;
• organisation of training and training of nominees to the members of the Independent Commission;
• arrangement and participation in conferences, seminars and other forms of training;
• preparation of information materials for sittings of the Methodological Board;
• preparation of visual training aids;
• organisation of improvement of professional skills of the staff members of the Office;
• co-operation with analogues foreign public procurement training authorities.

During the reported period, experts of the Office consulted representatives of procuring entities, suppliers and contractors as well as other legal and natural persons concerned on issues related to application of Law on Public Procurement and other procurement organisation-related issues. Oral consultations accounted for the major part thereof (replies to inquiries by phone, direct consultations in the Training Division, responses to questions given in advance, etc.). In 2000 the Office gave in excess of 8400 consultations of such a character. 398 inquires were replied in writing.

Staff members of the Office prepared and read 26 reports on public procurement in seminars, discussions and similar meetings held by different authorities.

Two weekly training courses have been held for nominees to the members of the Independent Committee.

In addition to responses to the received inquiries, the experts of the Office analyse and classify them. On the basis of the said analysis the Office produced a summarised publication ‘Answers to the Top Questions about Public Procurement’.

In 2000 4 standard training programs were developed and served as a basis of regularly held seminars, lectures and training according to other forms. The training programs have been made in compliance with Law on Public Procurement and secondary legislation related to its enforcement as well as according to provisions of the EU Directives and methodological recommendations of public procurement training authorities (SIGMA, TAIEX) that are acknowledged in the European Union. Main training programs are as follows:

• training program and skills tests for nominees to the members of the Independent Committee. Duration of this program is 32 hours (4 days). 63 nominees to the members of the Independent Committee were trained according to this program;
• training program and methodological aids for practical tasks for public procurement experts in procuring entities. Duration of this program is 16 hours (2 days). The program has been implemented twice (in Druskininkai Training Centre DAINAVA) and attended by 60 listeners;
• training program for improvement of professional qualifications of public officer. Duration of the program - 16 hours (2 days). The program was implemented once and attended by 70 listeners;
• concise training program for public procurement experts in procuring entities. Duration of the program - 6 hours. In 2000 this program was implemented 25 times and attended by more than 400 listeners.

In addition to the above-mentioned training, the Office together with Danish Consulting Company Mercury Urval arranged an interdepartmental seminar - conference on actual public procurement issues.

All the aforesaid training programs (conferences, seminars, courses) were attended by over 850 listeners.

Particular subjects discussed in seminars were illustrated with relevant visual training aids. More than 70 units of such aids were developed anew or restored.

In 2000 the Office regularly held sittings of the Methodological Board. The sittings addressed 51 issue related to the most actual problems of the Office, organisation of public procurement in procuring entities and inquiries given directly to the Office and during the seminars. The Training Division forwarded 29 issues to be discussed by the Board, in addition to 11 issues forwarded by the Methodological Division, 8 - by the Control and Prevention Division and 3 - by other units of the Office.

Experts of the Office work in close co-operation and share experience with foreign public procurement authorities, which provide with useful methodological and information materials. The Office keeps regular contacts with public procurement authorities in Poland, Estonia, Sweden and other countries. Particular attention is focused on close contacts with the European Union, World Trade Organisation, Phare representatives and other international organisations and their experts. Such co-operation gives a possibility to compile and analyse legislative and methodological material on public procurement existing in other countries and international organisations, and to use this material in arrangement of public procurement and improvement of the public procurement system in Lithuania.

It is forecasted that now, when integration into the European Union is accelerated, the legislation framework is developing and experience of foreign countries is applied to a wider extent, training work of public procurement officers in Lithuania will become even more actual. Therefore, the Office will have to put intensive efforts in development of new training programs, system and forms meeting the most progressive practice of foreign countries.

It should be stated that mass media has not been sufficiently utilised in the training process. It could serve for broader publication of novelties in the public procurement system and application thereof in practice as well as for promoting publicity and transparency of public procurement.

Development of the Public Procurement Information System

In order to accumulate and analyse information on public procurement, give preconditions ensuring more effective control of Law on Public Procurement, it is necessary to create and implement an information system that would meet the EU requirements and allow disposing, analysing and summarising of comprehensive information on public procurement. Results of such analyses would be used for further improvement of public procurement control. This information system would also give a chance to detect most of violations of the provisions of the Law in publication of information announcements and conducting procurement proceedings.

In 2000 the Division of Reports and Analysis proceeded with the functions delegated to this Division. One of such functions is compilation of information on the expected and actual public procurement, concluded purchase contracts and results of performance thereof. In order to carry out this function, the experts of the Office carry outmonitoring of information announcements published by procuring entities in Informaciniai Pranesimai, the annex to Valstybes Zinios, inspect, whether the content of such announcements meets the requirements of Law on Public Procurement and related regulations. Volume of this work significantly increased, if compared to 1999. Since October 1st, 1999, after coming into force of the new Law, procuring entities have been publishing not only tender invitations, but also other information, such as information pre-announcements, information on the contracts concluded and on the results of performance thereof.

At the end of 1999 major efforts were put to get ready for implementation of the new procedure to publish information announcements. The Office appointed two experts (instead of former one) to monitor information announcements, developed model forms VPT-4 - VPT10 (approved on Dec. 30, 1999 by Order No. 60 of the PPO Director) to serve as a basis to present data for information announcements. This enabled computerisation of the monitoring process of information announcements that was started on February 2000. Within three months special dbases were created for introduction of information announcements, accumulate and monitor compliance of their content with the requirements of law on Public Procurement and related regulations. Implementation of the said dbases resulted in more effective monitoring of the announcements, timesaving to check data of each announcement. In 2000 there were reviewed 7 278 information announcements in total, whereas 623 - information pre-announcements, 3 211 tender invitations, 2 406 - information announcements on the contracts concluded and 1 308 - information announcement of the results of contract performance.

Unfortunately, about 80% of announcements received from procuring entities failed to meet the established requirements. In a result, the procuring entities were addressed to revise and correct the data. Notwithstanding the fact that experts of this Division periodically consulted representatives of the procuring entities on issues related to publication of information announcements, in addition to contribution of the Training Division, which dealt with the most often problems in seminars, the quality of the delivered announcements has not improved. Insufficient attention paid to preparation of the information announcements by major part of the procuring entities results not only in unreasonable workload for the staff members of the Office and fund wasting, but also, creates preconditions to miss some conflicts with the provisions of Law on Public Procuring among a vast number of inconsistencies.

We think that the Government should pass a resolution increasing responsibility of the procuring entities for their announcements and giving the Office a right to disregard the information announcements the content thereof disagrees with the requirements of Law on Public Procurement and related regulations.

As in preceding years, the Office compiled data from public procurement procedural reports, what enabled to detect a part of procedural violations in public procurement, determine volumes of public procurement in Lithuania, structure of public procurement by applied methods of procurement, funds utilised for procurement, types of procurement objects and procuring entities. The procedure for compilation and production of data on public procurement is defined by Resolution No. 1479 of the Government of the Republic of Lithuania.

In compliance with Law on Public Procurement and provisions of the above-mentioned resolution, information on public procurement was given to state-owned (municipal) authorities and public. Summarised information on public procurements performed in every quarter was published in Informaciniai Pranesimai, annex to Valstybes Zinios. State authorities were informed on centralised public procurement carried out by ministries and other departments, procurements conducted by individual procuring entities, public procurement of particular goods, services and works. Data accumulated in the dbases was used by the experts of the Control and Prevention Division to inspect whether the provisions of Law on Public Procurement and related regulations have not been violated in the process of public procurement.

The Office received 3254 reports of the procedures of public procurement in 2000 (See Table 1). 51 report indicated that procurement failed due to one or another reason.

According to the received reports, the total value of 2753 procurements in 2000 amounted to 2 090 526,8 thou Litas and was by 349 324,5 thou Litas less compared to the value of public procurement in 1999. Decrease in the value of public procurement was also affected by a fact that the threshold value of public procurement regulated by Law on Public Procurement increased from October 1st, 1999.

1st quarter accounted for the major part of public procurement performed in 2000 (See Figure 1).

If compared to 1999, more than 40% decrease is reported with regard to the value of public procurements made out of municipal budget funds and state monetary funds.

Values of public procurement of goods, services and works in 2000 are indicated in Fig. 2, while values and quantities of the said procurement in 1st - 4th quarters of 2000 are illustrated in Fig. 3 and Fig. 4, respectively. By the number and value of procurements in 2000 there prevailed procurement of goods (accounted for a major half of total procurements), while in 1999 value of procurement of works accounted for a major half of the aggregated value of procurements. In 2000 the value of work procurement amounts only to 33,1% of the value of work procurement performed in 1999.

Aggregated procurement of natural gas accounts for the major part in the value of procurement of goods in 2000, i.e., 396 298,4 thou Litas (12 procurements). Aggregated procurement of financial intermediation services accounts for the major part of the value of service procurement, i.e., 178 671,8 thou Litas (43 procurements). Aggregated procurement of construction, reconstruction and repair of motor roads, roads, streets, other transport and pedestrian pathways accounts for the major part of work procurement, i.e., 60195,2 thou Litas (49 procurements).

Values and quantities of public procurement performed in various methods of procurement are indicated in Fig. 5 and Fig.  6.

Reports on procedures of public procurement in 2000 were produced by 507 procuring entities, including 168 state authorities, 79 municipal authorities, 114 public establishments, 80 state enterprises, 60 enterprises engaged in water management, energy, transport and telecommunications. Values of public procurement performed by different enterprises are indicated in Fig. 7.

According to the received reports, 7,3 suppliers (contractors) at an average were involved per procurement procedures. Analysis of the methods of procurement showed that a major part of suppliers (contractors) bid in restricted tenders (6 procurements) - 13,6 bidders at an average in each tender. Open tenders attracted 7,7 suppliers (contractors), requests for quotations - 5,8 suppliers (contractors) and competitive negotiations - 2,6 suppliers (contractors) at an average.

If case of open tenders, average duration of procurement procedures from publication of an invitation in Informaciniai Pranesimai, annexed to Valstybes Zinios, till conclusion of the contract was 72,2 days in 2000.

In order to ensure comprehensive and reliable information in the database of reports, the Office addressed 170 procuring entities 235 times in writing with a request to revise and supplement the delivered documentation.

Analysis of data accumulated in the dbases showed that after expiration of bids’ validity some procuring entities failed to inform the Office on closing or termination or the procurement procedures. To this effect the Office formed a system to detect such cases. With the help of the information disposed, 70 procuring entities were given 87 notices to inform on the course of the procurement procedure.

In 2000 procuring entities delivered reports according to the forms approved on Dec. 15, 1998 by Order No. 59 of the PPO Director and meeting requirements of the then active Law on Public Procurement. In 2000 the said form were modified in order to adapt them to the requirements of Law on Public Procurement and better implement the public procurement coding system introduced at the end of 1999. Reports submitted pursuant to forms approved on Dec. 20, 2000 by Order No. 130 of the PPO Director will give more particular information on public procurement procedures. An identification code of procurement indicated in the reports will enable combination of all data on the particular procurement compiled in different dbases.

When the procedure for filing and reviewing complaints on public procurement changed on January 1st, 2000, capacities of formerly created complaint dbases did not meet requirements raised for accumulation and processing of data related to complaint review. Creation and implementation of a new database in the Control and Prevention Division as well as related training of the staff was carried out in 2nd and 3rd quarters of 2000. In addition to the aforesaid dbase, experts of the Control and Prevention Division operate one more database created by the Report and Analysis Division in 2000. This dbase is designated to accumulate key data on preventive procurement evaluations in progress.

However, the Office is very concerned about the present state of creation and development of the public procurement information system due to insufficient funds.

In fact, creation of the information system was hardly proceeded in 2000. Preliminary operations were continued. Working under the Twinning program, started on August, 2000, staff members of the Office got familiar with Swedish experience in application of e-aids in public procurement, discussed with Swedish experts ways of application of experience of the EU countries as well as application of such experience in drafting specifications of the information system.

In addition to the above-listed activities, staff members of the Report and Analysis Division periodically consult representatives of procuring entities on issues related to filling in and filing of procedural procurement reports, giving a code to a procurement object, preparation of information announcements, carry out maintenance of the existing hardware and software, administers internal computer network.

Table 1 Public Procurement in 2000

• Number of reports received pcs: 3254
• Number and value of procurements, which value has been indicated

• Information received for evaluation of procurement pcs: 283

Complaints reviewed by PPO, decisions:

• Complaint review by ICRC arranged by PPO pcs: 74

Decisions of the ICRC