Report on Activities of the Public Procurement Office under the Government of the Republic of Lithuania in 2001

Mision, stategic objectives

Mission: The Public Procurement Office (hereinafter referred to as “the Office”) is implementing the state policy in the field of saving of funds by co-ordinating public procurement operations and monitoring public procurement procedures together with ministries and other state authorities.

Strategic objectives: To implement Law on Public Procurement (further – “the LPP”), improve the public procurement system and supervise public procurement operations.

IMPLEMENTATION OF PROGRAM “IMPLEMENTATION OF LAW ON PUBLIC PROCUREMENT, CO-ORDINATION AND SUPERVISION OF PUBLIC PROCUREMENT OPERATIONS AND IMPROVEMENT OF THE PUBLIC PROCUREMENT SYSTEM”, AS NAMED IN THE STRATEGIC ACTIVITY PLAN OF THE PUBLIC PROCUREMENT OFFICE:

Implementation

Description of the program: The Program will contribute to implementation of the state policy in public procurement, encouragement of competition, seeking for economical and rational utilisation of funds assigned for public procurement.

Measures set forth in the Program cover improvement of the public procurement system, increase of effectiveness of control and preventive measures, improvement of the quality of complaint review, implementation of information technologies, training of public procurement experts and refreshing of their qualifications.

Key measures set forth in the Program meet strategic priorities of the Government of the Republic of Lithuania – prepare for the membership in the European Union, develop information society. In the field of improvement of the public procurement system, there is expected to initiate required amendments of the Law, share in drafting of such amendments, analyse valid legislation, give recommendation with regard to improvement thereof.

In implementation of the Program there are set forth and implemented measures to enable detection of infringements of the Law on Public Procurement and prevent likely violations. This goal is sought by reinforcing the control of performance of public procurement and intensifying preventive actions.

The information system in progress must be capable of performing the following functions: to accumulate and process required information in dbases, provide for opportunities to carry out public procurement in electronic medium, transmit information announcements and notices, produce reports.

Other measures of the Program include seeking for higher effectiveness of public procurement. It is expected to develop standard procurement documents to be used in procurement of goods and services of a certain types. Such documents will enable reduction of input, shorten a period required to prepare for procurement.

Preparation, training of experts and improvement of their qualifications alongside with consultations, recommendations and methodological material provided for them will contribute to prevention of mistakes in organisation of procurement and minimisation of input required to eliminate such mistakes.

The following strategic plans of the Government of the Republic of Lithuania are distinguished in the Program:

• Taking over and implementation of EU acquis during preparation to the EU accession by 2004;
• Assurance of further and material improvement of business development conditions;
• Development of information society.

For implementation of the Program in 2001 the Company with 35 staff members was assigned 1125 though LTL.

Goals of the program and brief description of its contents

Presently active legislation regulating public procurement has not been fully aligned with provisions of EU directives. In its national acquis adoption program, Lithuania has committed itself to do so by the end of 2003. For this purpose, the Office shared in drafting of amendments of the LPP, drafts of all secondary legislation falling under the Office competence have been elaborated and followed by initiation of their adoption.

It is necessary to advance analysis of the active legislation in the field of public procurement and give recommendations with regard to amendment thereof in order to exclude all provisions likely to create conditions for abuse and eliminate unnecessary restrictions. The legislation should provide for an opportunity to carry out procurement of small value in the simplified procedure. In addition a legal framework should be created for performance of electronic procurement in future.

Effectiveness of public procurement is reduced by too high input related to organisation of procurement. One of the measures to minimise such input is employment of standard procurement documentation in practice of procurement. The goal of the Office is to develop some portion of standard procurement documentation every year for procurement of certain types of goods and services.

While controlling activities of the procuring organisation, infringements of the Law on Public Procurement should be detected and violators should be exposed to administrative liability. In addition, effectiveness of preventive measures should be increased, procurement documentation should be evaluated in the prevention procedure, applications of the procuring organisations to perform certain proceedings of public procurement should be analysed and reasonability of such applications must be justified.

Review of suppliers’ (contractors’) complaints should be arranged in the Independent Committee for Public Procurement Complaint Review (further – “the IC”).

In order to satisfy the need of state authorities and society for information about public procurement, formation of an information system is being started on the basis of modern information technologies. Such information system should enable accumulation, processing, systemisation, storage and provision of information related to public procurement.

Creation of the information system will contribute to solution of objectives of information society development in the field of public procurement. Web site created by the Office will provide with information actual for state authorities, procuring organisations, suppliers (contractors) and the general public. The procuring organisations will be given an opportunity to place electronic notices on public procurement.

The following are planned during implementation of the Program:

• develop standard programs of different contents and training duration for preparation of public procurement experts, nominees to the IC, improvement of their qualifications;
• organise training of staff members of the procuring entities, persons responsible for public procurement as well as nominees to the IC; arrange improvement of their qualifications;
• co-ordinate activities of authorities engaged in training and qualification refreshing of public procurement experts on a national level;
• implement continuous consulting of the procuring organisations and suppliers (contractors) on public procurement issues.

Implementation of the Program by tasks:

• Free movement of goods is considered one of “milestones” for Lithuania’s membership in the EU. In order to implement such a condition it is necessary to align the national public procurement legislation framework with the EU law.
• New forms of information notices were developed and approved by Order No. 13 of the Director of the PPO on January 31, 2001. On April 3rd, 2001 a new code index of public procurement objects was approved by Order No. 37. There was developed a draft of the Decree of the Government of the Republic of Lithuania ‘On the Procedure of Utilisation of Funds Assigned for Implementation of Co-Financed Programs and Projects’ (No. 864, July 11, 2001).
• Active participation is taken in elaboration and improvement of a draft Law on the Amendment and Supplement of the Law on Public Procurement that was presented by the Government of the Republic of Lithuania to the Seimas at the end of the year. On 2001 there were elaborated drafts of methodological documentation of recommendatory nature: “Methodological Recommendations for Evaluation of Suppliers’ (Contractors’) qualifications”, “Methodological Recommendations for Expertise Evaluation in Public Procurement” and “Methodological Recommendations for Duration of Public Procurement Contracts.
• A key instrument of preparedness for accession in the EU is the Program of Lithuania’s Preparedness for Membership in the European Union (PLPM). The Office shares in development and implementation of segments of this program attributed to the competence of the Office in sector “Public Procurement”. Every year the Office develops and produces to the European Committee at the Government of the Republic of Lithuania reports on implementation of the PLPM measures, consolidates related data in LIESIS information system, fills in TAEIX progress dbase, provides with information for quarter reports about Lithuania’s progress in the field of procurement.
• Staff members of the Office attend meetings of the Governmental Committee for European Integration, analyse material of the meetings, five recommendations on public procurement-related issues. The head of the Methodological Division participates in activities of negotiation work team “Free Movement of Goods”.

Harmonisation of law makes the basis of the membership preparedness process: the national law of Lithuania must fully meet the provisions of acquis communautaire.

By Order No. 96 of the Minister of Economy, dated March 20, 2001, there was established a work team to prepare a draft of the Law on Amendment and Supplement of the LPP. The law draft is being elaborated in co-operation with Swedish experts participating in Twinning project Enforcement of the Public Procurement System, funded by PHARE program.

One of the most important factors assuring successful implementation of the acquis communautaire provisions is adequately strong administrative – institutional capacity of the Office.

In implementation of the sets tasks, evaluation of procurement documentation prepared by the procuring entities and organisation of suppliers’ (contractors’) complaint review with the IC accounted for major labour expenditures in 2001.

In order to advance improvement of the IC operations, standard documentation is obligatory (standard forms of resolutions, protocols, orders, work-hours table of IC members and different letters, etc.).

Activity details of the Independent Committee are indicated in Table 1.

In 2001 the Office received 127 complaints from suppliers (contractors). In 38 cases decisions were made not to refer review of the complaints in the IC, including:

• 20 complaints not meeting “the Conditions and Procedure for Complaint Review and Discharge of Member of the Independent Committee for Public Procurement Complaint Review from Complaint Reviewing”. The complainant were informed in writing on the revised procedure of complaint reviewing and filing; time limits were indicated to eliminate the shortcomings;
• 10 cases, when the complaints were determined not falling under the competence of the IC;
• 4 cases when complaints were filed against decisions and acts of the procuring organisations with which regard relevant decisions of the IC have been already taken. In these cases decisions were made to disallow complaint review;
• 4 cases when the complainant withdrew their complaints before referring them to the IC.

All complaints referred to the IC in 2001 were reviewed in compliance with time limits and procedure defined by the legislation.

The basic condition determining reduction of the number of complaints is more responsible approach of the procuring organisations in preparation of procurement documentation: qualification of personnel in charge for arrangement of public procurement have improved and thus severe violations of the LPP are rarer encountered.

In 2001 the number of complaints acknowledged ungrounded in the process of review also dropped down. However, the number of complaints that were not filed to the IC for not meeting the legislative or other requirements has significantly increased

In 2001 343 cases of public procurement were subjected to evaluation. The Office obligated the procuring organisations:

• to revise procurement documentation - 7 cases;
• to analyse, compare and evaluate suppliers’(contractors’) bids in addition - 
• 44 cases; 
• to suspend procurement proceedings and invite a public procurement tender anew, if necessary - 6 cases.

Development of information society requires effective satisfaction of information needs of the general public and rendering of electronic services in the filed of public procurement. Procuring organisations are not satisfied with such a situation when there are no opportunities to effectively employ information technologies in preparation and production of information announcements, and traditional methods have to be used instead. Internet access to procurement documentation and information about public procurements is important for suppliers (contractors).

In order to set forth methods to settle the existing problems experience of some member states was analysed with regard to application of information technologies in public procurement in the light of applying such information technologies in Lithuania. In participation of experts of the Ministry of the Interior (Department of Information Policy), there was created a computerised program of public procurement organisation (further – “the Program”). This Program is aimed to modernise the public procurement system, increase its effectiveness by means of modern data transmission and communication, increase transparency of public procurement, assure information accessibility, encourage Internet using, increase capacities of Lithuanian suppliers (contractors) to compete with foreign suppliers (contractors).

Creation of the public procurement information system was started in the beginning of 2001 according to theTwining project of PHARE. General requirements for the information system were developed in addition to specifications of required software and ways of application of glossary details. Office personnel were supplied with computers and equipment and software. Equipment was acquired necessary for updating the existing local computer network in the Office.

It is expected to complete creation of the public procurement information system in 1st semester, 2002.

In 2001 procuring organisations placed 9879 public procurement information notices in Publication Informaciniai Pranesimai (Information Announcements), annexed to Valstybes Zinios (the Gazette). It was followed whether the placed announcements meet the requirements of the Law on Public Procurements and accompanying secondary legislation. Representatives of procuring organisations that placed the announcements not meeting the requirements were informed about shortages and proposed to revise the contents of the announcements.

In 2001 the database of reporting on public procurement proceedings was supplemented with details of 3836 report filed by the procuring organisations. Such data was analysed in order to establish likely violations of the Law on Public Procurement and requirements of secondary legislation. Lists of procurement in which performance there had been detected likely violations were analysed by experts of the Control and Prevention Division.

Information about 3836 cases of public procurement in 2001 was summarised. Total value of 3258 procurements amounted to 2 108 237,5 though LTL and was by 17 710,7 though LTL or 0,8% more compared to 2000.

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

• consulting of persons involved in public procurements processes;
• development of training programs;
• organisation of training of nominees to members of the IC;
• training and organisation of conferences, seminars and other training forms;
• arrangement of consideration of problematic issues by the Methodological Board, search for answers to the problematic issues.

Experts of the Office provided consulting to procuring organisations, suppliers (contractors) and other interested authorities as well as to private individuals.

Implementation of the said measures in 2001 resulted in:

• preparation of 184 public procurement experts (planned 120);
• development of 5 training programs and refresher courses in public procurements (planned 5);
• consulting of 3700 procuring organisations, which were provided with in excess of 11 000 consultations of different forms;
• preparation and insertion of 17 new members to the IC (planned 15);
• re-qualification of 45 members of the IC (planned 44).

In 2001 the Office advanced the operations provided for in the Twinning projects (No. L99/IB-FI-03) together with Swedish National Public Procurement Board.

Aim of the Project – reinforcement of the public procurement system, increase of transparency and competitiveness, full harmonisation of the national law with requirements of the EU law in the field of public procurement, improvement of institutional and personal capacities of the staff members of the Office.

The major results of implementation of the Project: proposals concerning improvement of the procedure for small-value procurement, proposed structure of the future Law on Public Procurement of the Republic of Lithuania, comparison of provisions of the Law on Public Procurement of the Republic of Lithuania with consolidated directives of the classical sector of the European Union, institutional analysis of the Office and IC, approved plan of development of training material and list of standard documents to be prepared, proposals concerning the new information system and commencement of its design.

Priority trend if activities in the nearest future

In 2002 the Office will seek for its strategic objectives by implementation of Program – “Implementation of Law on Public Procurement, Co-ordination and Supervision of Public Procurement Operations and Improvement of the Public Procurement System”.

1159 though LTL will be assigned for implementation of the Program. It is planned that the number of personnel of the Office will increase by 1 persons and in 2002 the Office will have 36 staff members.

The following program objectives are set forth in the 2002 Strategic Activity Plan:

• Improvement of the public procurement system in alignment of the national legislation with requirements of EU directives and the World Trade Organisation;
• Monitoring of performance of public procurement, employment of preventive measures to minimise the number of violations of the Law on Public Procurement; 
• Satisfactions of the needs of state authorities and general public for information about public procurements, preparation for public procurement in electronic medium;
• Training of public procurement experts and improvement of their qualifications.