Drastic alterations to be made in the public procurement system

The government wants to make changes in the public procurement system, widely decried as inefficient and a breeding ground for corruption, Deputy Development Minister Yiannis Papathanassiou announced yesterday. Presenting the ministry’s plan, Papathanassiou said that the government considers the actual procurement system as «rotten, a source of unbelievable waste and lack of transparency… unbecoming of a country that participates in the eurozone.» The aim of a revamped system will be to improve transparency, drastically reduce wasteful spending and provide a better flow of information. Papathanassiou declared that the new legal framework for public procurement will be presented to Parliament in the autumn, so that the procurement program for 2005 can take place under the new regime. The deputy minister also announced the appointment of a seven-member commission of experts, which will present its proposals in two months’ time. A professor of administrative law will assist the commission by making a comparative study of legislation in other European Union member states. A recent EU directive on the establishment of an integrated management system for public procurement will be adopted into Greek law. An automated database monitoring all state procurements will be set up, partly through funds provided from the EU’s Third Community Support Framework. System’s weaknesses Papathanassiou said the present government had made a detailed study of the present procurement system and had found a series of weaknesses. First, despite the size of the Integrated Procurement Program, there was no overall monitoring authority and procurements were made directly by the agencies concerned, such as hospitals, public enterprises, the social security foundation (IKA), the armed forces and local authorities. Second, very few of the above organizations conducting the procurements inform the Development Ministry within two months, as is prescribed by current legislation. As for accounting and audit reports, they exist only for about 10 percent of all procurements. Third, the ministry’s General Secretariat for Commerce does not have any effective monitoring mechanism. It has failed to impose fines on public bodies that provide no accounting of procurements, despite its legal obligation to do so. Furthermore, audits have been conducted on only 15 percent of procurements and the trend is declining. Fourth, there are great obstacles and delays to the tenders for public procurement. For example, in 2002, the General Secretariat for Commerce called 60 percent of all the year’s tenders in the last quarter; two years after the call, no contracts have yet been signed in 30 percent of the cases. Fifth, there have been many legal challenges to tenders, especially brought to the Council of State, leading to severe delays. (This may have to do with weaknesses in the tender process itself but is also standard practice with companies that losing out in a tender, hoping to make political capital out of the legal challenge. Several such legal challenges in the past years, for example, have been made by firms abetted by the current governing party, which was then in opposition.) Sixth, little account has been taken of the European experience in public procurements. The participation of Greek civil servants in European Commission working groups making proposals on improving public procurements is extremely limited.