Business Magazine

Improving Transparency and Integrity in Kosovo’s Public Procurement

Posted on the 03 April 2013 by Center For International Private Enterprise @CIPEglobal
Panelists at a Riinvest public procurement conference in 2011. (Photo: CIPE)

Panelists at a Riinvest public procurement conference in 2012. (Photo: Riinvest)

In February this year, Kosovo celebrated  five years since its declaration of independence. The new country is working to establish a viable democracy with well-governed institutions conducive to economic development and prosperity. Persistent corruption, weak rule of law, and poor quality of public institutions have undermined Kosovo’s reform efforts and sewn distrust in the government among citizens. Much of this is due to the political system that condones patronage relationships between politicians and business cronies who rely on weak institutions to secure control of the economy.

At the core of the problem is lack of accountability within government agencies and limited mechanisms for oversight by civil society and the private sector. Public procurement tenders, for instance, are awarded based on privilege and political loyalty rather than free and fair competition. Furthermore, government employees in charge of managing public tenders are left unaccountable for their flawed decisions and the resultant inefficiencies and corruption. In order to dismantle this crony system, Kosovo’s civil society and private sector need to take action to bring greater transparency and accountability to the public procurement process.

Since public tenders make up roughly one fifth of Kosovo’s GDP, it is crucial to strengthen the management of public funds and build a transparent and accountable implementation system that guarantees fair competition for everyone in the private sector. CIPE and its partner, the Riinvest Institute for Development Research, a leading think tank in Kosovo, have been working since 2011 to address the weaknesses in the public procurement process.

In partnership with CIPE, Riinvest conducted a comprehensive review of the public procurement system before presenting their recommendations to the government and the wider public. Kosovo’s 2004 and 2010 public procurement laws failed to bring Kosovo in line with modern standards, despite European Union technical assistance in drafting the 2010 legislation. In particular, the 2010 law failed to eliminate opportunities for malfeasance by exposing procurement officers to political pressure.

In 2011, the law was amended to bring the public procurement process in line with European standards. However, the implementation of the state-of-the art law has serious flaws and is often marred by corruption, conflicts of interest, and lack of accountability. At the same time, the private sector lacks adequate information on the rules and procedures for public tenders and is afraid to complain when they see obvious violations for fear of being excluded from future bidding. These recommendations include modifying secondary legislation and regulations to foster implementation, centralizing the procurement process, fast-tracking an electronic procurement system, increasing training to procurement officers, and improving access to information for the interested businesses.

Riinvest has found success in advocating for these proposals by reaching out not only to government agencies but also to the general public. On April 5, 2012 Riinvest organized an international conference titled “Improving Transparency and Governance of Public Funds in Kosovo” that gathered the private sector, government ministries, and civil society, to highlight the findings from the policy paper on the state of public procurement in Kosovo.

CIPE Global Senior Program Officer, Anna Nadgrodkiewicz, spoke at the conference on the experiences of CIPE partners around the globe with reform of public procurement systems in such countries as Mexico, Indonesia, Peru, and Vietnam.  Speaking at conference, Ilaz Duli from the Public Procurement Regulatory Commission (PPRC) said that it was the first time that all the agencies involved in public procurement in Kosovo had come together with the private sector and civil society to discuss transparency issues.

Riinvest’s initiative has received widespread coverage in the Kosovar electronic and print media. Riinvest partnered with the Balkan Investigative Reporting Network (BIRN) to organize a televised debate that aired on national television station RTK TV to audiences of 350,000 to 400,000 people.

As a result of these efforts and direct appeals to the government, Riinvest’s advocacy work has succeeded in five areas. The PPRC agreed to simplify many procurement procedures. The PPRC also agreed to include health and construction suppliers in their electronic procurement pilot project, reflecting Riinvest’s finding that the highest number of complaints is filed from companies in these two sectors. The Kosovo Institute of Public Administration has adapted the training program for public procurement officers according to Riinvest recommendations.

The government has also taken into serious consideration Riinvest’s proposal to improve planning of public procurement in the government’s medium-term public expenditure framework. This provides an additional layer of accountability for public officials as the expenditure framework is closely monitored by the International Monetary Fund and the World Bank.

Finally, the government has invited Riinvest to participate in future meetings of the National Anti-Corruption Council, chaired by the President of Kosovo. This is a significant opportunity for Riinvest to use a powerful platform to advocate for vital reforms in the years to come.

CIPE Eastern Europe and Eurasia intern Nathaniel Oppenheimer contributed to this report.

Natalia Otel Belan is Program Officer for Southeastern Europe at CIPE.

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