28844
REPUBLIC OF SLOVAKIA
FINAL
COUNTRY PROCUREMENT
ASSESSMENT REPORT
May, 2001
EUROPE AND CENTRAL ASIA REGION
THE WORLD BANK
SLOVAKIA
FINAL COUNTRY PROCUREMENT ASSESSMENT REPORT
FINDINGS AND RECOMMENDATIONS
Table of Contents
Page
Acronyms
Preface: Date, Basis and Purpose of Report i
Acknowledgements i
Executive Summary ii
Part A : SUMMARY OF FINDINGS - STRENGTHS AND WEAKNESSES
OF PRESENT PROCUREMENT SYSTEM
Public Sector
1. Legal and Regulatory Framework 1
2. Procedures and Practices 2
3. Organization and Resources 5
4. Audit and Anti-Corruption Measures 7
5. Public Sector Management Performance 8
6. Performance on Bank-assisted Projects 9
7. General Risk Assessment 10
Private Sector
8. Commercial Regulations 10
9. Commercial Practices 11
Part B: RECOMMENDED ACTION PLAN
10. Strategic Approach 11
11. Measures to be Taken by the Government 12
12. Measures to be Taken by the Bank 13
13. Technical Assistance 14
14. Timetable 14
15. Recommended Bank Approach for Supervision 14
Attachments
1. Action Plan
CURRENCY
Currency Unit = Slovak Koruna (SKK)
US$1 = SK 47 May, 2001)
ACRONYMS
CPAR Country Procurement Assessment Report
EBRD European Bank for Reconstruction and Development
EC Evaluation Commission
EU European Union
GCC General Conditions of Contract
GEF Global Environment Facility
GOS Government of Slovakia
ICB International Competitive Bidding
IDF Institutional Development Fund
MOF Ministry of Finance
NCB National Competitive Bidding
NBS National Bank of Slovakia
NKU Supreme Audit Office
PPA Public Procurement Act
PPB Public Procurement Bulletin
OPP Office of Public Procurement
RFP Request for Proposals
SAB Single Administration Document
SBD Standard Bidding Documents
UNCITRAL United Nations Commission for International Trade Law
USAID United States Agency for International Development
WTO World Trade Organization
iv
SLOVAKIA
FINAL COUNTRY PROCUREMENT ASSESSMENT REPORT
(CPAR)
PREFACE
Date of the Report
This report was completed on May 23, 2001.
Basis of Report
This report updates the CPAR on Slovakia dated January 10, 1995. The report is based on the findings of a Bank mission to Slovakia from November 9 to 18, 1999, and analyses of the materials and other information collected. The mission comprised of Messrs. Naushad Khan, Senior Procurement Specialist, (CPAR team leader); Jagdish Jassal, Procurement Analyst (team member), and Mr. Henry Marek, Consultant (team member). Messrs. Juraj Sipko, Director, Foreign Relations Department, Stefan Hritz, General Director, Mikulas Bakay, Director for Procurement and Concession, Ministry of Construction and Public Works extended full cooperation to the Bank mission, and made valuable contributions to the mission’s work through participation in the assessment. The report follows the CPAR instructions issued by the Bank’s Procurement Policy and Services Group on June 1, 1998.
This report has been discussed with the Office of Public Procurement of Slovakia and reflects the agreements reached between the Office and the World Bank.
Purpose of the Report
The World Bank undertakes assessments of the procurement environment, covering both public and private sectors in borrowing member countries on a systematic basis. The objective of the assessment is to determine the compatibility of national procurement law and practices with the principles of economy and efficiency and with international procurement practices. The findings and recommendations of this work not only help the Bank ensure that sound procurement practices are followed in the projects that the Bank finances, but also enables it to provide valuable feedback to member countries regarding the strengths and weaknesses of their public procurement systems. This enables member countries to improve the transparency of the procurement process and enhance efficiency of public spending.
Acknowledgements
The team acknowledges the extensive cooperation and assistance received from officials and staff of the public and private agencies visited. The team is particularly grateful to Ms. Marcela Havranova of the International Financial Institutions Division, Slovak Ministry of Finance, for organizing the mission’s program in Slovakia, and Ms. Bola Surakat for processing the report.
SLOVAKIA
COUNTRY PROCUREMENT ASSESSMENT REPORT
Executive Summary
Slovakia was the first country in Central and Eastern Europe to introduce a Public Procurement Act (PPA) in 1994. Its procurement legislation has evolved during the last five years. Several substantial amendments to the 1994 Act were the result of the Government’s continued efforts to improve Slovakia’s procurement system. The current Public Procurement Act was passed in September 1999 with a view mainly to fulfilling the requirements of Slovakia’s candidacy for the European Union.
The World Bank has continuously supported government efforts to introduce a transparent and competitive public procurement system in Slovakia. In 1994, the Bank conducted an assessment of the public and private sector environment in Slovakia. As a result, it provided feedback to the Government to help it improve the transparency and effectiveness of the system. It backed up its recommendations for these improvements through a grant from its Institutional Development Fund (IDF) and through direct technical assistance on procurement.
Under the IDF grant-funded procurement institutional development project, the 1994 PPA was amended and an improved PPA introduced in 1996. The 1996 PPA reflected only some of Bank recommendations. With the help of the grant, procurement guidelines and standard bidding documents were prepared; 25 public officials were trained in training others in procurement; and 500 public officials throughout the country received initial training in procurement. The following two major Bank recommendations were not included in this version of the PPA: (i) creation of an independent public procurement body; and (ii) inclusion of separate provisions in the PPA on procurement of services. The September 1999 PPA did provide for the creation of an independent Office of Public Procurement (OPP).
This update of the 1995 CPAR is based on the September 1999 PPA and the findings of the Bank CPAR mission to Slovakia in November 1999. The 1999 PPA is an improvement upon the previous PPAs in some respects, including the creation of an OPP, more detailed and clear procurement procedures, accreditation of procurement professionals, introduction of the Public Procurement Bulletin and expanded bid protest resolution procedures. However, it is the Bank's view that, although the procurement methods in the 1999 PPA comply with EU Directives, some of these methods lack transparency and may not result in efficient and competitive procurement.
The PPA provides for four procurement methods: open tendering, restricted tendering, negotiated tendering with prior notification; and negotiated tendering without prior notification. While open tendering includes transparent procedures which will lead to competitive and economic procurement, the PPA does not include appropriate criteria for the use of restricted tendering, such as the availability of a limited number of suppliers, response to natural disasters, etc. Similarly, the negotiated procurement with prior notification method lacks transparency and gives excessive discretion to the contracting authority.
In order to improve the transparency of the negotiated procurement with prior notification method, it is recommended that the conditions for its use should be brought more into line with those contained in the European Union Supplies Directive and that, where such conditions of use are not met, Open or Restricted Tendering should be employed.
One of the significant flaws in the 1999 PPA, just as was the case in the 1994 and 1996 PPAs, is the lack of clear provisions specific to the procurement of consultants’ services. Consequently, contracting authorities have been and will be using the same procedures for the procurement of consultants’ services as are applicable to goods and works. This gives rise to undesirable practices, such as decision on the selection of service providers on the basis of their price rather than the quality of their proposals, requirement of bid and performance securities, which are not relevant in case of a consulting services contract. The Bank recommends strongly, as it did in the past, the inclusion in the PPA of separate provisions relating to procurement of consultants’ services in future amendments to the PPA.
The other major recommendations made by the Bank include:
· improvement in procurement planning by providing information about budgetary allocations early in the budgetary cycle to the implementing agencies so that adequate time is available to conduct economic and efficient procurement;
· establishment by contracting authorities of a permanent procurement committee responsible for decision making and for providing oversight; and evaluation committees to deal with the bidding process;
· introduction of a formal code of ethics for government employees to improve their accountability in procurement;
· continuous training of the staff of contracting authorities in procurement to ensure effective implementation of the PPA;
· updating of the procurement guidelines and standard bidding documents prepared with the assistance of the Bank’s IDF grant;
· collection and dissemination of best procurement practices to contracting authorities through the PPB; and
· dialogue with the private sector to keep suppliers, contractors and consultants informed of the requirements of the PPA and of improvements in the procurement system.
The Bank also recommends that the role of the Supreme Audit Office of Slovakia (NKU) in conducting procurement audits of contracting authorities at regular intervals be enhanced and its reports be made public. Furthermore, NKU auditors should receive basic training in the application of the PPA.
The 1999 PPA provides for accreditation of procurement professionals. This is an important improvement in the public procurement system. However, the concern is that the accreditation process may become a bureaucratic obstacle to professional development. Therefore, in order to ensure the successful and timely implementation of this program, it would be necessary for the OPP to urgently formulate a detailed institutional development plan, including strengthening the OPP’s own capacity and arrange sources of financing to implement the institutional development plans and OPP’s institutional capacity. OPP also needs to define clear criteria for accreditation of the procurement professionals in the country.
The CPAR includes detailed recommendations for improving the transparency and effectiveness of the PPA. These relate to the language of bidding documents and bids in case of international open tendering; bids to be opened immediately after the deadline for bid submission; guidelines on evaluation systems to ensure the use of objective criteria; improvements in the bid protest resolution procedure; and use of the list of entrepreneurs only to expedite qualification process rather than pre-select bidders.
The Bank believes strongly that the implementation of the above-mentioned recommendations (as detailed in the attached action plan) will greatly improve the transparency, economy and efficiency of the public procurement system of Slovakia. It recommends that, pending amendments to the PPA, the GOS implement these actions through a regulation or guidelines.
In order to implement the proposed action plan included in the CPAR, it will be necessary that the GOS identify funds from its own budgetary resources, in addition to exploring the possibility of seeking technical assistance from international organizations, such as EU, OECD, EBRD, and bilateral donors.
14
FINDINGS AND RECOMMENDATIONS
A – SUMMARY OF FINDINGS
STRENGTHS AND WEAKNESSES OF THE PRESENT PROCUREMENT SYSTEM
1. Legal and Regulatory Framework
1.1 The principal sources of law in Slovakia are its constitution, acts of the National Council of the Slovak Republic, and Government decrees and resolutions. The general legal framework in Slovakia is improving as a result of the Government’s efforts to reform the system. The reform is driven by Slovakia’s efforts in introducing market-oriented reforms, its anticipated membership of the European Union and is aimed at making the Slovak legal framework comprehensive and consistent with that of the EU. The country’s current legal framework for public sector procurement consists of the Public Procurement Act No 263/1999 (PPA) passed by the Slovak Parliament on September 14, 1999. This Act is based on the European Union’s directives on procurement. It came into effect on January 1, 2000. The 1999 Act replaced the PPAs 81/1994 and 120/1996, which were based on the UNCITRAL Model Law on Public Procurement. The PPA applies to all procurement financed or co-financed with state budgetary resources.
1.2 Slovakia was the first country in Central and Eastern Europe to introduce a public procurement act in 1994. Its procurement legislation has evolved during the last five years. Several substantial amendments to the 1994 Act are the result of the Government’s continued efforts to improve Slovakia’s procurement. The switch from the UNCITRAL model law, on which the 1994 and 1996 PPAs were based, to the EU procurement directives, which form the basis of the September 1999 Act, was necessitated mainly to fulfil the requirements for Slovakia’s candidacy for the EU.
1.3 Bank Review of the 1994 PPA: The Bank conducted an assessment of the public and private sector procurement in Slovakia in 1994. The results of this review were included in the CPAR dated January 10, 1995. The main recommendations of the 1995 CPAR included: (i) removal of ambiguities through revision of the 1994 PPA; (ii) creation of an independent public procurement office to ensure effective performance of the public procurement system; preparation of explanatory guidelines, separate standard bidding documents for goods, civil works, and consultant services, and (iii) training of procuring entities to ensure consistency, better transparency and integrity in the procurement process. The Bank backed up these recommendations with the approval of a grant at the request of the Government of Slovakia (GOS) from the Bank’s Institutional Development Fund (IDF) to implement these recommendations.
1.4 IDF Grant for Strengthening Public Procurement: The IDF grant objectives included strengthening of the public procurement office through the provision of office and training equipment; revision to the PPA of 1994 to improve clarity and transparency; preparation of standard bidding documents, training of procurement trainers; and initial training of approximately 500 public procurement officials both at central and local government levels. The grant-funded activities were successfully completed. The impact of the grant-funded activities on public procurement can be regarded as positive. Although the PPA of May 1996 did not include all Bank recommendations made in the 1995 CPAR, the revised law removed some ambiguities of the 1994 Act; public officials became better informed of the requirements of the PPA through training seminars; standard bidding documents became available to the procuring entities; and the Act provided for the Office of Public Procurement (OPP), which has now been established.