The caretaker Minister of Justice Yanaki Stoilov is proposing new rules to reduce corruption in public procurement. They will improve the rules for the so-called „In house“. The Ministry of Justice, Finance, Economy and Defense is working on this issue. The aim is to stop the observed vicious practices. „In-house“ is essentially an internal assignment from an agency to its own structures, without using the general order for public procurement. Т the Minister of Justice Prof. Yanaki Stoilov said:
„Our proposal is to use the in-house when the legal entity has the necessary human and technical resources to ensure the independent implementation of at least 80 percent of the activities subject to the contract.”
He clarified that the in-house itself is a procedure compatible with European regulation and it can be economically and socially useful, as long as it is not abused:
“In road construction, transport, the economy, energy and other areas, we see the misuse of in-house procedures to avoid public procurement. In such cases, state-owned companies shall be used as an intermediary for subcontracting, without fulfilling competitive conditions and publicity.”
Minister Stoilov clarified that the prepared amendments to the Public Procurement Act will prevent such cases and reassignment will be allowed only for specific activities.
Deputy Finance Minister Monica Beecher explained that an initiative was taken at the end of June and the competent body – the Public Procurement Agency issued a methodological instruction on the implementation of the Public Procurement Act. It gives greater clarity about the so-called internal assignment, regulated in art. 14 of the Public Procurement Act. Beecher said
“We continue the initiatives. Various texts of the Public Procurement Act are being drafted to improve and clarify the provisions. This is a joint, coordinated participation of the various ministries that have experience in such internal procurement. Our ambition is to put an end to bad practices in the implementation of the Public Procurement Act.”
She specified that the proposed changes in the law will be subject to public discussion by the Ministry of Finance.
Deputy Minister of Economy Krassimir Kiryakov reminded that similar practices are also observed in the Ministry of Economy:
“The case of the State Consolidation Company is emblematic, to which a capital increase of BGN 630 million has been provided. It then advanced this amount 100 per cent to its own company, Montazhi, and these funds were used to repair dams. Without proper control and accountability, several dozen subcontractors are engaged in this activity and on this occasion the prosecutor’s office filed a complaint.”
The Deputy Minister of Justice Ivan Demerdzhiev gave a specific example with construction contracts with the company Avtomagistrali EAD.
“It does not have the capacity to carry out the activities in question, but using the institute of outsourcing, it in turn rents construction equipment together with staff. In practice, this is a hidden reassignment of construction activities”, Demerdzhiev said, adding that the law is so rudely circumvented.
The companies that actually perform the activities receive the payments without participating in a normal competitive procedure, and the negatives remain for the state-owned company, as Avtomagistrali bears the warranty responsibility for the work performed by other companies.
