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submited on 30.06.2010 in category Regulated markets | Fiscal affairs
More transparency in government spending on mobile communications could contribute to decreasing waste of public resources according to recent research by Industry Watch.
As of the moment considerable portion of government institutions do not disclose information on the government procurement in the Public Procurement Register. Currently there is information about 60 public procurement procedures for mobile communications services in the past 5 years valued at BGN 16 million. Administrative structures, accounting for barely 40% of the total number of state employees, have provided data for the register. The rest have either not complied with the law regarding public procurement transparency, or have not organized a procedure in the last years.
The survey of Industry Watch reveals a series of administrative practices which contradict the main goals and principles of the Law on public procurement.
A significant number of institutions have not opened a public procurement on mobile communications since 2005. In many cases this is due to revolving old contracts, whose term is over (usually the procurement contracts have duration between 1 and 3 years), without new procurement to be open. There are cases, in which the prices of mobile services have not been changed for a period of 4 years, despite the dynamic development of the telecommunications’ market, which allowed consumers to obtain constantly improving terms – both with respect to quality and coverage, and prices.
The lack of competition in practical terms in the delivery of mobile services for the state administration is imposed by the applying of specific technical requirements, as well as differentiated weights on calls to different operators. As far as Bulgaria still has considerable differences in on-net and off-net termination rates, such criteria for assessment of offers gives in many cases advantage to one of the mobile operators.
The EU legislature in the area of telecommunications the main aim of the public procurement procedures is “encouraging the participation of all potential suppliers of mobile services”. The possibility of renegotiating the expired contracts without procurement is excluded with the argument that this practice contradicts main legal principles and leads to achieving conditions which are not favorable for the state. Public procurement procedures which establish preferences for particular type of software or technological standard are not tolerated, because they impose monopolistic position for one operator, reduce the incentives for investments and innovations and limit the public choice.
The consequences of such actions in public institutions are the reduction of competition on the telecom market and the potential harming of the public interest in view of the efficient spending of the public financial resource. Each policy for more efficiency of budget spending in the long term must be based on transparent and competitive public procurement.
At the moment Bulgaria is facing a risk of loss of macroeconomic stability due to enlarging budget deficit. The measures of the government, targeted at reducing spending, have for now not been sufficient for keeping the deficit within the required 3% of GDP level. On the other hand, many state representatives state that these are the maximum cuts, which the authorities could make. Whether this is true or not depends on the public procurement transparency and the maintaining of main principles in public procurement.
About the research
The research covers practices of ministries, government agencies, commissions, and other big central institutions. The main part of the information is available in the Public Procurement Register. Currently we are actively seeking information directly from public institutions under the Law on access to public information.