2003 REPORT

- Summary -

Until the enactment of the Public Procurement Law, the area of public procurement in Serbia, estimated by the World Bank to have been worth a total of 1.4 billion US dollars in 2002, had not been adequately regulated; this had created numerous openings for serious mismanagement of taxpayers' funds.

The Public Procurement Office began work on 15 January 2003. By 31 December 2003, the Office had issued a total of 7,660 written opinions, or about thirty a day. On the average, requests for opinions were handled in two-and-a-half days, far below the maximum of seven days prescribed by the Law. The rapid responses to procuring entities' queries did a great deal to constrict room for the implementation of the negotiated procedure without prior public notice, the source of most abuses.

The Public Procurement Office was also involved in over 9,800 consultations, or about forty a day. Twenty major and over 40 smaller seminars were also held for procuring entities and tenderers. The biggest of them, organised for the Ministry of Defence of Serbia and Montenegro, assembled 120 participants; those ranked highest then went on to form the Public Procurement Office of the Ministry of Defence of Serbia and Montenegro.

The Public Procurement Office also identified and trained four of five members of the Commission for the Protection of Tenderers' Rights who had been appointed by the Government on 26 December 2003 and performed their duties until the end of May 2004.

Together with the Ministry of Finance, the Public Procurement Office participated in the drafting of the Law on Alterations and Amendments to the Public Procurement Law, in force since 1 July 2004. This Law provides for an improved status of domestic producers compared with foreign tenderers, streamlines the procurement procedure and cuts its costs, and defines the protection procedure more precisely.

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As of 29 July 2004, the regulatory framework of the system of public procurement can be regarded as being complete. The Law on Alterations and Amendments to the Public Procurement Law and appropriate secondary legislation have been adopted. The latest sub-legal regulation - the Regulation on the Mandatory Contents of Tender Documentation - has been drafted and is expected to be published by the Ministry of Finance in the very near future.

Apart from this, both institutions in charge of implementing public procurement regulations - the Public Procurement Office and the Commission for the Protection of Rights - are fully operational.

Over the past two years, the new system of public procurement has shown indisputable positive effects in respect of better management of taxpayers' funds and an increase in the number of tenderers and contractors, all giving a powerful impetus to the development of the Serbian economy.

Finally, Serbia's system of public procurement has been almost completely harmonised with directives issued by the European Union – the exception being preferential treatment and appointment of the Commission for the Protection of Rights by the Government rather than the Parliament - and has as such received the support of the OSCE (except for the two points given above).