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Presentation by D. Vilytė, Lithuania (ENG), Eighth SIGMA Regional IPA Conference on Public Procurement, Montenegro, June 2018.


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Presentation by D. Vilytė, Lithuania (ENG), Eighth SIGMA Regional IPA Conference on Public Procurement, Montenegro, June 2018.

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Presentation by D. Vilytė, Lithuania (ENG), Eighth SIGMA Regional IPA Conference on Public Procurement, Montenegro, June 2018.

  1. 1. © OECD Panel discussion on the key priorities for developing the framework and sound foundations of public procurement system The public procurement reform in Lithuania: implementation of the new EU public procurement directives and structural reforms Ms. Diana Vilytė, Director of the Public Procurement Office of Lithuania Bečići, Montenegro 13-14 June 2018
  2. 2. • Country profile • New legislation implementation • Some practical cases • Procurement reform in Lithuania national defence system 1
  3. 3. 2 2.205 kmm
  4. 4. LITHUANIA • Population 2,8 mln. • GDP ~37,2 billion EUR • Intependence restored 11 March 1990 • Admited to NATO 29 March 2004 • Joined the EU 1 May 2004 • Lithuania become a 36 –th member of the OECD 3 May 2018 3
  5. 5. Institutional system 4 Ministry of Economy Public Procurement office (PPO) Central Purchasing Organisation (CPO) The Competition Council The National Audit Office (NAO) Special Investigation Service Chief Official Ethics Commission | Lithuania
  6. 6. Institutional system Ministry of Economy is in charge of the definition of the public procurement policy and legislation but does not participate in the implementation or control of public procurement 5
  7. 7. Institutional system The Public Procurement office implements the public procurement policy and supervises compliance with the law and the implementing legislation. The PPO’s functions:  providing methodological assistance  administering the central e-procurement portal  preventing infringements  controlling contracting authorities’ compliance with the law and coordinating  monitoring public procurement procedures 6
  8. 8. Institutional system The Central Purchasing Organisation conducts centralised procurement on behalf of contracting authorities, including the central administration and its territorial branches, as well as local authorities. It negotiates framework agreements for a wide range of products, services and public works, which contracting authorities can browse and order online using an e-catalogue. 7
  9. 9. Institutional system The Competition Council investigates possible anti- competitive practices from both contracting authorities and bidders. The Competition Council ensures compliance with competition regulation. The National Audit Office is the supreme audit institution of Lithuania and aims to foster an efficient management of State property. Special Investigation Service is the main law enforcement institution to investigate fraud or corruption related crimes. 8
  10. 10. Public procurement statistics • Number of contracting authorities – 4 000 • Number of suppliers – 21 000 • 12% of GDP is the amount spent in Lithuania on public procurement • The value of Procurements 4-5 MM EU • Low value procurements 949,5 MM EUR, # procedures – 801 000 • 3,1 % number and 7,5% by value awarding contracts by foreign companies • E-procurement uptake reached approximately 99,3% of total procurement value in 2016 9
  11. 11. Remedies and review system • Precondition for judicial review - a compulsory complaint to the contracting authority • Independent three-instance path of judicial review. • Applies to contracts above and below the EU thresholds 10
  12. 12. Courts System 11 Ordinary courts (civil and criminal cases) Administrative Courts (administrative cases) The Constitutional court (constitutional cases) Third instance The Supreme Court of Lithuania Second instance The Court of Appeal of Lithuania Supreme Administrative Court of Lithuania First instance District courts District courts The Constitutional Court
  13. 13. THE EU SINGLE MARKET SCOREBOARD 12 5 green 2 yealow 2 red
  15. 15. Legal system The new regulation of public procurements came into force on 1 July 2017, Concessions – 1 January, 2018 14 Public procurement Utilities Concessions Defence Remedies
  16. 16. The main objectives of the legal reform • Set up simpler, more modern, more flexible but, at the same time, more transparent purchasing procedures • Reduce administrative burden • Increase the efficiency of public spending • Create better conditions for combating corruption, unauthorized supplier agreements in public procurement 15
  17. 17. Summarizing the most important changes Business Changes • Supplier Verification Procedure. Options for „self cleaning" • A new approach to bid evaluation • Possibility of direct payment to subcontractors • Splitting of the procurement object into lots Changes to contracting authorities • Preliminary market consultations • Supplier Verification Procedure • Shorter terms • Options for changing contracts • Blacklisting 16
  18. 18. Fighting distortion of competition The contracting authority will have to remove the supplier from the procurement procedure if: • the supplier has concluded agreements that distort the competition between the suppliers involved in the procurement and • she has compelling data for this: the same mistakes, similar records, etc. The reason for examining whether there is an unauthorized agreement could be the withdrawal of a supplier's offer without a good reason • The Competition Council will provide advice and methodological assistance on issues related to the identification of unauthorized suppliers 17
  19. 19. Sanctions for violations of procurement rules Manager of contracting authority For other people - for their work Amounts of administrative penalties: • from 140 Eur to 3,000 Eur • for repeat misconduct – from 3 000 EUR to 6 000 EUR In the past: administrative penalties for violations of the Public procurement law from 144 euro to 724 euro. 18
  20. 20. Larger application fee Differentiated and increased application fee in public procurement cases: • Low value purchases - 300-350 Eur • Simplified purchases - 1000-2000 Eur • In international purchases - 3000-5000 EUR 19
  21. 21. Remains some tasks… • Improperly planned funds and time • Inadequate deadlines for submission of tenders and applications for the procurement object; • One bidder • Application of price-quality ratio • Publication of contracts and confidentiality 20
  22. 22. Transparency 21
  23. 23. Lithuania 41st / 137 Global Competitiveness Index 2017-2018 edition 22
  24. 24. 23
  25. 25. Transparency tools. Obligations to publish 24 Publication of every awarded contract Annual report on small value procurements Reports on every public procurement procedure and contract award Optional: Technical specifications on every procurement Procurement plans until March 15
  26. 26. Free data. Municipality of Vilnius 25
  27. 27. OECD project in Lithuania Improvement of the Lithuanian public procurement system though professionalization of the national workforce and streamlining of R&D tendering 26
  28. 28. OECD project in Lithuania The general objective of this Project is to improve the efficiency of the national procurement system by raising the level of competency of the public buyer at the central and local level, and rationalize the system for public procurement R&D services in order to achieve higher economic impact in Lithuania. 27
  29. 29. Prevention Exploit the strong data collection system to improve risk management systems to better target oversight efforts. 28
  30. 30. Data analysis and Publications 29
  31. 31. Data analysis and Publications • Participation of foreign companies in Lithuanian and Lithuanian companies - foreign public procurement for 2011-2016. • One bidder 2014 -2016 • Information Technology Services Public Procurement 2011-2015 • Construction works 2014 and 2015-2016 • Purchases of food and catering services for 2013-2015 30
  32. 32. 31
  33. 33. 32
  34. 34. Success story: splitting of the procurement object into lots • The Fund for European Aid to the Most Deprived (FEAD) • Support for 300 000 inhabitants • Contract with one bidder – 15,6 MM Eur • Contracts with several suppliers – 7,9 MM Eur • Savings – 7,7 MM Eur 33
  35. 35. Procurement reform in Lithuania national defence system (issues) • No additional personnel to handle the increase of defence budget and the increased complexity of projects • Ministry and defence forces are overloaded with acquisition functions with the duplicate structures • No single owner of the process, number of interfaces and lack of clear division of responsibilities • Knowledge and expertise are scattered 34
  36. 36. Procurement reform in Lithuania national defence system • Instead of 72 procurement entities, after the transition period, as of 1st of 2019 it will remain 55 and only the single one – Defence Materiel Agency – will execute all the centralized procurement procedures, which will comprise 95 % of all the defence procurements (by value). • The tasks are assigned now to the single Agency and duplicated structures are eliminated - the process became more simple. 35
  37. 37. Procurement reform in Lithuania national defence system The procurement experts from 5 different institutions are consolidated in the single Agency (consolidation of knowledge and expertise) – better quality with the same resources. Less people are involved in the procurement process – more easy to control. 36
  38. 38. Procurement reform in Lithuania national defence system • In contrast to the old system all the activities are regularly measured now against Key Performance Indicators (KPI). The recent results of KPIs in centralized defence procurement (periods - 1Q 2017 and 1Q 2018) are: • Single competitor - number of tenders with a single competitor in 2018 1Q is reduced by 50 % 37
  39. 39. Procurement reform in Lithuania national defence system • Open tender – number of open tenders vis-à-vis not publicly announced in 2018 1Q is increased by 10 % • Other KPIs: durations of procedures, exceeded amounts, number of complaints, ad-hoc procurements, etc. (13 in total) – minor changes (no clear indications yet). 38
  40. 40. © OECD 39 Thank you