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Presentation by S. Hoxha, Kosovo (ENG) Eighth SIGMA Regional IPA Conference on Public Procurement, Montenegro, June 2018.

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Presentation by S. Hoxha, Kosovo (ENG) Eighth SIGMA Regional IPA Conference on Public Procurement, Montenegro, June 2018.

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Presentation by S. Hoxha, Kosovo (ENG) Eighth SIGMA Regional IPA Conference on Public Procurement, Montenegro, June 2018.

  1. 1. © OECD Centralized procurement Guidelines on centralized procurement Safet Hoxha 13-14 June 2018 Becici, Montenegro
  2. 2. Definition Centralized Public Procurement is a concept where all requests for goods, works and services are processed by a central unit within the country, which also conducts procurement procedures for other contracting authorities. 1
  3. 3. Aim of centralized procurement Establishment of a functional centralized public procurement system, where one of the main goals is elimination of a series of defects and anomalies that partial procurements cannot eliminate. • Amongst others, the model of centralized procurement will address: 2
  4. 4. Advantages of centralized demand/needs • Price variations for the same product procured during the same fiscal year by various public institutions; • Miss-match between prices of similar products offered by the same vendors; • Value for money through collection of demand/needs • Limited participation of bidders; 3
  5. 5. Advantages of centralized demand • Additionally, centralized demand would achieve higher level of professionalism on both sides that are parties in the procurement procedure. • Such situation would reduce the appeals in the process and consequently increase the trust in procurement procedures • In addition, there is a much higher monitoring level by the public authorities, NGO’s and media. 4
  6. 6. Disadvantages of centralized procurement When addressing the centralized procurement model, it is necessary to take into account the negative sides of this system, especially the impact it may have on the distortion of the public market in the country, specifically in small countries like Kosovo. • Negative effects of this system could be the following: 5
  7. 7. Disadvantages of centralized procurement • Main disadvantage is restriction and exclusion of SME’s from participation in the procurement activities, risking to also limit their development. • Another negative effect that emerges as a consequence of the development of this model is concentration of the public economy at the centre, thus disabling regional development of entrepreneurship. 6
  8. 8. Disadvantages of centralized procurement • Concentration of economy at the centre creates a disproportion in economic development at national level (under-developed regions) • Also, concentration of procurement at the centre through centralized procurement activities would influence the dis-balance of employment policies, which in turn would impact the demographic aspects of the population by moving from the periphery towards the centre. 7
  9. 9. Disadvantages of centralized procurement • Concentration of economy at national scale would result in massive movement of population towards centres seeking for jobs, and this would leave peripheral regions without development. • Villages will migrate towards towns and this will put the basic sectors of economy at risk, including agriculture and farming (stockbreeding). 8
  10. 10. History of centralized procurements in Kosovo • This history started with amendments to Law no.04/L-042, where the Government undertook to organize centralized procurements, designing the legal and technical infrastructure. • Certainly, the technical and legal preparations took considerable but sufficient time needed for the successful commencement of this project. 9
  11. 11. Commencement of centralized procurements in Kosovo • Decision to begin with centralized procurements was taken by the Government, which through an administrative instruction specified goods that were to be part of the list for centralized procurements, as well as the authorities subject to this Administrative Instruction (AI). • It is worth noting that in the beginning the process was associated with difficulties of the market resistance, which was eventually overcome. 10
  12. 12. Commencement of centralized procurements in Kosovo Despite a silent resistance and hesitation of public authorities and businesses, the Government managed to issue the AI’s for several years now: Administrative Instruction on Centralized Procurement no.02/2015 Administrative Instruction on Centralized Procurement no. 05/2016 Administrative Instruction on Centralized Procurement no. 03/2017 Administrative Instruction on Centralized Procurement no. 06/2018 Based on these decision, the CPA has implemented contracts at following values: 11
  13. 13. © OECD Contracted values over the years • In 2015 – contracted value: 3,500,000.00 EUR • In 2016 - contracted value: 42,000,000.00 EUR • In 2017 - contracted value: 22,500,000.00 EUR • In 2018 - contracted value: 10,000,000.00 EUR, as at the reporting time.
  14. 14. © OECD Benefits from centralized procurements  According to the analysis carried out by the relevant institution, but also of mechanisms supporting centralized procurements, the value of direct savings ranges from 4% to 9%.  In addition, there are indirect savings as well, such as:  single procurement procedure (instead of 140 procedures/institutions)  single monitoring by the PPRC, etc. (instead of 140 procedures/institutions)  single appeal (instead of 140 procedures/institutions)  single audit (instead of 140 procedures/institutions)  Other benefits  Standardization of items  Identical prices between institutions  Elimination of conflict of interest (CPA conducts procedures, CA’s implement them)
  15. 15. THANK YOU! 14

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