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Public procurement legislation, challenges and lessons learned
Opening words by Ambassador Paul Brummell at the British Romanian Chamber of Commerce (BRCC) conference.
Ladies and Gentlemen,
It’s a pleasure to be here today with you to discuss about a topic we have been following closely for the past few years, and I want to congratulate the British Romanian Chamber of Commerce and Wolf Theiss for choosing such an important theme.
Procurement policy reforms are really important for supporting economic growth in all countries, including in the UK and Romania. At the level of the European Union, since the Single European Act in 1986 Member States have been working towards a more open and competitive public procurement policy. The outcome of this process was the three new Directives on public procurement, transposed both in the UK and Romania earlier this year. Estimates put potential savings across Europe at close to 100 billion Euros a year if the directives are fully implemented.
Today I’m going to provide some details on the UK procurement sector reform first, then offer an overview of the most significant changes in the Romanian system, and last I will focus on the key elements of a modernised public procurement regime, crucial for the quality of the business environment here in Romania.
The UK spends more than 300 billion Euros on procurement annually, making it the largest market in the EU. The UK has therefore placed a great emphasis on the need to build a modernised procurement framework. We participated closely in EU negotiations between 2011 and 2014. We first prioritised the public sector directive, which was implemented last year. The utilities and concessions directives were implemented by the EU deadline of 18 April 2016.
The UK Government’s objective in reforming the public procurement regime was to free up markets and facilitate growth by:
1.Reducing lengthy and burdensome procurement processes that add cost to business and barriers to market competition
Modernising the procurement procedures and providing more flexibility for purchasers to follow best commercial practice to achieve the best procurement outcomes
Supporting measures to enhance SME access to public procurement, where such measures are non-discriminatory and are consistent with a value for money approach
The Romanian public procurement market is worth around 17 billion Euros, accounting for 12% of GDP. We have welcomed the Romanian Government’s efforts to organise consultations on their own legislative amendments and we were glad that the British Embassy has contributed to that effort by sharing our expertise during various public events.
Since 2014 Romania has achieved considerable progress in reforming the public procurement regime. First, on the legislative side, four new pieces of legislation were passed through Parliament in May, and we hope these generated increased transparency of awarding contracts, and increased access to contracts for small and medium enterprises. Secondary legislation has already been passed in some areas, and is is awaiting adoption in other fields.
Secondly, the institutional landscape has consolidated. The New Agency for Public Procurement is now the key institution tasked with the monitoring and control of public procurement. Other bodies like the Court of Accounts or Competition Council have been given new control powers to ensure contracts comply with competition rules and public spending was justified. The National Integrity Agency also has a role in ensuring the transparency and integrity standards in this field.
On this note, I would also like to welcome the adoption of the Agency’s Prevent system, aimed at identifying conflict of interest before the contract award procedure. Public procurement fraud continues to be monitored by the European Commission under the Co-operation and Verification Mechanism and I hope the new provisions will have a substantial impact on fraud prevention, in particular at local level. Addressing the risks of integrity will be crucial in tackling public procurement as a major risk area for corruption.
Thirdly, the new legislation has enabled Government to introduce many tangible changes that impact on buyers and bidders, of which some are yet to be adopted. They include, among others, the simplification and standardisation of documents to be submitted in the first bidding phase, the introduction of similar thresholds for Romanian and foreign SMEs, and the development of a web-based platform for contracts.
These are all areas where the UK has a good story to tell. The UK is an EU leader in e-procurement, with more than 50% of all contracts published online. We are keen to keep annual losses deriving from procurement fraud at less than 1% of total procurement expenditure. Our primary tools are transparency efforts, and firm action against fraudulent providers, including their exclusion from contracts.
Overall our point of view is clear: we need procurement procedures that are simpler, more flexible and more transparent. But a strong legal framework is not enough. Civil servants need to get proper training on how to use new provisions and both bidders and buyers need to develop an appropriate understanding of the new rules. A modernised public sector and an effective judicial system are also important in ensuring the success of the new procurement regime. I hope the new legal framework will provide the stability and predictability required by Romania’s private sector.
I know the Government continues to work with the World Bank and European Investment Bank on large technical assistance projects to train civil servants better and develop e-procurement tools. It is very important work and we are hoping it will be taken forward successfully by the new Government, whatever colour that might be, after December.