When reforming the public procurement system, the Ministry of Finance has reviewed the conditions for excluding bidders and decided that, once the Saeima approves the drafted bill, tax debtors will also be allowed to participate in procurements. However, in order to win the tender, the debt will still have to be paid off on the day the decision is made.
Currently there are 12 mandatory criteria applied to bidders, and if a bidder does not comply with them, they are not admitted to the tender. Under the planned reform there will now be only two mandatory criteria – the existence of a tax debt on the day the decision is made, and the criminal record of the candidate or its representative, for example, for setting up a criminal organization or for fraud.
At present a candidate is not admitted to a tender if, on the application day, they have a tax debt of 150 euros or more. The new system provides that a debtor will nonetheless be admitted to the tender and will be given the opportunity to clear their debt. However, such a lenient approach will not be applied to every debtor. The head of the Public Procurement Monitoring Bureau, Artis Lapiņš Inc., explained that the tendering authority will have to assess whether the tax debt is proportionate to the tender candidate’s activity.
The remaining criteria will not disappear entirely from the public procurement procedure. Checks such as whether all of the candidate’s employees have employment contracts and whether subcontractors have also paid all taxes may be applied at the discretion of the tendering authority.
Both the Minister of Finance Arvils Ašeradens and Lapiņš acknowledge that the reform could create new problems, but the existing system is too cumbersome and restrictive of competition to be left unchanged.
For example, in 25% of procurements only one bidder qualifies, while only 2.4% of the 182.2 thousand companies registered in Latvia win tenders. Meanwhile, 19.8% of procurement procedures are terminated altogether due to the cumbersome system.
“Public procurement is an essential part of Latvia’s economy. We had lost focus by concentrating on the cleanliness of documents instead of achieving maximum return from budget funds, and it was time to make changes. Therefore, together with all parties involved in the public procurement process, we have developed a structural reform of public procurement. It will free the public procurement system from unnecessary administrative processes, make procedures faster, ensure greater competition and promote that every euro from the taxpayer brings maximum benefit to society. Calculations by the Ministry of Finance show that, if the reform is successfully implemented, we will shorten the duration of procurement procedures by a quarter and significantly reduce the procedures regulated by law. If OECD estimates point to potential savings starting from 7%, we see that, by introducing this reform, in Latvia’s public sector expenditures there is a potential to save at least from 2% to 4%,” the Minister of Finance states.
Originally published at https://inc-baltics.com/nodoklu-paradniekiem-laus-piedalities-publiskajos-iepirkumos-lai-uzvaretu-parads-gan-bus-jasamaksa/
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