Challenges and Compliance with EU Acquis in the Procurement Sector: A Critical Analysis of Public Procurement and Contracting in Albania Entela Abdul

This study examines the evolution and current landscape of public procurement and contracting within Albania. Central and local governments heavily rely on these processes for the implementation of investments, delivery of public services, and satisfaction of public necessities. Yet distinct from its European counterparts, Albania does not possess a well-established tradition in formulating and adhering to public procurement rules and procedures. The frequent modifications in legislation have posed a multitude of challenges within institutional practices related to public procurements and contracts, resulting in a lack of uniformity across different entities in upholding procedural norms. The process and need for legal reforms and alterations in procurement regulations in Albania are driven by an intent to align and standardize with international directives and the acquis Communautaire. The procurement legislation aims to foster an environment conducive to the efficient administration and management of public funds while simultaneously promoting competition, ensuring equal treatment, preventing discrimination, enhancing transparency, and bolstering public confidence. Consequently, this research aims to scrutinize the legal reforms and critically assess the complications encountered within the public procurement sector. It focuses on the impact of these issues on the successful completion of procurement procedures, which are vital to the provision of public services, the facilitation of investments, and the broader economic sustainable development and progression of the country. In light of the examination of both legal reforms and institutional practices, as well as the identification of prevalent issues within the procurement process, this study raises two key research questions: Is Albania prepared for the implementation of procurement laws in line with international directives and the acquis Communautaire? What procedural and legal strategies must public institutions implement to prevent illicit activities by Economic Operators competing in tenders?

Introduction

Contracting authorities, during the development of procurement procedures, supply goods and services, carry out various works, guarantee equal, competitive, and non-discriminatory treatment, and promote transparency and proportionality (On Public Procurement Act, Article 3, Law no 162/2020). To promote competition and transparency, the procurement procedures in Albania are published through the electronic procurement system, where the necessary information to participate in the tender is easily accessible. These legal provisions have come as the necessity of harmonization and alignment with international directives and the Treaty on the Functioning of the United Europe (TFEU), which specifically provides for the free movement of goods and services in different European countries. Referring to this treaty, the observance of the main principles, such as equality, non-discrimination, proportionality, and transparency, are foreseen in the Albanian procurement legislation. Economic operators winning public contracts of the procurement procedures are obliged to respect the principles derived from the treaty for the functioning of the United Europe. According to Directive 24/2014/EU of the European Parliament and European Council of 26, February 2014 on Public Procurement, public contracts on a certain value of the winning economic operators, referring to the procurement procedure, must be contracted based on international rules and especially publicity and the promotion of free competition, giving inspiration to the economic development of the country and the management and efficiency of public funds. It is also worth noting that referring toDirective 17/2004/EC of the European Parliament for coordinating the procurement procedures of entities operating in the water, energy, transport, and postal services sectors and Directives 18/2004/EC of the European Parliament, for the coordination of procedures for the award of public works contracts, public supply contracts, and public service contract, public procurement rules should be reviewed and improved. This legal improvement should be done to increase the efficiency of public funds and to promote competition by facilitating the participation of small companies in the function of the good management of public funds, the comprehensive harmonization of public procurement rules, and the European common market.

Referring to the latest legal changes, in order to prove the fulfillment of the qualification criteria in the standard tender documents, the completion of a self-declaration is required. In this case, within the framework of the approximation of legislation with European directives, this self-declaration is accepted as sufficient proof instead of certificates or documentation issued by public authorities or third parties (On Public Procurement Act, Article 82, Law no. 162/2020). These legal changes have created a problem in the institutional practices of public procurement since, in many cases, the self-declarations are not true, leading to the cancellation of the procurement procedure at the stage of signing the contract when the filing of self-declaration verification documentation is required. In many cases, this documentation is missing, and the self-declaration is false.

The methodology of this study, consists in the qualitative and interpretive analysis of the law and legal changes in the public procurement sector, as well as their effect on institucional practice. Also analyzed are the findings and data obtained from interviews conducted with public procurement officials, which have identified the institutional problems caused by the legal changes.

Referring to the review of legal changes, institutional practices, and their qualitative analysis, the objectives of this study will focus on two directions:

• Improving and harmonizing the legislation and institutional practices of procurement with international directives, according to the perspective of the positive effects of inclusiveness in the common European market, as well as the promotion of the free circulation of goods and services.
• Difficulties observed in the Albanian reality and the practices of procurement procedures developed by administrative institutions refer to the harmonization of Albanian legislation with international directives. From this analysis, concrete recommendations have been identified regarding the measures that should be taken to avoid the problems identified in this study.

Legal Changes in Public Procurement and Harmonization with International Directives

Public contracts and procurement procedures are the most important elements of the realization of investments, public services, and the fulfillment of community needs by central and local state institutions. Unlike other European countries, our country does not have a consolidated tradition regarding the rules and development of public procurement. Laws constantly changing and evolving have also brought problems in institutional practices regarding the development of public procurements and public contracts.

These practices are not unified in terms of respecting the procedural rules in different institutions.

Legal changes and procurement rules in Albania are aimed at harmonizing and complying with international directives and Aquas Communitare, creating a unified practice regarding investments and public contracts.

This study analyzes the legal changes and highlights the problems created in the public procurement sector regarding the successful finalization of the procurement procedures in the function of the realization of public services, investments, as well as the economic development of the country. The purpose of the procurement law is to increase efficiency in the good administration of public funds, promote competition, equal treatment, non-discrimination, transparency, and increase public trust.

Referring to the legal provisions of procurement, one of the constituent elements of the standard tender documents is the self-declaration summary form, where part of the requirements and qualification criteria for the procurement procedure is not proven by the presentation of documentation (as provided for in the previous legislation) but by the self-declaration. of the competing economic operator (On the Approval of Public Procurement Rules Act, Article 15, DCM 285/2021). In this form, the competing Economic Operator declares that it has the technical and legal capacities to fulfill these criteria. This information stated by the Economic Operator is considered true in the function of the evaluation of the competition procedure by the Bid Evaluation Commission (On the Approval of Public Procurement Rules Act, Article 26, DCM 285/2021).

Participating economic operators, when applying in the procurement procedure, together with the requested documentation, also deposit the self-declaration summary form. This change was made in order to increase the effectiveness and speed of drafting the procurement documentation and reduce the bureaucracy provided for in European law and international directives. It is also worth noting that the self-declaration form predicted in the standard tender documents is approved by PPA as the highest governing body of public procurement. The truth of the information in the self-declaration summary form cannot be proven with other accompanying documentation, but it is left to the competence and personal responsibility of the economic operator participating in the tender. Through the summary formula, the economic operator declares himself and provides information regarding (On the Approval of Public Procurement Rules Act, Article 26, DCM 285/2021):

1. The economic operator is registered in the commercial register according to the legislation in force, and his field of activity is precisely the field of the object of the procurement procedure for which he is competing.

2. The economic operator has not been convicted by a final court decision after referring to the legal provisions; if they have been convicted for a certain category of criminal offenses, these economic operators cannot participate in the tender (On Public Procurement Act, Article 76, Law 162/2020).

Any economic operator is disqualified from public procurement procedures in cases where he is or has been convicted by a final court decision for criminal offenses, such as participation in a structured criminal group, criminal organization, terrorist organization, corruption, fraud, money laundering, or terrorist financing, actions with terrorist intent, counterfeiting, child labor and other forms of human trafficking. The obligation to disqualify an economic operator applies even when the person convicted by a final court decision is a member of an administrative, managing, or supervisory body, shareholder, or partner or his representative, decision-making, or controlling powers within it. So, if the economic operator has self-declared that he has not been convicted by court decision for this category of criminal offenses and it turns out to be the opposite, the Contracting Authorities must disqualify him from the procurement procedure. This control, according to the Joint announcement between PPA and the Ministry of Justice Nr. 1155 Prot date 01.02.2019, is exercised by an employee who has the right and access given by the Ministry of Justice to check whether the administrators, supervisors, shareholders, or partners of the economic operator have been convicted by a final court decision. In the following, this employee requests information from the General Directorate of Prisons about the criminal offense for which these operators were convicted.

If it happens that the Economic Operator has been convicted for one of the offenses provided for in the legislation, for which he had cheated in the self-declaration made, then PPA excludes him from the right to benefit from public contracts, for a period of three months to three years, after he has misinformed and submitted documents containing false data for qualification purposes (On Public Procurement Act, Article 78, Law 162/2020). The Public Procurement Agency takes into account the principles of impartiality, legality, and proportionality in its decision-making on the exclusion of economic operators and the determination of the term of the exclusion.

It is also worth noting that the Economic Operator must not have been convicted by a final court decision, even for offenses related to his professional activity. Even in these cases, this information is self-declared by the EO when he competes for a procurement procedure.

3. The Economic Operator is not in the bankruptcy process. This information is also self-declared by EO, as it is very important to follow and strictly implement the public contract. If it happens that the EO may be in the process of bankruptcy and this information is not known, referring to the procurement procedure, it could win a public contract, which it cannot finalize due to bankruptcy. In this case, the procurement procedure must be repeated, causing delays and negative consequences in the public service of various institutions.

4. The economic operator has paid all tax obligations and social security.

5. The economic operator, operating within the Republic of Albania, has paid off all the matured electricity obligations.

6. The economic operator is not in the conditions of conflict of interest.

7. The economic operator exercises the activity in compliance with the legal requirements of the environmental, social, and labor legislation.

8. The economic operator has presented an independent offer according to the requirements of the legislation in force.

9. The economic operator fulfills the technical specifications, according to the requirements defined by the contracting authority.

10. The economic operator disposes of the workforce necessary for the execution of the contract according to the requirements of the contracting authority.

11. The economic operator has the necessary tools and machines for the execution of the contract according to the requirements of the contracting authority.

12. Informs on the entities whose capacities the economic operator will be supported, if applicable, and potential subcontractors, if applicable.

13. The economic operator exercises the activity in accordance with the requirements of the legislation in force.

Contracting authorities, in cases where they have doubts and when access is allowed to various documents and accessible state data, can verify or receive supporting documents during the bid evaluation phase (On Public Procurement Act, Article 82, Law 162/2020). In cases where the information is accessible, then the Economic Operators in the self-declaration form define the internet address where the documentation is accessible, as well as giving consent for the verification of this information so as not to violate the principle of personal data protection.

Problems Identified in Institutional Administrative Practices During the Development of Procurement Procedures

In the previous legal provisions for public procurement, economic operators, for each criterion required in the Standard Tender Documents, had to submit certificates issued by institutions or third parties, as well as any proof documentation regarding the qualification criteria.The documentation was filed electronically in the Electronic Procurement System and could be easily verified by the Bid Evaluation Committee, during the bid evaluation phase. At the moment of the announcement of the winner and before the conclusion of the contract, this documentation deposited in the EPS, should be administered in the archive of the Contracting Authority in original, or notarized copy. Referring to the legal changes and their harmonization with the European directives, as evidence for fulfilling the qualification criteria in the procurement procedures, is the self-declaration form from the Economic Operator. It is worth noting, that the evaluation of the offers and the announcement of the winner, is referred to the self-declaration of economic operators not accompanied by proof documentation, as was the procedure before the legal changes.

However, after the announcement of the winner and before the conclusion of the contract, the contracting authority has the right to ask the winning bidder to submit the proof documents for the self-declarations, as well as the documents presented as part of the bid electronically in the Electronic Procurement System (On the Approval of Public Procurement Rules Act, Article 26/6, DCM 285/2021). These documents must be presented in the original or in copies identical to the original (notarized copies), and the documentation must be the same as that presented in the procedure developed electronically.

Despite the fact that the legal changes and the self-declaration prediction to fulfill the various legal criteria have come as an urgent need to harmonize and approximate the procurement law with the European directives, these legal changes have brought many difficulties in terms of the development of procedures of procurement in institutional practices and the finalization of public contracts. The purpose of this harmonization refers to the fact that legal approximation in different countries to achieve the same positive practical results.

Referring to this reasoning, in some cases legal changes do not effect positive practical results The laws and practice are correlated with each other across countries and better practice is correlated with beter outcomes, but laws are not correlated with outcomes (Bosioet al., 2022).

Specifically, according to Sadika Vashi (2023), after the winner was announced, it turned out that the economic operator did not have proof documentation for the self-declaration form, or the information provided in the self-declaration turned out to be false. Although the legislation has provided severe penalties for the economic operator who submitted false data in the self-declaration, as exemption from APP for a period from three months to three years, or criminal proceedings by competent authorities (On Public Procurement Act, Article 78, Law 162/2020), in terms of institutional practice, the legal changes have brought many obstacles and difficulties in finalizing the procurement procedures and concluding the public contract. The procurement procedure has been suspended at the contract conclusion stage as a result of the impossibility of submitting self-declaration proof documentation. Although the procurement procedure ends at the stage of announcing the winner, the impossibility of signing the public contract leads to the cancellation of the procurement procedure and its relaunch. Ivona Lame (2023) emphasized that, this cause delays in public services and in the fulfillment of the needs of the institution for goods and services in order to fulfill institutional mission. Economic operators, in many cases, do not have the goodwill to declare true information in relation to the required criteria or do not have sufficient education to understand the legal penalties arising from declarations of false information.

Conclusions and Recommendations

Referring to this study, the problems observed in institutional practices, but also based on the cancellation notices published in the Public Notices Bulletin of PPA, it results that many procurement procedures are canceled. This cancellation comes as a result of not finalizing the signing of public contracts due to the missing documentation proving the declarations of economic operators.

Although the legal changes to procurement rules have come as a result of the necessity of approximation with European directives and EU law, the delays and problems that have been observed during the practical implementation of procurement procedures developed in various institutions lead us to the conclusion, that our country is still not ready for these legal changes and harmonization with European legislation. Economic Operators, in relation to the declarations of the fulfillment of the qualification criteria required in the DST, do not have a legal and moral responsibility, as they declare false information that is not justified by evidentiary documentation.

Referring to this study and the fact that the EO’s self-declarations, in many cases, contain false information, causing negative consequences for the public service, such as delays and cancellation of procurement procedures, we believe that the penalties and punishments related to the lack of documentation should be toughened. Referring to this study, we propose that in addition to the provision of exclusion from the PPA of EO for a period of three months to three years, administrative penalties (fines) and the referral of the case to the prosecution body should be added.