I've been doing a piece of desk work looking the role of financial inspection agencies in an Eastern Europe country. One country which has developed a decentralised PIFC strategy whilst retaining a financial inspection function is Bulgaria. Far from seeing this as an anomoly a recent EC report notes the importance of the role of the Inspection Agency in addressing weaknesses in the public procurement process. The report notes:
“The implementation of public procurement legislation in Bulgaria shows important weaknesses. Bulgaria initiated checks by its competent authorities which have established an irregularity rate of 60% among all tenders verified. This rate reaches almost 100% for large public infrastructure projects where the authorities have an obligation of ex-ante control.
At the same time, the administrative and judicial authorities are not in a position to protect public procurement against conflict of interest in an effective way. This is due to a number of weaknesses in structures and procedures. The capacity of administrative authorities to advise on public procurement procedures and to perform checks is insufficient. The capacity of the Public Financial Inspection Agency has been reduced substantially; as a result, the agency performed ex-post controls in only 12% of all public tenders in 2009. At the same time, ex-post administrative checks do not follow a proper risk assessment. The introduction of the system of ex-ante control should help to remove shortcomings in the procedure for big structural projects. However, the Public Procurement Agency lacks sufficient capacity to verify the legality of tenders through ex-ante checks and to follow up whether its recommendations have been followed”.
I understand that Bulgaria's financial inspection law is being tightened to give the Agency greater powers to address weaknesses in the procurement process.
It was interesting for me to learn that the centralised control body is seen to have a role in ex-post reviews of procurement contracts and that this is recognised in the EC report. In a country perceived to have relatively high levels of corruption (in the context of the EC at least) and a history of centralised control this seems to be an appropriate model. If anyone has first hand experience of this system in Bulgaria or elsewhere I would be interested in hearing about it.
