Bulgarian government’s vogue for halting public tenders endures

Written by on March 30, 2016 in Bulgaria - Comments Off on Bulgarian government’s vogue for halting public tenders endures

In March 2016, Bulgarian government officials have continued to carry out Prime Minister Boiko Borissov’s order to review and cancel public tenders where necessary, with the sums of halted public procurements now running into many hundreds of millions of leva.

The vogue began in February, when Borissov ordered a halt to public procurement procedures for a 60km stretch of Hemus Motorway, worth about 757 million leva (about 387 million euro).

Borissov first said that the cancellation was motivated by an inability to get European Union funding, but later it emerged that he was responding to speculation that the Hemus Motorway business had gone to companies linked to controversial business person Delyan Peevski and LukOil Bulgaria chief Valentin Zlatev.

The pattern that emerged of cancelled public tenders fuelled speculation that the move was directed at least in part against Peevski, an MP for the Movement for Rights and Freedoms whose short-lived appointment in 2013 as chief of the State Agency for National Security sparked widely-supported public protests demanding the resignation of the government of the time.

An alternative interpretation has been offered by Mihail Mikov, leader of the opposition Bulgarian Socialist Party, that large-scale public tenders are being dropped because under Borissov’s centre-right government, in office since November 2014, Bulgaria is heading for cash flow problems. Mikov has not offered figures to back up this assertion.

In February, Bulgaria’s government decided to cancel a tender, called in January and estimated to be worth 484 million leva over a period of 11 years, to pick a new contractor to print Bulgarian identification documents, and then the country’s two port cities on the Black Sea, Varna and Bourgas, called off three projects worth 155.5 million leva, or about 79.5 million euro.

Borissov said that at the time that procurement procedures would be stopped if there was even the slightest indication of irregularities. He said that the identification document business would be carried out by the state, at what he described as vastly cheaper cost.

Also suspended by the end of February were a public procurement tender for the Zheleznitsa tunnel on Struma Motorway, worth a reported 250 million leva, and a tender for renovations of Sofia’s Winter Sports Palace, worth a reported 35 million leva.

In mid-March, Transport Minister Ivailo Moskovski said that he was suspending tenders involving the Bulgarian Port Infrastructure Company (BPIC) and National Railway Infrastructure Company. Though no overall figure was given by Moskovski, the deals included one for the supply of wi-fi infrastructure to the BPIC, a six million leva deal.

Defence Minister Nikolai Nenchev got into step, announcing suspension of public procurement tenders for food supply to the army. Public procurement would be stopped his ministry if there was “the slighest shadow of a doubt” about the integrity of a deal, Nenchev said.

A headline-maker among cancellations was a decision on March 21 by the Social Ministry to stop the purchase of 10 luxury cars – described in media reports as “limousines” – for a total of 720 000 leva.

The cancellation came after a report by local Nova Televizia which alleged that the tender conditions had been compiled in such a way that only two models, produced by one manufacturer, could meet them.

The detailed specifications included requirements for horsepower, of higher than average, fuel efficiency, a six-speed automatic gearbox – and the colour should be metallic black. The cars were meant to replace ones bought in 2009 “for the needs of the administration” (a ministry meant to help the poor, and one that presumably intended, with 190 horsepower cars, to help them that much faster).

In a media statement, the ministry said that steps were being taken to prevent a repeat of the way the procurement had been drafted. The Cabinet minister in charge, Ivailo Kalfin, had ordered the tender cancelled after the television report, the ministry said.

Bulgaria’s Parliament approved a new Public Procurement Act on February 2 2016, which is expected to come into force in mid-April. It transposes into Bulgarian law two 2014 EU directives and three older EU directives that the country had not previously put into its domestic law.

The specific regulations governing how the act operates are to be promulgated by the government.

Also in March, Economy Minister Bozhidar Lukarski said that it was a fact that there was a concentration of a certain number of companies in the construction sector. But, in a television interview, he denied that the cancellations of public procurements were causing tension in the private sector.

In a commentary article in late March, on the state of Peevski’s business empire – of which he claims to be divesting himself – public broadcaster Bulgarian National Radio said, “Peevski’s construction business suffered a serious blow when a string of public tenders, worth tens of millions of euro, were halted by no less than the Prime Minister himself”.

Speaking in March, Tomislav Donchev, one of Bulgaria’s four deputy prime ministers and whose portfolio covers the management of EU funds, said that “once a procedure is terminated, it is really terminated”.

It was not just a question of fighting corruption but also of fighting behind-the-scenes deals, and public suspicions, he said.

“I accept that it is not very customary for the political leadership of the country to be doing this (cancelling tenders), it is correctly the responsibility of the administration,” Donchev said in an interview with Bulgaria’s public broadcaster. “We are doing everything necessary so that the baton is taken by the control institutions, and that will happen soon. It is a matter of, if not days, then weeks,” he said.

(Photo: Apostoloff)

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