Silistra Municipality Uses State of Emergency to Circumvent Legal Requirements for Tender Procedure

The Anti-Corruption Fund Foundation (ACF) has filed a report with the Public Financial Inspection Agency, asking for a thorough check into a public procurement procedure for insurance services in the town of Silistra in northeastern Bulgaria.

The contract for the provision of insurance for the municipal fleet and real estate property is worth BGN 55,882.35. The procedure was opened on 18 March 2020 by the mayor of Silistra. Citing the state of emergency currently in the country, the municipality did not organize a competitive tender procedure, neither did it invite several insurance companies to submit offers. Instead, it resorted to direct negotiation, extending for 12 months the contractual relationship with Asset Insurance, the service provider at the time.

The circumvention of the public procurement procedure is a violation of the Public Procurement Act (PPA) and the state of emergency declared in Bulgaria does not provide an excuse, according to the ACF legal team.

“This case from Silistra is one example of a worrying trend of using the state of emergency law as an excuse for circumventing legal procedures which, under normal circumstances, are mandatory and serve to defend the public interest, encourage competition and guarantee the efficient allocation of public funds,” said Boyko Stankushev, director of ACF.

“We looked into the public procurement documents after reviewing a publication by local journalist Dimitar Petzov in a local Silistra group on social media. We call on all engaged citizens to continue defending important legal principles and to monitor institutional decisions at the local and national level,” said Mr. Stankushev.

In the published procurement documents, Silistra Municipality has explained its decision citing the state of emergency introduced on 13 March 2020 which, the municipality claimed, prevented it from meeting the deadlines outline din the law for the holding of open tenders or other competitive procedures. Since the renewal of insurance policies for the municipal fleet and real estate property was urgent, a decision was made to engage in direct negotiation and buy insurance covering the following 12 months from Asset Insurance, the sole provider of this service to the municipality for the past three years.

ACF’s investigation, however, shows that Silistra Municipality had been under the obligation to open a public procurement tender before the state of emergency was declared. An analysis of procurement contracts for the same service for previous years shows that the municipal insurance policies were expiring on 29 March 2020 and, according to the PPA, the procedure should have been announced in February 2020 at the latest. Instead, the municipality announced the procurement procedure on 18 March 2020, a mere 11 days before the expiration date of the insurance policies. Thus, the municipality could not have met the deadline outlined by law under any circumstances. In other words, the declared need for urgency in appointing an insurance provider was not due to unforeseeable circumstances such as the state of emergency but was a result of delayed actions of the awarding party and represents a violation under the PPA.
ACF stresses that the state of emergency legislation does not in any way obstruct the legally-defined procedures for holding public tenders (exceptions are only made for deliveries of some types of medical and protective equipment and these are clearly defined in the State of Emergency Measures Act). The PPA remains the relevant piece of legislation with regards to all other cases and it should be implemented strictly by all awarding parties who are still under the obligation to spend the increasingly scarce public resources in a frugal, transparent and legal manner.

We believe that, through this violation of the Public Procurement Act, the mayor of Silistra Municipality has limited the ability of other insurance companies to participate in the tender, thus violating the legal requirements to encourage free competition among potential service providers as well as the overall goal of the PPA, namely the efficient allocation of public spending.

ACF has filed a report with the Public Financial Inspection Agency, asking for a check into the public procurement from 18 March 2020, as well as all tenders for insurance services by Silistra Municipality in the period 2017 – 2020.

ACF will continue to monitor closely public procurement procedures within the period of national state of emergency and calls on citizens to alert us in the event of suspected legal violations.