ACF: via another series of illegal annexes, BFSA continues to pour millions into mobile incinerators with dubious capacity

With four annexes from December 15, 2020, published on January 14, 2021, the Bulgarian Food Safety Agency (BFSA) has extended the terms of all existing contracts for disposal of animal waste, concluded in 2018 with the contractors “Blue cross 2016” Ltd (with a new name from October 12, 2020 “IDDD Logistics” Ltd.) and “Eco BG – SGP” Ltd. According to one of the annexes, in addition to extending the term of the contract, the BFSA pours a new BGN 2.8 million to the contractor ECO BG – SGP. Thus, only in 2020, “Eco BG – SGP” had received a total of BGN 30.16 million from the BFSA above the contract. Between March 2018 and December 2020, the two companies received a total of BGN 89,5 million via contracts and annexes contradicting the procurement rules.

since August 2019, the Anti-Corruption Fund (ACF) and journalist Genka Shikerova investigate the contractual irregularities between the BFSA and “Eco BG – SJP” Ltd and “Blue Cross 2016 Ltd in the documentary “War for Carcasses.” The violations are mainly related to providing additional funds via repeatedly signing annexes and assigning additional services for animal waste disposal to the same companies without complying with the legal requirements for amending public procurement contracts. The ACF’s investigations raise reasonable doubts whether both companies’ mobile incinerators’ have the technical capacity to neutralize the record amounts of animal waste reported and paid for by the BFSA and whether the Agency exercises effective control over its contractors.

“The December 2020 annexes are an example of how the BFSA continues to award additional funds to the same beneficiaries despite numerous violations reports, the case the ACF won against the BFSA, and the State Agency for Financial Inspection’s ongoing investigation,” commented ACF director Boyko Stankushev. “The annexes violate the Public Procurement Act (PPA) and its specific provisions about amendments to already concluded contracts.”

According to the BFSA’s announcement from January 14, 2021, the contracts’ new changes are necessary due to two groups of mutually exclusive reasons.

On the one hand, the BFSA points to the existence of “extraordinary circumstances” which could not have been reasonably foreseen by the contracting authority, namely: the extension of the European regulation allowing state aid in the field of animal waste disposal, the granting of additional funds from State Fund “Agriculture,” and the contractor “Blue Cross 2016” Ltd’s name change. “None of these circumstances is a development that a reasonable and conscientious contracting authority could not have foreseen, as required by the applicable Bulgarian and European law,” said Lora Georgieva, a senior legal expert at the ACF.

On the other hand, the notice states that the procurement documents and the contracts provide the possibility for changes. ACF’s legal analysis shows that these allegations are also incorrect. The public procurement documentation does not allow the possibility of extending the contracts after December 31, 2020; on the contrary, it explicitly prohibits such renewal. The provision of Art. 4 of the agreements, stipulating the options for their amendment, does not meet the legal requirement that the change clauses should be clear, precise, and unambiguous. Moreover, the clause is illegal, as it seeks to introduce the possibility of an indefinite extension of the contract. The law strictly prohibits such a result.

“Concluding new and new annexes in obvious violation of the Public Procurement Act hinders free competition. It restricts transparency and impairs the possibility for efficient spending of public funds,” concluded Boyko Stankushev. “The responsible institutions must act on the reports we have sent and stop these inappropriate practices.”

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