No. 7




The Procurement System’s Flaws

11 June 2003


RiTo No. 7, 2003

Following the entry into force of the Public Procurement Act on 1 April 2001, the question has arisen of why buyers or public organizations do not use open tenders and still try almost without exception to offer unadvertised tenders, which are regulated by a special section of the Act.

Unadvertised, negotiated tenders have become the tendering process, accompanied by lawsuits and media stories of corrupt special interests and accusations of skimming of state funds. This article examines deviations from the law that take place when public services are purchased from out of house providers, and attempts to analyze the flaws in the procurement system. In tying up the conceptual problems with this law, it must first be stated that the new law ignores specificity of services, being more suitable for purchasing material goods than immaterial services with a complicated structure. The law also ignores the need for long-term relationships, making it difficult to build on transactions from both the buyer and vendor’s perspective. Third, under the law, high service costs are internally programmed into contracts; the law also ignores buyers’ needs to enter into short-term contracts with specific providers, to vet them for future use as long-term partners. In short, these are flaws that could not be apprehended at the time the law was drafted. When the construction of a system is lacking, its implementation will be flawed and fixing the consequences will not solve the problem.

Full article in Estonian