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Partnership for Social Development Public Procurement Systems in the Western Balkans: An Assessment of Integrity, Performance and Vulnerability to Capture Country report ALBANIA 2 This report has been published within the framework of the Governance Risk Assessment in Public Procurement-GRAPP project implemented by Partnership for Social Development (Croatia). Project full title: Governance Risk Assessment in Public Procurement

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Partnership for Social Development Public Procurement Systems in the Western Balkans: An Assessment of Integrity, Performance and Vulnerability to Capture Country report ALBANIA 2 This report has been published within the framework of the Governance Risk Assessment in Public Procurement-GRAPP project implemented by Partnership for Social Development (Croatia). Project full title: Governance Risk Assessment in Public Procurement

Abstract and Figures

The integrity of the public procurement process is best assured when two conditions are present: first, the allocation of resources should occur in conditions of open competition; and, second, mechanisms should exist to monitor the government agents in charge of the process and check that their decisions are made solely on the basis of the relative merits of competing bidders1. While these conditions appear undemanding, in practice achieving integrity in public procurement is a challenging task in any governance environment, even in well-developed democracies. Despite the efforts of public procurement policy actors to suppress corruption in public procurement, the incidence of corruption in this area remains high, suggesting that accepted mechanisms and approaches are deficient.
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1
Partnership for Social Development
Public Procurement
Systems in the Western
Balkans: An Assessment
of Integrity,
Performance and
Vulnerability to Capture
Country report
ALBANIA
2
This report has been published within the framework of the Governance Risk Assessment in Public
Procurement- GRAPP project implemented by Partnership for Social Development (Croatia).
Project full title: Governance Risk Assessment in Public Procurement
Acronym: GRAPP
Duration: May 2017 December 2017
Website: http://www.integrityobservers.eu/
This publication has been produced with the assistance of the European Union.
The contents of this publication are the sole responsibility of Partnership for Social Development and
can in no way be taken to reflect the views of the European Union.
The project is funded by the European Union
3
Contents
1. Introduction ........................................................................................................................................ 4
Conceptual framework and rationale................................................................................................... 4
Methodology ....................................................................................................................................... 7
General methodological approach ....................................................................................................... 7
Indicators and data packages covered by the assessment .................................................................... 8
Measurements and process of assigning values to different indices ................................................... 8
Potential method in brief ..................................................................................................................... 9
Values of the index .............................................................................................................................. 9
2. Country report Albania .................................................................................................................... 12
Summary interpretation of overall indices ........................................................................................ 14
Key findings ...................................................................................................................................... 15
Key recommendations ....................................................................................................................... 16
Category 1: Public Procurement Regulatory Ecosystem ................................................................... 17
Category 2: Public Procurement Planning ........................................................................................ 20
Category 3: Exceptions from procurement legislation ...................................................................... 23
Category 4: Information management in Public Procurement system .............................................. 27
Category 5: Pre-bidding stage ........................................................................................................... 29
Category 6: Public procurement Contracting .................................................................................... 31
Category 7: Petty public procurement ............................................................................................... 34
Category 8: Public Procurement Remedy mechanisms ..................................................................... 37
Category 9: Control over the implementation of PP legislation ........................................................ 41
Category 10: Control over Execution of public procurement contracts ............................................ 45
Category 11: Regulation of conflict of Interest in PP System and procedures ................................. 47
Category 12: Audit mechanisms ....................................................................................................... 50
Category 13: Criminal justice system response to PP anomalies ...................................................... 53
Category 14: Capacity and human resources management ............................................................... 56
Category 15: Trends in public procurement contracts....................................................................... 58
Category 16: Trends in framework agreements ................................................................................ 61
Category 17: The most successful tenderers ..................................................................................... 63
Category 18: Trends in petty public procurement ............................................................................. 65
3. References ......................................................................................................................................... 67
4
1. Introduction
Conceptual framework and rationale
The integrity of the public procurement process is best assured when two conditions are present: first,
the allocation of resources should occur in conditions of open competition; and, second, mechanisms
should exist to monitor the government agents in charge of the process and check that their decisions
are made solely on the basis of the relative merits of competing bidders
1
. While these conditions
appear undemanding, in practice achieving integrity in public procurement is a challenging task in any
governance environment, even in well-developed democracies. Despite the efforts of public
procurement policy actors to suppress corruption in public procurement, the incidence of corruption in
this area remains high, suggesting that accepted mechanisms and approaches are deficient.
Detecting and measuring corruption in public procurement (hereafter, PP) is particularly challenging,
not least because there is scant agreement on how to define corruption or translate theoretical
definitions into practical approaches. Rose-Ackerman (1975) proposed a framework for detecting and
measuring corruption in public procurement that is based on the relationship between market structure
and the incidence of corrupt dealings in the government contracting process
2
. This widely accepted
approach has led to the development of ‘red flag’ indicators of corruption risk in the public
procurement process. Practitioners, investigators and policy makers use this approach to estimate the
probability that corruption occurred in a specific procurement case while it also lays the foundation for
a new evidence-based approach to fighting corruption
3
. However, the red flag approach is dependent
on being able to gain access to high-quality data, which is rarely the case. It also fails to shed light on
why such deviations occur and how serious the extent of corruption in the public procurement system
is in any given country or sector.
These deficiencies in detecting PP-related corruption may be especially profound in situations of
market capture, where corrupt actors are able to shape the rules and access to data. Thus, in our study
on public procurement in the construction sector (Podumljak and David-Barrett, 2015), the empirical
evidence suggested that actors were able to exert direct or indirect political control over access to
contracts of a significant value, such that only favoured bidders were successful
4
. This demonstrates
that capture of the system’s functionality - for the purpose of shaping the outcome is an important
part of public procurement corruption. As such, the phenomenon of state capture shall be addressed
research and assessments of PP corruption.
State capture is defined as shaping the formation of the basic rules of the game (i.e. laws, regulations
and decrees) through illicit and non-transparent private payments to public officials and politicians”.
5
Academic scholarship suggests that state capture - illicit influence over the rules of the game - is one
of the most pervasive forms of corruption today, especially in transitional societies.
6
While a
conservative interpretation of state capture focuses on the aim of private interests to capture state
functions for its own benefit, this report also covers a less researched area: the usage of public
resources (power or material resources) in efforts to capture or influence the behaviour of external
actors - including in the private sector (economic operators), civil society and media - to serve illicit
1
Podumljak, M., David-Barrett, E. (2015) The Public Procurement of Construction Works: The Case of Croatia. European
Commission’s Seventh Framework Programme ANTICORRP. Available at: http://anticorrp.eu/publications/report-on-
croatia/.
2
Rose-Ackerman, R. (1975) The Economics of Corruption. Journal of Public Economics 4. 187-203.
3
Ferwerda, J., Deleanu, I., Unger, B. (2016) Corruption in Public Procurement: Finding the Right Indicators. European
Journal on Criminal Policy and Research Vol. 23, Issue 2, p. 245-267.
4
Podumljak, M., David-Barrett, E. (2015) The Public Procurement of Construction Works: The Case of Croatia. European
Commission’s Seventh Framework Programme ANTICORRP. Available at: http://anticorrp.eu/publications/report-on-
croatia/.
5
Hellman, J.S., Jones, G., Kaufmann, D. (2000) Seize the State, Seize the Day: State Capture, Corruption,
and Influence in Transition. p. 2. Policy Research Working Paper 2444. World Bank.
6
Ibid.
5
private interests. In such cases, the instruments of capture are usually defined through a set of
combined actions, and can become visible or manifest as bribery, breaches of integrity, favouritism,
conflicts of interest, clientelism, cronyism or other corrupt activity. However, the phenomenon of
capture is present only if these manifestations are the result of systemic multi-layered activity to
control loci of state and societal power. This can be observed through proxies such as hyper-
politicization of the public sector and the presence of constituencies of interests of political, economic
and social players with significant influence over the rules that govern the distribution of public
resources.
This report differentiates between, on the one hand, basic deviations from administrative processes
and incidental corruption and, on the other, the more severe phenomena of societal capture. The report
develops two indices to measure these phenomena a corruption resistance index and a capture risk
index. The indices rest on Klitgaard’s
7
widely accepted corruption axiom C = M + D A (1988), to
measure the extent to which a monopoly of power and administrative discretion are checked by
accountability. This approach also builds on more recent theoretical work by Mungiu-Pippidi
8
(2013)
describes corruption and the control of corruption as an equilibrium between opportunities (resources
and motives for corruption on one side), and constraints (deterrents imposed by the state or society).
While describing corruption is a complex task per se, measuring it is even more challenging.
Numerous scholars and practitioners have developed indices based largely on surveys of perceptions
and experts (i.e. Transparency International Corruption Barometer, World Bank World Governance
Indicators) while others have developed proxies for corruption in public procurement (see Fazekas et
al 2013). Our approach also focuses on PP but seeks, rather than measuring corruption, to assess
systemic deterrence to corruption and state capture, and the effectiveness, efficiency and impact of
established systems in detecting, preventing and punishing undue influence over procedures and
outcomes. The aim of the report is to inform practitioners and policy makers to enable design of better
control systems.
The team faced several challenges that this report aims to address. In the first pilot draft we tested a
country-specific approach to reporting (following the principles of the EU Anti-Corruption report
2014
9
) but responses from non-practitioners relating to understanding of PP-specific capture risks
have led us to focus our recommendations on more conceptual factors, rather than policy or
institution- specific advice. In addition, since the report aims to assist the European Commission in
developing future country reports, as well as member state governments in designing efficient and
effective responses to corruption in public procurement, a new, innovative digitally-assisted
comprehensive standardized approach in reporting was designed and piloted in this final document.
The approach and methodology also builds on the new approach of the Commission elaborated in the
EU 2016 Enlargements strategy and the emphasis on evidence-based reporting within the
fundamentals first framework.
The EU began to play a more active role in governance reforms in the Western Balkan (WB) countries
in June 2003 when the prospect of potential EU membership was extended to all WB countries during
the Thessaloniki EU-WB Summit. The summit resulted in the Thessaloniki Declaration, which has
guided the reform efforts of the WB countries in seeking to join the Union, as well as offering
enhanced EU support for their endeavours.
10
With the prospect of EU membership, among other
important issues, all of the WB countries committed to a permanent and sustainable fight against
7
Klitgaard, R. (1998) Controlling Corruption. p. 75. Berkley: University of California Press
8
Mungiu Pippidi, A. (2013) The Good, the Bad and the Ugly: Controlling Corruption in the European Union. p. 28. Berlin:
Hertie School of Governance.
9
European Commission (2014) EU Anti-Corruption Report. Available at: https://ec.europa.eu/home-
affairs/sites/homeaffairs/files/e-library/documents/policies/organized-crime-and-human-
trafficking/corruption/docs/acr_2014_en.pdf
10
Council of the European Union (2003) Thessaloniki European Council 19 and 20 June 2003. Council of the European
Union (2003) Thessaloniki European Council 19 and 20 June 2003. Available at:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/76279.pdf.
6
corruption that was accompanied by technical and financial aid to good governance programs in
respective countries.
The European Commission (EC) DG Near (at the time DG Enlargement) played a crucial role in
guiding the respective countries in their reform efforts and providing assistance in the areas where
challenges for WB countries were significant. However, more than a decade later, the strategies and
action plans implemented had not produced the expected results or impact on corruption patterns. This
has prompted policy-makers to revisit and redesign the approaches and objectives used in the fight
against corruption in the Western Balkans.
Through the GRAPP project, we aim to address several explanations for the absence of sustainable
positive reforms and developments. Academic literature argues that EU democratic conditionality in
any area, including fight against corruption, works best where the local political costs of compliance
are not high. However, in the areas where conditionality threatens to disrupt the power equilibrium of
veto players (i.e. local political elites), progress is likely to be limited or unstable.
11
From the EU’s
point of view, the fight against corruption is embedded in two different categories assessed by the EU
Country reports Democratic conditionality and acquis conditionality
12
. However, the success of the
EC in its assistance to anti-corruption efforts in the accession countries depends greatly on the
responsiveness of local actors. In addition, in designing realistic reforms and development
benchmarks, the Commission requires an understanding of the local governance culture and the social
drivers of corruption, as well as analysis of the effectiveness and efficiency of the accountability
mechanisms in the local context. The EC is highly dependent on local political cooperation in
assessing the different aspects of governance in order to design appropriate reforms. Yet local veto
players are often reluctant to give up their power, leading to a variety of roadblocks to democratization
and making the process challenging, slow and sometimes frustrating for many of the actors involved.
As such, the need for in-depth research and assessment, as well as for the development of process
tracing tools, has emerged as a priority for the EU accession processes of WB countries, as well as for
other processes where assessment is an essential foundation for designing effective assistance and
support to reforms. In order to improve the process, the EC uses a variety of available tools developed
internally and externally (i.e. SIGMA and OECD´s ‘Principles of Public Administration’ and GRECO
evaluations). However, despite the value and quality of the established instruments, many gaps in
understanding specifics in certain corruption hot-spots (i.e. state capture) as well as challenges to
adequate local contextualization remain.
In order to respond to this challenge, we propose a complementary approach in assessing specific
corruption risk areas, which is elaborated further here.
11
Podumljak, M. (2016) The Impact of EU Conditionality on Corruption Control and Governance in Bosnia and
Herzegovina. 7th Framework Programme: ANTICORRP project. Available at: http://anticorrp.eu/publications/the-impact-of-
eu-conditionality-on-corruption-control-and-governance-in-bosnia-and-herzegovina/.
12
Term Democratic conditionality mostly refers to Copenhagen criteria as explained in: Schimmelfennig, F. and U.
Sedelmeier (2004) Governance by conditionality: EU rule transfer to the candidate countries of Central and Eastern Europe.
Journal of European Public Policy 11/4: 661679.
7
Methodology
General methodological approach
Our methodology addresses the European Commission’s need for local contextualization whilst also
engaging with theoretical approaches to assessing the concept of state (social) capture. The main
guiding methodological principles of the GRAPP project - Common denominator approach, Multi-
purpose indicators approach, Standardized data collection approach, and Standardized data
interpretation approach - are elaborated below:
The Common Denominator approach establishes key elements of assessment in each area that provide
standardized information on the risks of capture, exposure to capture, and manifestation of capture of
specific public and social power entities relevant for the category being assessed. This enables
researchers to establish specific relationships as well as causalities between the anomalies detected and
progress/regress of the social (state) capture phenomena over time. The common denominator
approach also enables researchers to establish cross-category relationships and cross-country
comparisons that can be elaborated in country and cross-country reports within the GRAPP project.
The manifestation and systemic nature of social (state) capture and different forms of corruption in
Public Procurement is determined primarily by the culture of governance, integrity, accountability and
transparency observed in the given societies. Therefore, common denominators are established in each
of the 18 assessment areas, resting on these key elements. In addition, the common denominators
applied in each area will cover the following:
Vulnerabilities and loopholes in relevant regulatory frameworks (in each of the 18 areas of
assessment) that create risks of capture of state loci of power.
Barriers to capture and corruption identified in the regulatory framework in each assessed area
(integrity, accountability and transparency mechanisms).
Implementation and enforcement capacity of the existing organisational infrastructure
established to deal with corruption and capture phenomena in Public Procurement (integrity
and horizontal accountability mechanisms).
Evidence of capture of loci of state and social power (hyper politicisation, preferential
treatment in distribution of public resources including distribution of power).
Effectiveness of vertical accountability mechanisms (social capacity to detect, expose and
sanction corruption and social/state capture) relevant for Public Procurement systems.
The Multi-purpose Indicators approach provides efficiency in usage of collected information for the
purpose of establishing indicators and creating judgments about country status in each assessed area.
As tested during the pilot project, the quality of assessments will rely on being able to collect a
significant amount of primary source data to understand governance behavior in the assessed area. In
order to reduce the burden on data collection systems and national administrations, multi-purpose
indicators have been established. For example, the regulatory and performance indicators in the area of
procurement planning (existence, accuracy and assurance of transparency of procurement plans) can
be used also to assess the quality of information management. This approach preserves resources
needed for implementation and lessens the overall burden on administrative bodies in given countries
during the data collection period. The multi-purpose indicators approach is further strengthened
through usage of PSD’s GRAPP IT Tool which provides the experts and levels of evaluation with the
information relevant for making quality judgments. In addition, multi-purpose indicators contribute to
the speed and quality of the reforms in each of the countries covered by GRAPP as they target specific
measures in the PP system that have direct relationships with the integrity, accountability and
transparency of the system. By improving performance on one of the multi-purpose indicators, the
impact of the measure may spread through several categories, contributing to the overall impact of EU
Assistance to the accession countries in chapters 23 and 24.
8
The Standardized Data Collection approach was tested in the MEDIA CIRCLE project (measuring
Media Clientelism Index) in the period 2013-17. PSD prepared standardized FOIA requests for data
sets and distributed them to our country partners. Accompanied by a letter from DG Near explaining
the purpose of the exercise and data collection, these requests for information packages were duly
forwarded to relevant authorities. The respective country authorities were given 45 days to respond to
all of the questions, with an additional 45 days allowed for clarification of the requests and additional
responses from relevant authorities. Standardized data collection facilitates understanding of
discrepancies observed to date in country evaluations by different projects and facilitates the
development of different sets of indicators at subsequent stages.
The Standardized Data Interpretation approach is an additional measure intended to mitigate
variations and deviations in understanding of specific country situations. The IT Tool established by
PSD guides researchers in interpreting the collected data. Each data set and set of indicators important
to understanding the social (state) capture situation is followed by a specific set of questions to which
researchers are asked to respond. Narrowing the interpretation to the aspects of contextualization most
relevant to social capture shall further enhance the quality of the reports, ease the review and editing
process established, and support the EU Commission in designing high-quality assistance to reform
programs for accession countries.
Indicators and data packages covered by the assessment
In each of the six countries covered, eighteen (18) different areas/ categories of Public Procurement
important for understanding governance culture, integrity eco system, risks and manifestations of
state/social capture were assessed: 1. Public Procurement Regulatory Ecosystem; 2. Public
Procurement Planning; 3. Exceptions from the application of the PP Law; 4. Information management;
5. Pre-bidding; 6. Contracting; 7. Petty public procurement; 8. Remedy mechanisms; 9. Control over
the implementation of law; 10. Execution of public procurement contracts; 11. Conflicts of interest;
12. Audit mechanisms; 13. Criminal justice system; 14. Capacity and human resources management;
15. Trends in public procurement contracts; 16. Trends in framework agreements; 17. The most
successful tenderers; 18. Trends in petty public procurement. For each category, the set of multi-
purpose indicators were assessed using the standardized interpretation approach used as established in
the interpretation guidelines that each of the experts received. In total, more than 130 data packages
were used in the assessment of each country, with additional information requests made where
relevant (e.g., in the case of inconclusive opinion over the specific category).
Measurements and process of assigning values to different indices
During the measurement and data interpretation process, and due to the need to valorise or weight
certain categories, a three-level measurement was deployed for each of the countries analysed :
1. On the first level, local experts provided their respective opinion over each specific category
based on collected primary source data (i.e. responses received from respective authorities),
applying the standardized interpretation guidelines.
2. In the second-level evaluation, these interpretations were translated into vector-based
distances.
3. The third-level evaluation utilised the PSD expert group to review the local expert evaluations.
For each of the 18 categories, two different measurements were provided: a) Corruption Resistance
Index and b) Capture Risk Index. These two differ in the standardized interpretation and require
different logic in thinking by evaluators which is crucial in order to be able to understand, observe and
measure the effect that corruption has on the procurement system:
9
The Corruption Resistance Index measures the rationale, relevance, effectiveness, efficiency
and coherence of measures for prevention, detection and sanctioning of potential corruption-
related behaviour in each assessed category. This Index reflects on the capacity and practice
of the regulatory and institutional framework to prevent, detect or sanction corruptive
behaviour, based on observable evidence.
The Capture Risk Index reflects on the evidence of discretional power, politicization, and risk
of unchecked undue influence over the established structures that could lead to capture of the
system by undue private or partisan interests. It reflects on the opportunities to influence
established anti-corruption measures and undermine the effectiveness and efficiency of
established systems.
The principle of assigning values to each of the indices in levels two and three above rests on the
Potential method following theoretical work of Lavoslav Čaklović, Ph.D., University of Zagreb,
Faculty of Science, Department of Mathematics, as tested in the Media Circle project and the
measurement of the Media Clientelism Index in SE Europe. The Potential method can be applied to
modelling all human activities which are based on preferences (see brief interpretation of Potential
method below).
Potential method in brief
Each decision problem has data structured in the form (S,R), where S is a set of objects and R is a
preference relation. In this exercise, the evaluator tries to find a representation of this preference
structure in the form of a real function defined on S which preserves the preference. In reality, R is
often non-transitive and incomplete, which is the reason why the correct representation of the
preference structure is not possible. The potential method, based on graph theory, is flexible in the
sense that it gives the best approximation of the reality in space of the consistent preference structure.
A preference multigraph is a directed multigraph with non-negative weights which may be interpreted
as the aggregation of individual preferences of a group of decision-makers (or criteria graphs). The
nodes on the graph represent the alternatives in consideration, while the arc-weights represent the
intensity of a preference between two nodes. The ranking of the graph nodes is obtained as the
solution to the Laplace graph equation.
This simple model may be integrated in complex decision structures: hierarchical structures, self-dual
structures (when the weights of the criteria are not known), reconstruction of missing data in the
measurement process (when some proxy data are given), classification process (medical diagnostics),
classical multi-criteria ranking (including ordinal ranking and with a given intensity of preference),
group decision-making and many others.
Values of the index
Values of the index are arithmetical interpretations that range from 1,00 to +1,00, with the extreme
(1,00) being an infinite number that cannot be achieved. Based on the given interpretation, evaluators
assign a vector-based value to each of the 18 categories, based on standardized interpretation. Their
vector-based evaluations are translated in to numerical based on the graph theories as described above.
The accurate representation of reality is further strengthened by the three-level evaluation process. The
final score for each index in each category is an average value of each of the three level evaluations
conducted. However, it is important to note that while each of the numerical values and charts
represent the closest representation to reality possible, their main purpose does not rest on numerical
comparison between the countries (although it does provide this option) but on visual and numerical
value of the observed strengths and weaknesses of the PP system in each of the observed 18
10
categories, and on possibilities to learn from cross-country comparison in terms of legislative,
institutional or policy improvements.
Important note
In the process of gathering and analysing data, GRAPP assessment as well as any other assessments
that rely on primary source data, have methodological limitations. Due to regulation and commonly
accepted practices on the statistical reporting statistical data including data on budgets, economic
performance and institutional performance were not available for the year of the assessment (2017),
but only after then June 2017, for the previous year (2016). Therefore, for the purpose of GRAPP
assessment, three-year trends were observed (2014, 2015, 2016). While limitations in country’s
statistical reporting can affect real-time monitoring, they still provide insight in to the trends in the
performance of the institutions. On the other hand, in order to properly assess current state of play in
each specific country, the regulatory framework, as well as institutional setting and human resources
management, was observed in the year of the assessment as well (2017). As GRAPP assessment was
set as pilot to multi-year observations (new report on developments in public procurement in each
country is expected by the end of 2018 within GRASP framework), based on experience in our Media
Clientelism Index measurement, the limitation of the statistical reporting will be mitigated based on
observation of year to year developments i.e. the progress or regression of individual indicators in
relation to the index measurement from the previous year.
Public Procurement Corruption Resistance Index by level of resistance (stages of system
development)
Elementary response
to corruption
Incidental response to
corruption
Moderate response to
corruption
Developed system
Sustainable anti-
corruption setting
11
Public Procurement Capture Risk Index by level of risk
Captured system
High capture risk
Moderate capture risk
Low capture risk
Adequate response to
potential capture
12
2. Country report Albania
Authors: Munir Podumljak, Aleka Papa
Contributing author: Ana Hećimović
Editor: Elizabeth David Barrett
Methodology and standardization: Partnership for Social Development Croatia (Methodology and
IT tool for Governance Risks Assessment in Public Procurement (developed in 2016, Croatian
Copyright Agency: Deposit Certificate Reference No. 301/2017)
Data collection: Institute for Democracy and Mediation (Albania)
Fact checking: Institute for Democracy and Mediation (Albania), Partnership for Social Development
(Croatia)
First instance evaluator: Aleka Papa
Second instance evaluator: Ana Hećimov
Third instance evaluator: Munir Podumljak
Correction of indices: Sandra Gajić, Matea Matić
Abbreviations
ASPA
Albanian School of Public Administration
CA
Contracting authorities
CM
Council of Ministers
DCM
Decision of the Council Ministers
EPS
Electronic Procurement System
HIDAACI
High Inspectorate for the Declaration and Audit of Assets and Prevention
and Control of Conflict of Interest
MF
Ministry of Finance
MI
Ministry of Interior
PPA
Public Procurement Agency
PPC
Public Procurement Commission
PPL
Public Procurement Law
SSAI
Supreme State Audit Institution
13
Summary
TABLE A.A. Overall Public Procurement Corruption Resistance Index 2017, Albania
13
TABLE A.B. Overall Public Procurement Capture Risk Index 2017, Albania
13
1. Public Procurement Regulatory Ecosystem; 2. Public Procurement Planning; 3. Exceptions from the application of the
PPL; 4. Information management; 5. Pre-bidding; 6. Contracting; 7. Petty public procurement; 8. Remedy mechanisms; 9.
Control over the implementation of law; 10. Execution of public procurement contracts; 11. Conflict of interests; 12. Audit
mechanisms; 13. Criminal justice system; 14. Capacity and human resources management; 15. Trends in public procurement
contracts; 16. Trends in framework agreements; 17. The most successful tenderers; 18. Trends in petty public procurement
-0,255
-0,158
-0,362
-0,469
-0,419
-0,271
-0,215
-0,236
-0,397
-0,929
-0,643
-0,183
-0,605
-0,180
-0,441
-0,246
-0,806
0,032
-1,000
-0,800
-0,600
-0,400
-0,200
0,000
0,200
12345678910 11 12 13 14 15 16 17 18
-0,411
-0,180
-0,641
-0,467
-0,741
-0,159
-0,082
-0,183
-0,354
-0,936
-0,634
-0,357
-0,454
-0,334
-0,433
-0,228
-0,793
-0,009
-1,000
-0,900
-0,800
-0,700
-0,600
-0,500
-0,400
-0,300
-0,200
-0,100
0,000 12345678910 11 12 13 14 15 16 17 18
14
Summary interpretation of overall indices
Tables A.A and A.B above demonstrate that Albania has made progress and exhibited stronger
development in the categories A.2 (public procurement planning) and A.18 (trends in public
procurement). The inclination of legislators to centralize the system and publish information in the
area of PP planning as well as to limit and control the use of Petty public procurement is observed in
these two categories as positive progress in terms of both indices - Corruption resistance and Capture
risk. In addition, despite the lack of proper regulation, significant progress has been made in building
resistance to corruption in the PP system owing to the practice of the Supreme State Audit Institution
(SSAI) as well as the education and capacity building activity of PP officers conducted under
cooperation with the OECD/SIGMA assistance.
In assessing the capture of the PP system, strong developments are observed in category 7 - public
procurement contracting - where proper division of powers/functions is applied, and there is strong
regulation of petty public procurement. However, some aspects of the system require immediate
attention from PP actors in Albania, such as:
Control of the execution of the PP contracts (category 10) is completely absent in the
legislation and consequently not the responsibility of any of the PP actors in place, which
poses significant risks for corruption incidence and capture of the PP system as well.
A lack of proper information management and digitalization affects the ability of the system to
properly observe outcomes of the PP procedures, as reflected in the absence of information on
most successful bidders (category 17), a key factor for any pro-active investigation/monitoring
of Public Procurement.
Observed deficiencies in the area of suppressing conflict of interest in PP system (category 11)
and procedures reflects on low deterrence to corruptive behavior by PP actors at all levels.
Observed weaknesses in the Conflict of interest area are further emphasized by weak sanctions
(mostly administrative and disciplinary) and the limited ability of external actors (i.e. media
and civil society) to access relevant information.
Significant capture risk is also observed in the pre-bidding stage of the PP system in Albania,
which lacks proper protocols or standard operating procedures developed for design of the
tender, communication with the respective bidders, and collection of evidence on procedures
(that could eventually address or mitigate significant risks to the outcome of the procedures
that derive from the pre-bidding stage of the procurement). While the contracting phase of the
PP system in Albania has a clear division of powers, such separation is absent at the pre-
bidding stage, with high exposure to politicization and discretionary decision-making by
political appointees and a lack of proper accountability.
15
Key findings
Albania has a comprehensive legal framework regulating public procurement, which has been
amended several times over the course of the last ten years to align it to EU requirements.
However, given the PPA reliance on secondary legislation, frequent changes have led to challenges in
updating the relevant bylaws which consequently lead to legal insecurity and limits the ability of PP
actors to adjust and perform their duties as prescribed by regulation.
Public procurement planning is moderately regulated. Moderate efforts have been made towards data
management quality; however, the fact that procurement procedures can be launched without being
published in procurement plans, represents a risk. Moreover, the efficiency and effectiveness of the
institutional framework in charge of supervising the adoption and implementation of procurement
planning is weak; it falls under the discretion of the internal audit bodies of the contracting authorities
or the SSAI to conduct thematic audits to supervise implementation in practice.
Loopholes in the information management systems were observed and this affects performance of all
PP actors in Albania. It is not clear why the establishment of e-procurement was not accompanied by
digitalization of the data in the system, as usually these two processes go hand in hand. The absence of
digitalization in the area of data management limits the ability of the system to detect, analyze, prevent
and punish deviations in public procurement.
This problem is further evident in the lack of standardization of information in the public procurement
system in Albania. Though all public procurement notices are required to be published in the
electronic procurement system and in the weekly APP Public Notice Bulletin, not all forms of notices
are standardized and prescribed in a unified form approved by the PPA.
Regarding the integrity and capture risks of the pre-bidding phase, there is a high risk of political
influence in appointments to the structure responsible for producing the tender documentation for the
contracting authority and the collection of all required materials, or the Procurement Unit. It is the
head of the contracting authority or a person duly authorized by her who makes these appointments.
The Evaluation Commission is also established by a special order by the head of the contracting
authority and is composed of not less than three persons, of whom at least one is an expert in the
pertinent area; this extends the risk of undue political influence to the entire decision-making system
in all tenders. However, this situation is somewhat mitigated as persons responsible for developing the
tender documentation cannot be appointed to the Tender Evaluation Commission.
As regards petty public procurement, petty purchase procedures are implemented through the
electronic procurement system, and risks related to that appear to be properly mitigated.
The PPC, as the legal remedy body, may have insufficient human resources to deal with the scale of
complaints submitted, which could affect the quality of decisions made as well as the effectiveness of
the body in preventing corruption. On the other hand, the PPA is responsible for conducting
administrative investigations into public procurement procedures, upon conclusion of a contract, but
not for conducting administrative investigations on how contracts are implemented. In both cases,
measures that are supposed to assure that contracts and implementation correspond to the
specifications of the tender are inadequately addressed by the regulatory and institutional setting in
Albania.
While conflict of interest regarding public procurement appears to be addressed in the regulatory
framework, the absence of any kind of performance indicators in this area suggests that the system
does not exist, nor perform, especially in that there are no pro-active investigations to detect and
sanction conflict of interest. Fines prescribed for a variety of misconducts are not reciprocal to the
potential damage that derives from the deviation in the public procurement procedure.
“Breaching the equality of participants in public bids or auctions” is a criminal offence, and fines and
incarceration of up to three years are prescribed for committing acts in breach of the laws which
regulate the freedom of participants and equality of citizens in bids and public auctions by a person
16
holding state functions or public service. Regarding criminal offences committed by persons
exercising public functions, ten criminal proceedings were brought in 2014, 13 in 2015, and 19 in
2016, while the number of convicted defendants dropped from 17 in 2014 to six in 2015 and 2016.
Although public procurement typically represents one of the hot-spots for corruption, criminal
investigations in this area represent only 2,5% of the overall statistics for corruption-related crimes.
Regarding key soft mechanisms that prevent corruption/capture of the public procurement system,
although progress has been made in the application of the e-procurement system, the
professionalization of public procurement remains problematic. The PPA does not require the
certification of procurement officials, and public procurement is not recognized as a ‘profession’ in
Albania.
Key recommendations
PP actors in Albania should focus immediate attention on information management and digitalization
and consequently the standardization of the PP information management, to increase the efficiency
and effectiveness of the entire PP structure in Albania. In the first stage of development in this area,
Albania may observe the PP information management systems in Montenegro and Bosnia and
Herzegovina as a preliminary solution. However, a longer term solution should follow the specific
needs of the PP system in Albania and respond to the risks and deficiencies observed in this report.
Division of powers and development and adoption of strict protocols and/or standard operating
procedures for pre-bidding stage (i.e. in the area of appointment of the personnel, development of
technical specifications, receipt and storage of the offers/bids) are also priorities for the Albanian PP
system. The lack of proper regulation in this stage of the procedure negatively impacts both of our key
indices (corruption resistance and capture risk). Finally, the lack of any control over the execution of
contracts is an urgent measure to be developed by legislators with proper institutional setting for
implementation in place. In this area, Albania may learn from concepts developed under the PP
framework in Montenegro.
17
Category 1: Public Procurement Regulatory Ecosystem
TABLE A.1.1: Corruption Resistance Index: Public Procurement Regulatory Ecosystem
TABLE A.1.2: Capture Risk Index: Public Procurement Regulatory Ecosystem
Kosovo; -0,797
Bosnia and
Herzegovina; -0,778
Albania; -0,255
Montenegro; -0,249
Serbia; -0,139
Macedonia; -0,063
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Kosovo; -0,750
Bosnia and
Herzegovina; -0,650
Albania; -0,411
Montenegro; -0,311
Macedonia; -0,287
Serbia; -0,110
-0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
18
Interpretation of indices Albania Category 1: Public Procurement Regulatory Ecosystem
Our assessment of the procurement regulatory package as shown in the tables A.1.1 and A.1.2 above
suggests that the Albanian regulatory system falls under the category of incidental response to
corruption risks, with high occurrence of opportunities for system capture (high capture risk). Frequent
changes of regulatory setting as well as regulated areas indicate attempts by the Albanian authorities to
align PP practice with the EU Acquis in PP and show significant improvement over time. However,
the incoherence in the adopted regulation, together with significant reliance on bylaws in important
areas such as Framework Agreements and electronic procurement, provide opportunities for
discretionary decisions in the absence of accountability mechanisms that would address the risks.
Temporary and quick improvements in the Public Procurement regulatory setting in Albania could be
achieved by observing the logic and structure of regulatory systems in FYR of Macedonia and Serbia
and applying either of the solutions designed.
Findings in detail
The Public Procurement Law
14
(PPL) and Decision of the Council Ministers (DCM) on adoption of
Public Procurement Rules
15
provide a comprehensive legal framework for regulating public
procurement in the country. Following the PPL adopted in 2006,
16
the primary legislation has been
amended eight times to align it with EU requirements. The latest amendments were adopted during
2017 to align it partially with Directive 2007/66/EC and focused on regulating the activity of the
Public Procurement Commission (PPC).
Along with the abovementioned Public Procurement Rules, additional secondary legislation arising
from the PPL has been adopted by the Council of Ministers: DCM on Conducting Public Procurement
Procedures Electronically
17
, and DCM on Public Procurement Procedures for Certain Goods and
Services on behalf and account of the Prime Minister's Office, Ministries and Subordinate Institutions
by the Central Purchasing Body, the Ministry of Internal Affairs
18
.
Finally, numerous instructions and manuals have been developed by the Public Procurement Agency
(PPA) in order to assist contracting authorities (CA) in implementing public procurement
procedures.
19
For instance, in 2015 six instructions were adopted regarding only the Electronic
Procurement System (EPS), and additional amendments to those were made during 2016 and 2017.
Given the PPL’s overreliance on secondary legislation, frequent amendments have resulted in
challenges regarding updating through relevant bylaws and consequently to the sense of legal
insecurity in public procurement system. Not all of the foreseen bylaws have been adopted, or aligned
with the latest amendments, which sets challenges for proper implementation of the law as well as for
monitoring and oversight institutions seeking to fulfil their duties.
In general, PP in Albania can be conducted by three types of contracting authority:
14
Public Procurement Law (No. 9643, 2006) as amended by PPL (No. 9800, 2007), PPL (No. 9855, 2007), PPL (No. 10170,
2009), PPL (No. 10309, 2010), PPL (No. 22/2012), PPL (No. 131/2012), PPL (No. 182/2014) and PPL (No. 47/2017).
Available here.
15
Decision of the Council Ministers on adoption of Public Procurement Rules (No. 914, 2014) as amended by DCM (No.
402, 2015) and DCM (No. 823, 2016). Available here.
16
With the adopted law of 2006 the first national act that entered into effect in 1995 was repealed.
17
Decision of the Council Ministers on Conducting Public Procurement Procedures Electronically (No. 918, 2014) as
amended by DCM (No. 796, 2017).
18
Decision of the Council Ministers on Public Procurement Procedures for Certain Goods and Services on behalf and
account of the Prime Minister's Office, Ministries and Subordinate Institutions by the Central Purchasing Body, the Ministry
of Internal Affairs (No. 28, 2015). Available here.
19
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
19
Constitutional and other central institutions, independent central institutions and local government
units;
Any bodies established for the specific purpose of meeting needs in the general interest, of no
commercial character, with the status of a legal person, and either financed, for the most part, by
the State, regional or local authorities, or other public bodies; or subject to management
supervision by those bodies; or having an administrative, managerial or supervisory board, more
than half of whose members are appointed by the State, regional or local authorities, or by other
public bodies; or associations formed by one or several of such authorities or one or several of
such public bodies
Sectoral contracting authorities.
Interpretation of the PPL raises questions as to whether public companies as entities are bound by the
PPL. An adequate assessment of PPL coverage, however, is not feasible due to the fact that a list of
contracting authorities, i.e. entities bound by the PPL, does not exist.
An interesting peculiarity was observed in rules pertaining to centralized procurement in Albania. The
Council of Ministers (CM) assigned the role of the central purchasing body to the Ministry of Interior
(MoI) for procurement of certain goods, works and services
20
on behalf of and to the account of the
Prime Minister’s Office, ministries and subordinate institutions.
21
Such a system represents an
additional capture risk due to the conflict of interest in MI’s jurisdiction as a central purchasing body
and as a law enforcement body in cases of violations of the PPL and criminal liability. Such risk is
further emphasized by the process of appointments to the MoI leadership, lacking proper integrity
mechanisms.
20
Goods, works and services delegated to Ministry of Interior are listed in Decision of the Council Ministers on Public
Procurement Procedures for Certain Goods and Services on behalf and account of the Prime Minister's Office, Ministries
and Subordinate Institutions by the Central Purchasing Body, the Ministry of Internal Affairs (No. 28, 2015). Available here.
21
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
20
Category 2: Public Procurement Planning
TABLE A.2.1: Corruption Resistance Index: Public Procurement Planning
TABLE A.2.2: Capture Risk Index: Public Procurement Planning
Kosovo; -0,912
Macedonia; -0,863
Serbia; -0,491
Albania; -0,158
Bosnia and
Herzegovina; -0,081
Montenegro; 0,416
-1,000 -0,800 -0,600 -0,400 -0,200 0,000 0,200 0,400 0,600
Resistance index (-1 worst, 1 best)
Corruption resistance index
Kosovo; -0,964
Macedonia; -0,796
Serbia; -0,537
Bosnia and
Herzegovina; -0,281
Albania; -0,180
Montenegro; 0,171
-1,200 -1,000 -0,800 -0,600 -0,400 -0,200 0,000 0,200 0,400
Capture risk index (-1 worst, 1 best)
Capture risk index
21
Interpretation of indices Albania Category 2: Public Procurement Planning
Public procurement planning in Albania lacks proper strength in regulation, as reflected in previous
indices on regulatory framework. However, the observed practice does show a slightly more
developed aspect of Public Procurement in comparison to the other assessed areas, or other countries
covered by this report. The PP Corruption Resistance Index (tables A.2.1 and A.2.2) suggests that in
this area, the Albanian Procurement system provides a moderate response to corruption risks,
following the moderate risk of capture of the implementing organizational structure. We observed the
inclination of the legislators to centralize the system and make the information public which is seen as
a desirable progress. However, the lack of accountability mechanisms for non-compliance as well as
the slow and complex process for publishing the Procurement Plans, exposes them to the risks of illicit
manipulation without adequate consequences if such practice occurs. As the Albanian system already
has in place a structure for centralized real time publishing of procurement plans (so that they can play
the role of supporting anti-corruption mechanism), the system may significantly benefit from the
practice observed in Montenegro in this area.
Findings in detail
The public procurement planning process and procurement plans are not mentioned in the Public
Procurement Law; and only one article is designated to this in DCM on adoption of Public
Procurement Rules, which further stipulates common practice to address important aspects of PP in by
laws. The Article 4, Paragraph 1 of the DCM No. 914 prescribes that the contracting authorities are
required to prepare and adopt annual procurement plans known as annual forecast registers of
procurements. The procurement plans should follow the standardization guidelines of the PPA and
contain data regarding the object of procurement, the fund limit, financing source, type of procedure
and timing planned for the procedure.
22
The head of the contracting authority is required to adopt and submit for publication by 15 January its
procurement plan to the PPA or the central purchasing body providing the budgetary funds. The
central purchasing body is required to submit by 30 January a summary of its own procurement plan
and those of other pertaining contracting authorities.
23
The process of procurement planning is linked to the adoption of the budget. Contracting authorities
send the Ministry of Finance (MF) a detailed plan on how the funds approved in the December of the
previous year will be used.
24
After the MF approves the plan, the contracting authorities send their
procurement plans by 15 January to the PPA, which has an ensuing obligation, within the month of
February, to publish them on its website in the form of a summarized National Public Procurement
Forecast Register.
25
If there are amendments to procurement plans, the contracting authority shall prepare additional
registers (plans) and submit them to the PPA, to the MF’s Department of Budget and Treasury, or to
the central purchasing body, depending on the case. The contracting authority or the central
22
Article 4, Paragraph 1 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
Instruction of PPA No. 2, “On the preparation of the annual forecast register of procurements and the public procurement
realization register” dated 27.01.2015.
23
Article 4, Item 1, Paragraph 1 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
The PPA Instruction No. 2, On Creating the Register of Projections of Public Procurements and Register of Implementation
of Public Procurements”, dated 27.01.2015, prescribing mandatory elements and deadlines that public procurement plans
must contain.
24
Management of the Budget System in the Republic of Albania (No. 9936, 2008)
25
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
22
purchasing body instructs the PPA or the MF’s Department of Budget and Treasury to incorporate the
changes in the relevant summary plans.
26
Nevertheless, the preparation and submission of procurement plans does not prevent the launching of
public procurement procedures by contracting authorities ahead of these deadlines
27
which, if abused
may lead to privileged access to information regarding future procurement activities by determined
economic operators.
Moreover, the efficiency and effectiveness of the institutional framework in charge of supervising the
adoption and implementation of procurement planning are weak. It is the responsibility of the internal
audit bodies of the contracting authorities or of the Supreme State Audit Institution to conduct
thematic audits to supervise the implementation of the legal provisions and adoptions and submissions
of the public procurement plans.
28
The supervision of abidance by the regulations governing the preparing and publication of public
procurement plans is not within the competency of the PPA
29
, meaning there are no sanctions in case
of violation.
26
Retrieved from the Public Procurement Agency through a FOI received on 11.07.2017. Paragraph 4 of Article 4 of the
DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
27
Paragraph 3 of Article 4 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
28
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
29
Retrieved from the Public Procurement Agency through a FOI received on 11.07.2017.
23
Category 3: Exceptions from procurement legislation
TABLE A.3.1: Corruption Resistance Index - Exceptions from procurement legislation
TABLE A.3.2: Capture Risk Index - Exceptions from procurement legislation
Kosovo; -0,904
Albania; -0,362
Bosnia and
Herzegovina; -0,299
Montenegro; -0,296
Serbia; -0,268
Macedonia; -0,117
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Kosovo; -0,900
Albania; -0,641
Montenegro; -0,354
Bosnia and
Herzegovina; -0,351
Macedonia; -0,317
Serbia; -0,281
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
24
Interpretation of indices Albania Category 3: Exceptions from procurement legislation
In the area of exceptions from procurement legislation, the evaluators observed numerous risks that
mostly rest on high opportunities for false interpretation of what falls under the exceptions from the
procurement legislation, an extensive list of exceptions, relatively high thresholds and weak
accountability provisions for non-compliance with the legislation (cases where respective contracting
authority intentionally uses inappropriate interpretation of the Exceptions). The observed deficiencies
in the system place the Albanian procurement system under the category of incidental response to
corruption with high risk of capture of the procurement system (captured system, table A.3.2 above).
The high value of procurement conducted under the rules of exceptions from the regulation, with the
trend showing a significant increase (see findings in detail below) over the years, further emphasises
that corruption risks that derive from exceptions from procurement legislation have not been properly
addressed in the Albanian procurement system. A temporary and quick improvement in the Albanian
system could be achieved by following the logic and structure of the exceptions from the public
procurement legislation observed in FYR of Macedonia and Serbia.
Findings in detail
The PPL provides for two levels of public procurement thresholds: high-value thresholds and low-
value thresholds. The financial thresholds are reviewed every two years and are established in the
Public Procurement Rules.
The high value thresholds are ALL 200 million (or EUR 1.48 million
30
) for goods and services, and
ALL 1.2 billion (or EUR 8.9 million
31
) works. The low value thresholds are ALL 8 million (EUR 59.5
thousand
32
) for goods and services and ALL 12 million (EUR 89.2 thousand
33
) for works.
34
In further assessments, attention shall be given to implementation of simplified procedures in low-
value thresholds and potential abuse of such procedures: for a procurement valued below ALL 800
thousand (EUR 5.9 thousand
35
) within one calendar year, the contracting authority may complete the
purchase through the small value procurement procedure.
36
The procurement procedures can be launched without being published in procurement plans which, if
abused, may represent a significant risk of capture and undue influence over public procurement
procedures. Moreover, contracting authority may launch public procurement procedure without
funding being made available to the account of the institution, i.e., without having planned this
procurement in advance. However, the contract shall enter into abidance with the timeframes set forth
in the public procurement rules, and only when funding is made available in the pertinent account of
the contracting authority.
37
Furthermore, the use of the public procurement procedure of “negotiated
procedures without prior publication of a contract notice”
38
to meet the contracting authority’s urgent
needs, or to satisfy the needs of the start of the year, does not require publication in the procurement
plans.
39
30
Conversion rates used for January 2017. Available here.
31
Ibid.
32
Ibid
33
Ibid
34
Article 8 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
35
Conversion rates used for January 2017. Available here.
36
Article 8 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
37
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
38
Article 33/1/c of the PPL.
39
Provisions of item 2/ë of Article 36 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated
29.12.2014.
25
The scope of exemptions from the applicability of the PPL includes:
40
public contracts awarded in the
field of defense, when the application of the provisions of PPL would cause disclosure of information
which might harm national safety interests; the purchase of arms, munitions and war material, or
related services; and the occurrence of natural disasters, armed conflicts, war operations, military
training and participation in military missions outside the country;
41
secret contracts, contracts
requiring special security measures, or contracts which are affected by the substantial interests of the
state.
42
Specific exemptions include public service contracts
43
for the acquisition or rental of immovable
property; the acquisition, development, production or co-production of program material or
commercials intended for broadcasting by broadcasters or publication in the media, and contracts for
broadcasting time; arbitration and conciliation services; financial services in relation to the issue, sale,
purchase or transfer of securities or other financial instruments; research and development services,
whose outcome is used by all on a non-discriminatory basis, other than those where the benefits accrue
exclusively to the contracting authority for its use in the conduct of its own affairs, on condition that
the service provided is wholly remunerated by the contracting authorities; all services referred to in
“Chapter V/1, Procedures for awarding sectoral contracts”, and for employment contracts. It also
applies to international obligations
44
and service contracts awarded on the basis of an exclusive right.
45
While there is a rational explanation for the exemption from the PPL in the area of defense, general
exemptions in other areas - if abused - may mean that a significant portion of public procurement
occurs outside of the regulatory framework and consequently outside of the internal and external
control mechanisms.
In pursuance of item 1 of the DCM No. 918, dated 29.12.2014, “On Conducting Public Procurement
Procedures Electronically”, all procurement procedures are conducted electronically, with the
exception of negotiation without prior notice of contract, the second phase of the “Consulting
Services” and “Design Contest” procedures, procurement procedures valued under ALL 100 thousand
(or EUR 744), and those conducted in emergency cases, and procurement procedures for the
“Purchase of electrical energy”.
While the PPL appears to restrict exemptions, actual practice and statistical reports derived through the
assessment indicate notable abuse of the ‘negotiation without prior notice’ procedure.
Table 1 Public Procurement Structure by type of procedure, 2014-2016
2014
2015
2016
Types of procedures
EUR
%
No.
EUR
%
No.
EUR
%
No.
Open international
procedure (winner
notice)
33.225.822
10,2%
16
36.796.062
7,0%
29
44.744.732
6,4%
47
Open procedure
(winner notice)
211.000.092
64,9%
1.523
368.932.831
70,7%
1.624
533.848.388
76,8%
1.949
Request for
proposal (winner
notice)
38.041.544
11,7%
3.060
40.844.608
7,8%
2.527
50.010.254
7,2%
2.958
Consultancy
3.022.515
0,9%
73
13.270.430
2,5%
88
7.843.432
1,1%
113
40
The exceptions are set out in Articles 5, 6, 7, 8 and 9 of the PPL, as amended.
41
Article 5 of the PPL as amended.
42
Article 6 of the PPL as amended.
43
Article 7 of the PPL as amended.
44
Article 8 of the PPL as amended.
45
Article 9 of the PPL as amended.
26
service, design
contest (winner
notice)
Restricted local
3.971
0,0%
1
584.293
0,1%
1
0
0,0%
0
Awarded negotiated
procedures without
publication
39.793.564
12,2%
2.121
61.638.392
11,8%
2.706
58.485.688
8,4%
2.186
Total
325.087.509
100,0%
6.794
522.066.616
100,0%
6.975
694.932.495
100,0%
7.253
Data source: Authors own computation based on data from Public Procurement Agency, Albania
Around 8 percent of the total public procurement value in 2016 was procured via negotiation without
prior notice procedure. Though in decline as a % of total annual public procurement (12% in 2014);
the value of goods, works and services procured under this procedure almost doubled in 2016
compared with 2014; from EUR 39.7 million in 2014, to EUR 58.4 million in 2016.
This may reflect poor procurement planning or that the procedure is being abused by the contracting
authorities. An adequate assessment in this regard, however, was not feasible due to difficulties
encountered in the attempt to access the contract registers in order to determine an in-year breakdown
of figures regarding the contracts signed and procedures used. This is further suggestive of corruption-
related risks (due to lack of the access to data by any kind of external controls).
27
Category 4: Information management in Public Procurement system
TABLE A.4.1: Corruption Resistance Index Information management in PP
TABLE A.4.2: Capture Risk Index Information management in PP
Kosovo; -0,577
Albania; -0,469
Serbia; -0,356
Macedonia; -0,258
Bosnia and
Herzegovina; -0,205
Montenegro; 0,003
-0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000 0,100
Resistance index (-1 worst, 1 best)
Corruption resistance index
Albania; -0,467
Kosovo; -0,455
Macedonia; -0,307
Serbia; -0,207
Montenegro; -0,070
Bosnia and
Herzegovina; -0,028
-0,500 -0,450 -0,400 -0,350 -0,300 -0,250 -0,200 -0,150 -0,100 -0,050 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
28
Interpretation of indices Albania Category 4: Information management in Public Procurement
system
Albania has one of the least developed information management systems in Public Procurement
among the observed six countries. Indices A.4.1 and A.4.2 (above) show incidental response to
corruption risks in this area with high risk of capture of the system. Information management in PP is
not fully standardized, and thus centralized, lack of real-time and direct reporting in the respective
registers by contracting authorities (it is instead published by PPA every Monday, see in detail
findings below) creates opportunities for non-declared notices. This is further emphasised by the lack
of standardization and quality and corruption related relevance concerning the data published in the PP
Bulletin. In this area, the Albanian system could be significantly improved by applying some of the
solutions implemented in Montenegro, as the two systems show significant consistency in the
principles of the applied solutions.
Findings in detail
Notices of public procurement defined by the existing regulatory framework on public procurement
include contract notices, contract award notices, modification notices (of documents of public
procurement procedures), design contest notices, results of design contests, notices for additional
information, information on incomplete procedures or corrigenda and notices on the termination of an
awarding procedure.
46
Public procurement information management is still at an elementary stage of
development; only some of the forms of notices (mentioned above) are standardized and prescribed in
a unified form approved by the PPA.
47
All public procurement notices are required to be published in
the electronic procurement system
48
and in the Public Notice Bulletin
49
that the PPA publishes every
Monday. The Public Notice Bulletin, which is published in the electronic procurement system, is
accessible to the public, however limited in providing any possibility of analysis and comprehensive
system monitoring.
50
The Bulletin includes: contract notices for contracts of a value above and below
the high value threshold,
51
award notices,
52
contract notices,
53
and termination contracts
54
; an updated
list of economic operators banned from public procurement,
55
and other information that PPA deems
necessary for publication or that is required by the PPL.
56
Except for notices on contracts concluded,
the contract as a juridical act signed by contractual parties is not accessible.
57
However lack of
comprehensive standardization of the procurement data and elementary stage of digitalization remains
significant obstacle for performing oversight over the public procurement system, detecting anomalies,
monitoring behavior of contracting authorities and economic operators in public procurement, and
exercising internal and external controls.
46
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
47
These are specified in the Standard Tender Documents for Goods/Work/Services. Public Procurement Agency (2017)
Freedom of Information Act, written response retrieved on July 11, 2017.
48
As provided in the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014 and in reliance of
DCM No.176, “On Publication of the Bulletin of Public Notices”, dated 29.3.2006.
49
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
50
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017. The section
of the Public Notice Bulletin on the PPA’s website, www.app.gov.al.
51
Articles 12 and 13 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
52
Articles 6 and 21 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
53
Article 25 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
54
Article 6 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
55
Paragraph 3 of Article 13 of the PA, as amended.
56
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
57
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
29
Category 5: Pre-bidding stage
TABLE A.5.1: Corruption Resistance Index Pre-bidding stage
TABLE A.5.2: Capture Risk Index Pre-bidding stage
Serbia; -0,775
Macedonia; -0,753
Kosovo; -0,725
Albania; -0,419
Bosnia and
Herzegovina; -0,416
Montenegro; -0,375
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Kosovo; -0,806
Serbia; -0,787
Montenegro; -0,756
Macedonia; -0,750
Albania; -0,741
Bosnia and
Herzegovina; -0,580
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
30
Interpretation of indices Albania Category 5: Pre-bidding stage
All of the observed public procurement country systems, including that of Albania, show a lack of the
attention to building deterrence to corruption in the pre-bidding stage of the Public Procurement
process. Indices A.5.1 and A.5.2 suggest that anti-corruption developments in this area are at an
incidental response stage, and that the system is vulnerable to capture (no barriers to political or other
type of the illicit influence over the system in this category). Evaluators have observed that in addition
to lack of division of powers (appointing different personnel to administer different stages of
procurement), there are no adequate protocols or standard operating procedures developed for the
design of tenders, communication with respective bidders, and collection of evidence on the
procedures used all factors that could eventually address or mitigate significant risks that derive
from the pre-bidding stage of the procurement. The fact that conflict of interest in PP is not properly
addressed either contributes to the overall weakness of the system. While the Albanian procurement
system may temporarily and moderately benefit from looking in to solutions used in Montenegro in
this area, the lack of adequate measures to protect the pre-bidding stage from undue influence in all
countries suggests a need for action on the side of the EU commission through assisting with
developing SOPs or guidelines for regulation in this area.
Findings in detail
The Procurement Unit is responsible for producing the tender documentation for the contracting
authority and for collecting of all required materials. This Unit is established by the contracting
authority.
58
The head of the institution or a person duly authorized by him appoints the persons
responsible for producing competition documentation
59
; this represents a risk of undue political
interference with the decision making and capture of the system. The lack of division of powers in this
stage is insufficient to address the potential undue influence over entire process.
With regard to receiving tenders and storage of documentation, since all procurement procedures are
conducted electronically, the tender documentation - which includes tender documents published by
the contracting authority, bids submitted by bidders, evaluation reports, the selection of the winner,
and the notice on the concluded contract -, are stored in the electronic procurement system, in the
electronic archive of the contracting authority.
60
However, the security of information management in
this case is not sufficiently elaborated and therefore may represent additional risks in terms of
preferential treatment of certain economic operators.
Certain discrepancies have been observed between responses of competent authorities and
organizational culture realities in Albania, especially in the area of conducting electronic procurement,
differentiation between electronic procurement and digitalization of data, and managing data in
accordance with the fair treatment of all participants in public procurement. In the next report, special
attention and further explanations will be requested from respective authorities in Albania.
58
In reliance of Article 57 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
59
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
60
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
31
Category 6: Public procurement Contracting
TABLE A.6.1: Corruption Resistance Index Public Procurement Contracting
TABLE A.6.2: Capture Risk Index Public Procurement Contracting
Macedonia; -0,671
Bosnia and
Herzegovina; -0,646
Serbia; -0,450
Kosovo; -0,315
Albania; -0,271
Montenegro; -0,125
-0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Bosnia and
Herzegovina; -0,647
Macedonia; -0,631
Serbia; -0,522
Kosovo; -0,192
Albania; -0,159
Montenegro; -0,116
-0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
32
Interpretation of indices Albania Category 6: Public procurement Contracting
Both the Corruption resistance and Capture risk indices in the category of PP Contracting put Albania
among better performers in category 6 in comparison to other observed countries. While the value of
the corruption resistance index (table A.6.1) in this category is still in the area of incidental response
(observed components lack targeted anti-corruption approach), the value of capture risk index (table
A.6.2) places Albania in the moderate capture risk zone of the index. The strong points of the
contracting process in Albania are the adequately regulated division of powers, clear process
description in the existing regulation, as well as the approach to blacklisting of bidders as a corruption
prevention mechanism. However, the imprecision and lack of enforcement of anti-conflict of interest
regulation is inadequate as a response to the corruption risks that may occur. In addition, the overall
lack of oversight and dual control should be addressed in further developing the system. While scoring
higher than most of the observed countries in this aspect, Albania still could moderately benefit from
learning from the PP system in Montenegro, which has stronger solutions to the dual controls and
accountability in cases of breach of procedures (including conflict of interest in this area).
Findings in detail
The Tender Evaluation Commission is responsible for reviewing and evaluating bids.
61
The Evaluation Commission is established by a special order of the head of the contracting authority,
usually a political appointee, and is composed of not less than 3 persons, of whom at least one is an
expert of the area under consideration. If there is a lack of staff, the contracting authority contracts
external experts as commission members. The chairperson of the commission, who is responsible for
initiating work upon the creation of the commission, is selected from among the senior officials of the
contracting authority.
Persons responsible for developing the tender documentation cannot be appointed to the Tender
Evaluation Commission.
62
The prevention of conflicts of interest for members of the evaluation commission is regulated by the
PPL
63
, the Rules on Public Procurement which foresee that when opening bids, officials involved in
the process of bid evaluation sign a declaration whereby they state that they are not in any conflict of
interest with the bidders,
64
and the Public Procurement Agency Instruction On Declaration of Conflict
of Interest by Procurement Officers.
65
However from the responses it is not clear who is in charge of
checking or pro-active investigations related to potential or actual conflict of interest in public
procurement procedures.
The declaration form for conflicts of interest, which must be filled in when submitting a bid, is part of
the Standard Tender Documents for Goods/ Works/Services.
66
The declaration of conflicts of interest
assures the contracting authority that the tenderer/bidder is not in a conflict of interest. This
declaration form contains personal data on the tenderer/bidder and group of persons considered as
persons in conflicts of interest, in accordance with the applicable legislation (further explanation
please see in the chapter on conflict of interest below).
67
61
Article 58 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
62
Article 58 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
63
Article 26 Law No. 9643, dated 20.11.2006, “On Public Procurement”, as amended.
64
Article 56 and 64 of DCM No. 914, “On Adoption of Rules on Public Procurement” dated 29.12.2014, as amended.
65
Instruction of PPL No. 3, “On Declaration of Conflict of Interest by Procurement Officers” dated 24.10.2016.
66
Article 11 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
67
Article 16 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
33
As regards the procedures by which the Commission renders a decision on the selection of the most
advantageous tender,
68
the Commission starts by opening and reading the tenders. The evaluation
commission reads the name and address of the tenderer and opens the relevant sealed envelope. Then,
the list of the legal, administrative and qualification documents presented by the tenderer and the
economic offer must be read to the participants. At the request of any tenderer, the minutes and a
receipt reflecting all the documents accompanying his offer, shall be made available and a notice shall
be sent to any tenderer who submitted a tender, but was not present or represented at the opening
session. After the opening and reading session, as above-mentioned, if the evaluation commission
deems that its activities require more than one working day, it shall indicate to the representatives the
time and date that the result of the evaluation of technical and financial offer and the final
classification will be communicated to the tenderers.
69
The duration of the procedure must not be longer than 15 days.
70
Following the public session, the commission verifies and evaluates the submitted offers, qualifying
only those which meet the legal, administrative and qualification requirements or which are not
abnormally low. On the basis of the admitted offers, the evaluation commission drafts the final
classification.
71
Any member of the Procurement Unit may be present during the opening and evaluation phase, but
they are not entitled to vote. They may suggest opinions only when required to do so, and can carry
out functions of a supporting character etc.
72
The PPA can exclude an economic operator from participation in public procurement procedures for a
period of one to three years, without prejudicing criminal proceedings that may have started, in the
cases of serious misrepresentation and submission of documents containing false information for the
purposes of qualification;
73
corruption; conviction of any of crimes,
74
failure to comply with the
contractual obligations of public contracts within the time specified in the procurement rules; and
when there is a final decision by the Competition Authority Committee on bid collusion.
The drafting and enforcement of public procurement contracts does not fall within the domain of the
implementation of the PPA and the sublegal acts pursuant to it.
75
68
The procedures on the review and evaluation of bids are set out in Article 64 of the DCM No. 914, “On Adoption of Rules
on Public Procurement”, dated 29.12.2014.
69
Article 66 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
70
Article 67 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
71
Ibid.
72
Ibid.
73
Item 3 of Article 13 of the PPL, as amended.
74
Article 45, paragraph 1 of the PPL, as amended.
75
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
34
Category 7: Petty public procurement
TABLE A.7.1: Corruption Resistance Index Petty public procurement
TABLE A7.2: Capture Risk Index Petty public procurement
Kosovo; -0,699
Serbia; -0,542
Montenegro; -0,432
Macedonia; -0,283
Albania; -0,215
Bosnia and
Herzegovina; -0,178
-0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Kosovo; -0,747
Montenegro; -0,601
Serbia; -0,476
Macedonia; -0,302
Albania; -0,082
Bosnia and
Herzegovina; -0,076
-0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
35
Interpretation of indices Albania Category 7: Petty public procurement
Observed indices in the Category 7 - petty public procurement - place Albania among the better
performers in this area in comparison with other countries. As in the previous category of PP
Contracting, here too the corruption resistance index is in the area of incidental response, while
capture risk is considered to be moderate. The system’s strengths lie in low thresholds for petty public
procurement, application of an electronic procurement system for petty procurement, and rules of
minimum 5 bidders for petty procurement conducted in written form, as well as obligations to submit
petty procurement plans to relevant authorities. However, the absence of quality reporting on petty
procurement, as well as a lack of dual controls in this case, leave significant risks of abuse in this area.
External controls in petty procurement are not sufficient, as public access to data is limited, with the
only criterion for selection being the lowest price. While abuse and extensive use of petty procurement
is generally forbidden by the regulation, it does not specify types of abuse and adequate measures for
mitigation of such risks. These issues should be addressed in the future development of the Albanian
procurement system. Some solutions applicable for the Albanian PP system in the area of Public
Procurement may be observed in the PP system in BiH (i.e. centralized reporting). However, a
majority of the solutions in addressing the corruption risks in petty public procurement should be
developed based on the existing practices in Albania.
Findings in detail
The contracting authority can use the petty procurement procedure for works, goods and services when
the estimated value is under ALL 800 thousand (or EUR 5.95 thousand
76
). Petty procurement
procedures are implemented through the electronic procurement system.
77
However, those with a value
less than ALL 100 thousand (or EUR 744
78
) and procurements conducted in emergency cases are
exempted from the electronic procurement procedures.
79
Thus, in practice petty procurement can be
procured in both the electronic procurement system and in written form.
At the beginning of the year, the contracting authority plans the nature, quantity, and type of contracts
to be procured by means of petty procurement procedure.
80
To determine the threshold value for this
procedure, the contracting authority estimates the value of a group of similar goods or services, which
are usually procured together and should in no case be separated for the purposes of this procedure.
The head of the contracting authority or the person duly authorized by him establishes, at the
beginning of the calendar year, a special committee made up of three members, one of whom is the
chairperson. In the absence of staff, the head of the contracting authority or the person duly authorized
by him authorizes the procurement unit to implement this procedure.
When the need arises for works, goods, or services, the head of the contracting authority or any other
authorized officer issues a procurement order, whereby the object of the procurement and its quantity
are specified. The procurement order must be accompanied by an invitation to bid issued to economic
operators. The invitation to bid specifies all the necessary data on the object of procurement.
76
Conversion rates used for January 2017. Available here.
77
Contracting authorities must consider the requirements of Article 40 of the DCM No. 914, “On Adoption of Rules on
Public Procurement”, dated 29.12.2014 and the Public Procurement Agency’s Instruction No. 3, “On Procurement
Procedures for Petty Purchases”, as amended, dated 27.01.2015.
78
Conversion rates used for January 2017. Available here.
79
Item 2 of the DCM No. 914, “On Adoption of Rules on Public Procurement”, dated 29.12.2014.
80
Contracting authorities must consider the requirements of Article 40 of the DCM No. 914, “On Adoption of Rules on
Public Procurement”, dated 29.12.2014 and the Public Procurement Agency’s Instruction No. 3, “On Procurement
Procedures for Petty Purchases”, as amended, dated 27.01.2015.
36
If the petty procurement procedure is conducted in written form, the members of the committee test
the market in order to get indicators for the prices of works, goods or services. The committee
determines the winner based on the criterion of lowest price.
If petty procurement procedure is conducted electronically, the committee members invite at least 5
(five) economic operators, when feasible, and publish the investment to bid in the electronic
procurement system for any interested party.
Apart from the cases referred to above, this procedure may also include any petty procurement and
unforeseeable services, such as: various repairs, a change of locks, repair of various equipment,
photocopying machines, computers, and repair of small car defects during travel, and other services of
the same nature. In such emergency cases, and where committee presence proves impossible,
procurement may be carried out by persons who are not committee members.
37
Category 8: Public Procurement Remedy mechanisms
TABLE A.8.1: Corruption Resistance Index Public Procurement Remedy mechanisms
TABLE A.8.2: Capture Risk Index Public Procurement Remedy mechanisms
Serbia; -0,457
Kosovo; -0,441
Macedonia; -0,296
Albania; -0,236
Montenegro; -0,202
Bosnia and
Herzegovina; -0,125
-0,500 -0,450 -0,400 -0,350 -0,300 -0,250 -0,200 -0,150 -0,100 -0,050 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Kosovo; -0,501
Macedonia; -0,458
Serbia; -0,296
Montenegro; -0,262
Albania; -0,183
Bosnia and
Herzegovina; -0,143
-0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
38
Interpretation of indices Albania Category 8: Public Procurement Remedy mechanisms
Remedy mechanisms in Albania rank as moderate in comparison to the other observed countries.
However, the Corruption resistance index (table A.8.1 above) suggests that the quality of response to
corruption risks is rather incidental, while the system is prone to a moderate risk of capture (table
A.8.2 above). Limited measures to address corruption in the work of the Public Procurement
Commission (PPC) have been established (i.e. Rules that prevent undue influence on members of the
PPC are stipulated in the PPL, see findings in detail below) but these measures fall rather in the area of
the criminal justice system, which is not sufficiently equipped for dealing with PP violations, while
anti-conflict of interest measures for example are limited to the head of the PPC.
Despite interventions in the system in 2016, the effectiveness and efficiency of the institution remains
weak, with insufficient staff numbers and capacity to deal with the high number of sophisticated cases.
The annual ratio of resolving complaints is under 50% which can significantly undermine the
effectiveness and efficiency of the PP remedy system as an anti-corruption mechanism (based on the
complaints of competitors). Thresholds for qualification for complaints are relatively high for the
Albanian market (0.5% of the estimated value of the project) which may undermine the very purpose
of this part of procurement system in preventing anomalies. While appointment procedures in the
institution include some measures to prevent politicization and undue influence (i.e. asynchronous
duration of five-year mandate of the head of the body), in reality, the appointment is governed by the
Council of Ministers (CoM), meaning Prime minister, without proper accountability measures
appointed. While in the short term Albania could benefit from the solutions in this category designed
in Bosnia and Herzegovina, strategic solutions should address the digitalization of the information
management system, increasing the capacity of the institution through the deployment of the
additional staff and/or horizontal cooperation with other relevant bodies, and ultimately, by
introducing quality integrity checks for the employed and appointed staff in the PPC.
Findings in detail
The Albanian Public Procurement Commission (PPC) is the highest body for reviewing procurement
complaints and making decisions that are administratively final.
81
As regards financial barriers to submitting a complaint, each complaint lodged with the PPC incurs a
fee.
82
The fee is set to 0.5% of the value of the limit fund in the procurement procedure. If the
complaint is accepted, the fee is returned to the complainer at the end of the complaint process, but if
not the income from the fee flows into the state budget.
83
The deadline for submitting a complaint to the PPC, in the case of complaints against tender
documents, is 7 days from the publication of the contract notice on the website of the PPA.
84
Over the last three years, the total number of complaints has shown an increasing trend, from a total of
834 complaints in 2014 to 1,393 in 2016. The proportion of resolved complaints out of the total
number of submitted complaints has also been increasing. From 2014 to 2015, the ratio (in %)
increased from 40.5% to 49.8% but levelled off during 2016.
During 2014, a total of 826 public procurement appeals were registered and reviewed by the PPC (out
of a total of 834 public procurement appeals, concessions, mining permits and auctions).
85
PPC
81
In conformity with the Constitution, the PPL, DCM No. 184, “On Adoption of the Regulation ‘On Organization and
Functioning of the Public Procurement Commission” dated 17.03.2010, Law No. 44/2015, “Administrative Procedures
Code”, Law No. 9131, On Ethics Rules in the Public Administration” dated 08.09.2003, and other legal and sublegal acts
pursuant to them.
82
Pursuant to Article 63/10 of the PPL, as amended.
83
DCM No. 261 “On setting the fee and the rules of its payment, in an appeal procedure, to the Public Procurement
Commission”, dated 17.03.2010.
84
Pursuant to Article 63 of the PPA, as amended.
39
resolved 338 appeals and rejected 496.
86
During 2015, a total of 1,111 public procurement appeals
were registered and reviewed by the PPC (out of a total of 1,124 public procurement appeals,
concessions, mining permits and auctions).
87
The PPC resolved 560 appeals and rejected 564.
88
During
2016, a total of 1,387 public procurement appeals were registered and reviewed by the PPC (out of a
total of 1,393 public procurement appeals, concessions, mining permits and auctions).
89
The PPC
resolved 683 appeals and rejected 708 due to failure to comply with the formal conditions or as legally
unfounded, while 2 were not reviewed.
90
Although the PPC underwent a restructuring process in 2016 due to the adoption of a new structure,
91
its capabilities for investigating received complaints remain weak. If we compare the ratio of the
number of employees to the total number of complaints for the last three years, it decreased from 0.02
in 2014 to 0.015 in 2016 mainly due to the increase in the total number of complaints for 2016.
Referring to the prior structure, in 2016 the PPC had a total of 22 staff members, 5 of whom were
members of the Commission, rather than part of the civil service (1 chairman, 1 vice chairman and 3
members), 15 civil servants, and 2 who were not part of civil service.
92
During 2014 and 2015, it had a total of 20 staff members.
93
94
If the bidder is not satisfied with a decision rendered by the PPC, which is administratively final, they
may appeal against the decision to the Administrative Court.
95
The head and members of the PPC are appointed by Parliament at the proposal of the CoM.
96
The
CoM is required to publish the notification for applications at least six months before the expiry of the
mandate of the head or members of the PPC and/or no later than 30 days from the date of the early
termination of the mandate. After examining submitted applications and verifying whether candidates
meet the criteria for appointment, the CoM submits to Parliament the list of qualified candidates by
rank, as well as the list of candidates who do not meet the criteria for appointment.
When selecting the Head and/or members of the PPC, Parliament is not obliged to follow the ranking
filed by the CoM. If deemed necessary, Parliament has the right to invite candidates who meet the
eligibility criteria for the interview.
The head and the members of the PPC have a five-year mandate, with the right of re-election only
once.
97
The current head of the Public Procurement Commission, Evis Shurdha, was appointed on
21.09.2016.
98
The mandate of the head and the existing members of the Public Procurement
Commission will expire on 1 January 2018 (as stated at the moment of submitting data for this
report).
99
The head of the PPC is under obligation to the Act on the Declaration of Assets and Financial
Liabilities and Prevention of Conflicts of Interest.
85
Public Procurement Commission (2016) Annual Report 2015. Available here.
86
Ibid.
87
Public Procurement Commission (2016) Annual Report 2015. Available here.
88
Ibid.
89
Public Procurement Commission (2016) Annual Report 2015. Available here.
90
Ibid.
91
Prime Minister’s Order No. 35, “On the approval of the structure and staffing of the Public Procurement Commission”
dated 01.03.2016, as well as under Law No. 152/2013 “On the civil servant”, as amended, as well as DCM No. 125, “On the
temporary and permanent transfer of civil servants”, dated 17.02.2016.
92
Public Procurement Commission (2016) Annual Report 2015. Available here.
93
Ibid.
94
Ibid.
95
Article 19/7 of the PPL, as amended.
96
Article 19/2 of the PPL, as amended.
97
Pursuant to Article 19/2 of the PPL, as amended.
98
DCM nr. 658, “On the release and appointment from/to the office of the head and a member of the Public Procurement
Commission”dated 21.9.2016.
99
Article 76/3 of the PPL, as amended.
40
Rules that prevent undue influence on members of the PPC are stipulated in the PPL, which specifies
that any attempt to influence, directly or indirectly, is punishable by a fine, regardless of civil or
criminal proceedings that may have commenced
100
and in the Regulation on the functioning of the
PPC, which stipulates that members of the Commission are independent and impartial in their
decision-making.
101
100
Article 19/7 of the PPL, as amended.
101
Article 11 of the DCM No. 184, “On Adoption of the Regulation ‘On Organization and Functioning of the Public
Procurement Commission’”, dated 17.03.2010 as amended.
41
Category 9: Control over the implementation of PP legislation
TABLE A.9.1: Corruption Resistance Index Control over the implementation of PP legislation
TABLE A.9.2: Capture Risk Index Control over the implementation of PP legislation
Macedonia; -0,828
Kosovo; -0,819
Bosnia and
Herzegovina; -0,609
Albania; -0,397
Serbia; -0,391
Montenegro; 0,098
-1,000 -0,800 -0,600 -0,400 -0,200 0,000 0,200
Resistance index (-1 worst, 1 best)
Corruption resistance index
Macedonia; -0,869
Kosovo; -0,775
Serbia; -0,623
Bosnia and
Herzegovina; -0,485
Albania; -0,354
Montenegro; 0,009
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000 0,100
Capture risk index (-1 worst, 1 best)
Capture risk index
42
Interpretation of indices Albania Category 9: Control over the implementation of PP legislation
The Public Procurement Agency (PPA), as a key control mechanism over the implementation of PP
legislation in Albania, scores moderate in comparison to the other assessed countries. However, its
values on both the Corruption resistance index (table A.9.1) and the Capture risk index (table A.9.2)
indicate significant risks and low deterrence of corruption/capture. Since 2014, this department has
progressed in becoming a more independent body with a focus on anomalies in implementation of the
PP Legislation (see findings in detail below). However, the low number of staff (6 persons) in
comparison to over 5,000 procedures conducted and signed contracts of significant value annually
raises concerns that the department has insufficient capacity to properly observe PP in Albania,
especially due to limited digitalization and data management. As it is common practice that such
departments conduct ex ante and ex post controls, it is also considered to be one of the key corruption
prevention mechanisms; these deficiencies shall be addressed in future development of the Albanian
procurement system. The low number of inspections conducted (approximately 68 inspections
annually) on approximately 5,000 conducted procurement procedures, also indicates the limits of such
mechanisms in Albania. In addition, the low financial fines and/or simple disciplinary measures for
significant breaches of procedures (i.e. conflict of interest related or failure to publish contract in
appropriate register) further emphasize the risks that derive from deficiencies in the Public
Procurement control mechanisms in Albania (see findings in detail below). Improvements in the work
of the PPA in the short run may follow the solutions implemented in the Montenegro. However, for a
proper response it is important to design a strategic response focusing on the capacity of the
institution, technical assistance (digitalization of the system) and improvements in the area of the
sanctions prescribed.
Findings in detail
The PPA
102
is responsible for conducting administrative investigations on public procurement
procedures upon conclusion of the contract.
103
The Monitoring Sector, part of the Legal and Monitoring Department of the Public Procurement
Authority, is the body competent to monitor procurement procedures. This sector started its work as a
separate unit in July 2015. Until July 2015, this function was exercised by the Legal and Monitoring
Department, staffed by five specialists and the Director of the Department. In addition to monitoring
the procurement procedures, other duties of this unit include the review of reports by domestic audit
bodies, such as the Supreme State Audit Institution (SSAI), institutions’ internal audits, and the
Compulsory Healthcare Insurance Fund, etc.
104
Recruitment of staff for this unit ended in October 2016. The unit staff comprises six specialists and
one head of unit.
105
In terms of inspections conducted by the PPA, during 2014, 82 procurement procedures conducted by
52 contracting authorities, during 2015, 67 procurement procedures conducted by 55 contracting
authorities, and during 2016, 56 procurement procedures conducted by 55 contracting authorities were
examined.
106
In 2014, the PPA proscribed in total 80 fines which resulted from the monitoring of
public procurement procedures, in 2015 in total 53 fines were proscribed and 63 were proscribed in
2016. Finally, the PPA proscribed 41 disciplinary measures in 2014, 33 disciplinary measures in 2015
and 34 in 2016. Detailed data are presented in the tables below. At the time of writing this report, data
for 2017 were still not available.
102
Article 13 of the PPA, as amended.
103
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
104
Ibid.
105
Ibid.
106
Ibid.
43
The head of the Public Procurement Agency is a high management level civil servant (TND). He is
appointed and relieved of duties pursuant to the legal provisions, “On Civil Servants” and DCM no.
118, dated 05.03.2014.
107
As a result, the head of PPA is not appointed for a specified mandate.
108
The
current head of the PPA was appointed on 25.05.2017.
109
The head of the PPA is under obligation to
the Act on the Declaration of Assets and Financial Liabilities and Prevention of Conflicts of
Interest.
110
Sanctions prescribed for contracting authorities that deviate from the law in their practice include: a
fine of ALL 1 million (or EUR 7.4 thousand) for failure to implement a public procurement procedure
in cases where such an obligation is prescribed,
111
a fine of ALL 50 thousand to ALL 500 thousand
112
(or EUR 371 to 3.7 thousand) for violation of prescribed deadlines by the contracting authority,
113
a
fine of ALL 50 thousand to ALL 200 thousand (or EUR 371 to 1.48 thousand) for departure in the
technical specifications in the tender for competition from those described in the contract,
114
or a fine
of ALL 50 thousand to ALL 100 thousand (or EUR 371 to 743) for failure to publish a tender for
competition.
115
As fines prescribed are not in reciprocity to the potential damage, there is risk of non-
compliance with such regulation that has been indicated and observed in statistical reports.
Table 2 Number of monitoring of public procurement procedures conducted by public procurement
agency by type of procedure, 2014- 2016
2014
2015
2016
Negotiated procedure without prior publication of the
contract notice
62
20
21
Open procedure
13
30
20
Request for proposal
3
3
3
Small value procurement procedures
4
14
12
Total
82
67
56
Source: Author’s calculations based on data from PPA Annual reports, 2014- 2016
Table 3 Number of proscribed fines resulted from the monitoring of public procurement procedures
by type of official, 2014- 2016
Role of the official
2014
2015
2016
Head of Contracting Authority
17
10
17
Member of Procurement Unit
23
10
21
Member of Offers Evaluation Commission
27
22
19
107
Law No. 152/2013, Pursuant to the law “On Civil Servant” and DCM no. 118, “Procedures for appointment, recruitment,
management and termination of civil service relationship of high management level civil servants and members of TND”, as
amended, dated 05.03.2014.
108
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
109
Ibid.
110
Ibid.
111
Conversion rates used for January 2017. Available here. Article 72, paragraph 1, item “a” of the PPA, as amended. Failure
to meet the obligation is set out in Article 4 of the law.
112
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
113
Conversion rates used for January 2017. Available here. Article 72, paragraph 1, item “g” of the PPL, as amended.
114
Conversion rates used for January 2017. Available here. Article 72, paragraph 1, item “ç” of the PPA, as amended: Failure
to meet the obligation laid down in Article 23 of the Act.
115
Conversion rates used for January 2017. Available here. Article 72, paragraph 1, item “e” of the PPA as amended: Failure
to meet one of the obligations laid down in Article 38 of the Act.
44
Member of the Group for Calculating the Limit Fund
13
10
6
Member of Small Value Procurement Committee
0
1
0
Total
80
53
63
Source: Author’s calculations based on data from PPA Annual reports, 2014- 2016
Table 4 Number of imposed disciplinary measures resulted from the monitoring of public
procurement procedures by type of official, 2014- 2016
Role of the official
2014
2015
2016
Head of Contracting Authority
1
0
2
Member of Procurement Unit
26
18
12
Member of Offers Evaluation Commission
7
6
9
Member of the Group for Calculating the Limit Fund
4
3
1
Member of the Commission for Small Value
Procurement Procedures
3
6
10
Total
41
33
34
Source: Author’s calculations based on data from PPA Annual reports, 2014- 2016
In cases of failure to publish the public procurement contract in the appropriate register and conflict of
interest in the evaluating members of the evaluating committee, disciplinary measures are imposed.
116
The PPA does not envisage sanctions in cases of conflict of interest between the head of the
contracting authority and selected bidder, because the only applicable legal provision relates to the
potential conflict of interest between the tender evaluation commission members and the bidders
participating in a procurement procedure. This represents a significant risk for capture of public
procurement, due to the political appointments and consequent influence over the system by head of
contracting authority that is political appointee.
For cases in concluding a contract which deviate from the technical specifications described in the
tender competition, the PPA envisages no sanctions, because enforcement of the procurement contract
is not included in the domain of the implementation of the PPL. However, the PPL provides that “the
terms of the contract awarded pursuant to the PPL shall not differ from the prescriptions established in
the tender documents and in the successful tender.” (Paragraph 1 of Article 60 of the PPL). As
deviations between the technical specifications and actual contracts represent one of the key corruption
methods in public procurement, absence of such norm represent significant risk for corruptive practice
and capture of public procurement system.
116
Paragraph 2 of Article 72 of the PPA, as amended stipulating, “When the responsible persons are not punished with a fine,
and in any other case of violation of the provisions of this law, imposing of disciplinary measures shall be required against
them.”
45
Category 10: Control over Execution of public procurement contracts
TABLE A.10.1: Corruption Resistance Index Control over Execution of public procurement
contracts
TABLE A.10.2: Capture Risk Index Control over Execution of public procurement contracts
Macedonia; -0,939
Bosnia and
Herzegovina; -0,932
Albania; -0,929
Kosovo; -0,680
Serbia; -0,607
Montenegro; -0,050
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Albania; -0,936
Bosnia and
Herzegovina; -0,936
Macedonia; -0,927
Kosovo; -0,665
Serbia; -0,659
Montenegro; -0,336
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
46
Interpretation of indices Albania Category 10: Control over Execution of public procurement
contracts
Despite the fact that the obligation to establish proper mechanisms for control of the execution of the
public procurement contracts is envisaged in the latest 2014 PP Directive, very few countries have
taken steps in this direction and Albania is no exception. In both indices in this category, Albania
scores very low the Corruption resistance index value suggests only elementary development of
corruption resistance (no visible deterrence to corruption), while the Capture risk index suggests that
in this category evaluators observed it as a captured system. The lack of any regulation (either in the
PPL or by laws) that would explicitly assign responsibility for control over execution of the contracts
to a respective authority or contracting body provides no barrier for manipulation of the PP process
through the collusion between successful bidders and contracting authorities on the expense of the
public funds. This is further emphasized by the observed deficiencies in the control mechanisms (i.e.
PPA) and lack of the digitalization systems and obligation to report on executed contracts that would
allow external control mechanisms to react on anomalies. One of the questions raised is whether
information on executed contracts is available even for respective judicial bodies or executive branch
government. All of this makes the area of control of execution of the PP contracts one of the urgent
priorities in Albania.
Findings in detail
Monitoring of the execution of public procurement contracts is not regulated in Albania.
The Public Procurement Agency is responsible for conducting administrative investigations on public
procurement procedures upon conclusion of the contract, but not for conducting administrative
investigations on how the contracts are implemented, i.e. the execution of contracts.
117
Lack of mechanisms that assure that contracts are implemented according to technical specifications
set in the tender open space for post contract corruption that usually occurs if there is opportunity. As
in addition to lack of regulation, there is lack of institutional setting in charge of this aspect of public
procurement, this area represents one of the highest corruption and capture risks in Albanian public
procurement system.
117
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
47
Category 11: Regulation of conflict of Interest in PP System and procedures
TABLE A.11.1: Corruption Resistance Index Regulation of conflict of Interest in PP System and
procedures
TABLE A.11.2: Capture Risk Index Regulation of conflict of Interest in PP System and procedures
Macedonia; -0,929
Bosnia and
Herzegovina; -0,907
Kosovo; -0,816
Albania; -0,643
Serbia; -0,444
Montenegro; -0,189
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Macedonia; -0,924
Bosnia and
Herzegovina; -0,860
Kosovo; -0,860
Albania; -0,634
Serbia; -0,476
Montenegro; -0,226
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
48
Interpretation of indices Albania Category 11: Regulation of conflict of Interest in PP System
and procedures
Indices on conflict of interest in Albanian PP system suggest elementary development of deterrence to
corruption (table A.11.1) and captured system (table A.11.2). There are several institutions in charge
of the conflict of interest prevention and investigations (PPA, HIDAACI, and in specific cases of
complaint the PPC). However, the low number of cases processed by those institutions on all types of
breaches of the law, and absence of any statistics on conflict of interest cases related to public
procurement indicate that organizational structure in place is not effective nor efficient in addressing
this issue. Absence of coherent approach and sanctions that are reciprocal to the damage done through
occurrence of conflict of interest (sanctions are rather disciplinary and, in some cases, fined) tend to
diminish even the parts of the system where Albania has shown progress and development. The risks
are further emphasized by the limited digitalization of the system and limited access to data to external
controls (i.e. media and civil society). In general, the concept of conflict of interest is not set as anti-
corruption priority nor it is adequately regulated which provides significant opportunities for capture
of the system. As an immediate measure, Albania could adopt the setting, procedures and solutions
observed in Montenegro. However, for long term solutions, the PP related anti- conflict of interest
measures need to be more robust with proper investigating techniques and adequate sanctions in place.
Findings in detail
In the domain of public procurement in Albania, regulation of conflict of interest regarding contracts
with public institutions is conducted in a specific case-by-case manner.
118
It is the responsibility of the contracting authorities in the domain of public procurement to take all
measures to record all phases of the procurement process in the documentation of the public
procurement procedure, starting from the decision to appoint members to the procurement unit, to the
tender evaluation commission, award of the contract, conclusion of the contract, and decisions on
complaints and their resolution.
119
The authorities responsible for the implementation of the conflict of
interest law include a) the superiors of the officials, according to the hierarchy, within a public
institution; b) the directorates, units of human resources or units especially so charged, according to
the need and possibilities of every public institution; and c) the superior institutions.
These authorities are authorized, in the name of the respective institution: to collect from lawful
sources of information all data on the private interests of an official; to accept information obtained in
a lawful manner; to verify the credibility of this information; to notify the official of the information
obtained about him; to give the official the opportunity to prove the contrary if the official so requests,
and to record the private interests of officials in public institutions.
120
On the other hand, issue of conflict of interest is looked in to by the PPA (during their investigations)
and PPC (in case of complaint) implement additional monitoring of conflicts of interest. The PPA is
the supervisory central body for coordinating and controlling the process of public procurement
through law enforcement, advisory, control and policymaking functions. In this regard, in respect of
Article 13 of the PPL, the PPA is authorized to conduct administrative investigations on public
procurement procedures, including verification of cases of conflicts of interest in public procurement
procedures. The PPC plays an important role in the decision-making process regarding public
procurement procedures, as stipulated in Law No. 9643, dated 20.11.2006 “On Public Procurement”,
118
High Inspectorate of Declaration and Audit of Assets and Conflict of Interest (2017) Freedom of Information Act, written
response retrieved on July 3, 2017.
119
Paragraph 2 of Article 41 of Law No. 9367, dated 7.4.2005 as amended.
120
Law on Prevention of Conflict of Interest in the Exercise of Public Functions (No. 9367, 2005)
49
as amended. The PPC is the highest body in the field of procurement authorized to review complaints
on procurement procedures, in conformity with the requirements stipulated in this law.
The High Inspectorate for the Declaration and Audit of Assets and Prevention and Control of Conflict
of Interest (HIDAACI) plays an advisory role. The HIDAACI, in cooperation with the OSCE Presence
in Albania, has produced and published an explanatory manual “On the Role of Responsible
Authorities in the Prevention and Control of Conflict of Interest” and delivered the relevant training to
assist the responsible authorities of public institutions in the prevention, treatment, and resolution of
cases of conflict of interest.
121
The Albanian system of public procurement has institutions for managing conflicts of interest in place.
However, performance indicators of the detection of conflict of interest as well as sanctions prescribed
in specific cases related to public procurement are absent. This indicates that the regulatory system is
not adequately supported by the institutional framework and annual plans. The sampling method used
in inspections of public procurement as observed in this assessment is insufficient to prevent conflicts
of interest in public procurement, or to adequately sanction such occurrences. The absence of relevant
statistics and performance indicators in this area may significantly hinder all other aspects of integrity
in the public administration in Albania as well. Therefore, special attention should be given to this
issue in future reporting, and thorough explanations shall be requested from relevant authorities in this
field.
121
High Inspectorate of Declaration and Audit of Assets and Conflict of Interest (2017) Freedom of Information Act, written
response retrieved on July 3, 2017.
50
Category 12: Audit mechanisms
TABLE A.12.1: Corruption Resistance Index Audit mechanisms
TABLE A.12.2: Capture Risk Index Audit mechanisms
Bosnia and
Herzegovina; -0,438
Serbia; -0,321
Kosovo; -0,315
Macedonia; -0,262
Albania; -0,183
Montenegro; -0,050
-0,500 -0,450 -0,400 -0,350 -0,300 -0,250 -0,200 -0,150 -0,100 -0,050 0,000
Resistance index (-1 - 1 best)
Resistance index
Bosnia and
Herzegovina; -0,501
Serbia; -0,458
Macedonia; -0,398
Albania; -0,357
Kosovo; -0,317
Montenegro; 0,003
-0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000 0,100
Capture risk index (-1 - 1 best)
Capture risk index
51
Interpretation of indices Albania Category 12: Audit mechanisms
In the area of Audit mechanisms and their performance, Albania scores relatively higher than most
countries covered by the assessment. The Supreme State Audit Institution (SSAI) has all elements for
addressing corruption risks in place, and is equipped with the necessary knowledge to conduct
assessments of public procurement procedures. In the corruption resistance index, the SSAI is seen as
having a moderate response to corruption, while the capture risk index is still relatively high due to the
lack of specific obligations of the SSAI to conduct audit of procurement procedures in the existing
regulation. However, despite this, the SSAI has conducted specific audits and provided issue-specific
reports in this area (see findings in detail below). Incidental audits in the area of public procurement
are not expected to have a long-term effect in detecting or preventing corruptive acts, and therefore
this should be addressed in future development of Albanian PP system.
Findings in detail
The jurisdiction of the Supreme State Audit Institution (SSAI)
122
includes as “auditees” all institutions
of central government, local government bodies, other central and local performing public functions,
independent institutions and trade associations or any other forms, not including financial ones, where
the state capital is over 50 per cent, or the loans, credits and liabilities are guaranteed by the state.
123
The SSAI does not audit entities that are not public authorities.
124
The SSAI does not audit European
institutions/agencies, or international organizations, but “audits the users of public funds provided by
the European Union or other international organizations, unless otherwise provided by law.”
125
The
SSAI auditors are equipped with the skills required to audit public procurement procedures.
126
Indeed,
the 2016 SSAI Annual report provides an overview of public procurement procedures beyond simply
stating in whether the PPL was implemented or not. For instance, the report inter alia states that 50%
of the total public procurement value was contracted with 57 economic operators and 5% of the total
number of successful tenderers have won 14.7% of the total procurement value in 2016.
Table 5 Number of employees vs. number of contracting authorities for the SSAI
Year
2014
2015
2016
Number of employees
166
171
176
Number of contracting authorities
1933
1741
1378
The number of audits carried out by the SSAI during 2014-2016 was: 160 audits during 2014, 158
audits during 2015 and 154 audits during 2016.
127
If we compare the ratio of number of audits
conducted per year to the number of people employed, it shows a slightly decreasing trend, from 0.96
in 2014 to 0.87 in 2016. The number of staff employed has increased, from 166 employees in 2014
and 171 employees in 2015, to 176 employees in 2016.
128
Here the discrepancy in numbers between
122
Pursuant to Law No. 154/2014, the scope of activity is specified in paragraphs 1, 2, and 3 of Article 6. Article 10
delineates the competences of the SSAI. The SSAI conducts financial, compliance, performance, and information technology
audits (as set forth in Articles 11, 12, 13, and 14).
123
Supreme State Audit (2017) Freedom of Information Act, written response retrieved on June 30, 2017.
124
Paragraph 15 of Article 3 of Law No. 154/2014, On the Organization and Functioning of the State Supreme Audit
Institution”. Available here.
125
Item “dh” of Article 10 of Law No. 154/2014, “On the Organization and Functioning of the State Supreme Audit
Institution.”
126
Supreme State Audit (2017) Freedom of Information Act, written response retrieved on June 30, 2017
127
Ibid.
128
Supreme State Audit (2017) ALSAI Performance Report 2016. Available here.
52
publicly available reports and those retrieved through the GRAPP project was observed as well.
However, the discrepancies do not suggest a significant change in the capacity of the institution to
perform its duties. The Head of the SSAI is elected by Parliament at the proposal of the President of
the Republic with a seven-year mandate and with the right to re-election.
129
The current head of the
Institution was appointed on 15 December 2011.
130
The Head of the SSAI is under obligation to the
Act on the Prevention of Conflicts of Interest. Retrieved data from SSAI does not refer to any specific
role of the SSAI in assessing public procurement in relevant authorities, which consequently leaves
public procurement out of reach of soft mechanisms and raises questions as to what is the competent
authority that should play such role in the pp system in Albania.
129
Supreme State Audit (2017) Freedom of Information Act, written response retrieved on June 30, 2017.
130
Ibid.
53
Category 13: Criminal justice system response to PP anomalies
TABLE A.13.1: Corruption Resistance Index Criminal justice system response to PP anomalies
TABLE A.13.2: Capture Risk Index Criminal justice system response to PP anomalies
Kosovo; -0,888
Bosnia and
Herzegovina; -0,854
Albania; -0,605
Montenegro; -0,284
Macedonia; -0,135
Serbia; -0,028
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Bosnia and
Herzegovina; -0,845
Kosovo; -0,619
Albania; -0,454
Montenegro; -0,342
Serbia; -0,326
Macedonia; -0,180
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
54
Interpretation of indices Albania Category 13: Criminal justice system response to PP anomalies
The criminal justice system is observed as the ultimate, final and most important response to
corruption, and Public Procurement-related corruption is no exception to this. In this area, the
Albanian PP system scores relatively low. The value of the Corruption resistance index places the
Albanian system among elementary responses while Capture risk is considered to be high. Some
progress in this area has been made with the inclusion in the Albanian Criminal code of crimes related
to public procurement and concessions. However, the low number of cases and declining trend
indicates insufficiencies that should be considered by several different Government departments
(public procurement related institutional setting and criminal justice institutional setting). Sentencing
of corruption in PP is not reciprocal to the damage that can be inflicted as the maximum prison time
for crimes in PP is three years as prescribed by criminal code (see findings in detail). Among other
issues, a lack of proper protocols for horizontal cooperation, with questionable access to information
by the external controls (i.e. media and civil society), limits the corruption detection capability of the
system which ultimately limits the impact of the criminal justice system to pursue corruption in PP.
While the Albanian system may benefit in the short term by observing solutions in place in Serbia,
there are needs for stronger organizational responses to corruption in public procurement, as well as
stronger regulatory solutions for addressing corruption in PP. Weak political accountability, as well as
weak other horizontal accountability and control mechanisms further emphasize the potential for
capture of the system.
Findings in detail
Criminal offences directly related to violations in public procurement are enshrined in Article 258 of
the Albanian Penal Code: “Breaching the equality of participants in public bids or auctions”
131
.
Fines and incarceration of up to three years are envisaged for committing acts in breach of the laws
which regulate the freedom of participants and the equality of citizens in bids and public auctions by a
person holding state functions or public service.
132
According to the Procedural Penal Code, the competent authority for prosecuting corruption cases is
the Prosecutor’s Office. Based on the annual reports from the General Prosecutor’s Office, the specific
weight of sentences passed for criminal offences by persons exercising public functions was 2,4% in
2014, 2,2% in 2015 and 2,6% in 2016.
133
Low share of cases related to public procurement in overall
criminal justice statistics related to corruption implicate that detection mechanisms in Albania are
insufficient for the need in public procurement system. Public procurement, as one of the hot-spots for
corruption is expected to have higher share in overall corruptive behaviour in any country, especially
if emphasized in criminal code as a crime. This as well raises question of subordination, efficiency and
effectiveness of other bodies observed in this report, as they appear to have extensive powers and wide
scope as prescribed by legislation, but relatively low statistical outcome or performance indicators in
area of public procurement. Therefore, accountability and integrity mechanisms in observed areas in
Albania seem to be absent or ineffective.
Of the criminal offences by persons exercising public functions, 10 criminal proceedings were brought
in 2014, 13 in 2015, and 19 in 2016, while the number of convicted defendants dropped from 17 in
2014 to 6 in 2015 and 2016.
131
Criminal Code of the Republic of Albania, as amended.
132
Criminal Code of the Republic of Albania, as amended.
133
General Prosecutor’s Office (2017) Situation of Criminality 2016. Available here.
General Prosecutor’s Office (2016) Situation of Criminality 2015. Available here.
General Prosecutor’s Office (2015) Situation of Criminality 2014. Available here.
55
Table 6 Statistics on “Breaching the equality of participants in public bids or auctions.”
2014
Total
2015
Total
2016
Total
Conducted criminal proceedings
10
823
13
723
19
803
Proceedings sent to trial
3
138
2
169
2
171
Number of registered defendants
14
336
6
300
3
395
Defendants under trial proceedings
12
276
7
341
6
265
Convicted defendants
17
145
6
183
6
154
56
Category 14: Capacity and human resources management
TABLE A.14.1: Corruption Resistance Index Capacity and human resources management
TABLE A.14.2: Capture Risk Index Capacity and human resources management
Serbia; -0,803
Montenegro; -0,706
Kosovo; -0,261
Albania; -0,180
Bosnia and
Herzegovina; -0,176
Macedonia; -0,022
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Montenegro; -0,689
Serbia; -0,631
Bosnia and
Herzegovina; -0,442
Kosovo; -0,345
Albania; -0,334
Macedonia; -0,241
-0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
57
Interpretation of indices Albania Category 14: Capacity and human resources management
In this area, the Albanian public procurement system is among the better performers of the six
countries covered by the report. The corruption resistance index value places Albanian capacities and
human resources in the stage of moderate response to corruption, while the Capture risk index is still
relatively high. The strong points of the system are that the education and capacity building of PP
officers is conducted under cooperation with the OECD/SIGMA; the setback in this area is that there
is no process of certification of PP officers, as prescribed by the law. In reality this means that
procurement officers that have participated in the education do not have to conduct procurement
procedures, or to be capable of conducting procurement procedures. Lack of the knowledge and
capacity of the PP officers, although soft measure in fight against corruption, does increase the risk of
corruption in this area, as incompetence make them prone to political or other undue influence during
performance of the necessary tasks. In addition, staff are not necessarily able to apply the sophisticated
procedures and measures prescribed by PP regulation as observed in the findings in detail below. The
system of qualification and recertification need to be established in this area in any further
development of the PP system in Albania
Findings in detail
The PPA does not require certification of procurement officials, and public procurement is not
recognized as a ‘profession’ in Albania to date.
134
The PPA organizes training in public procurement in cooperation with the OECD/SIGMA. Public
procurement officials who attend the nine-day training course organized by the PPA in cooperation
with the Albanian School of Public Administration (ASPA) obtain certificates that are not accredited
as professional qualifications, but that certify attendance and successful completion of the training
course.
135
During 2016, seven nine-day training sessions were organized for officials at the national
level and nine one-day training sessions for officials at the local level. A total of 237 officials were
trained.
136
Lack of obligatory certification of public procurement officers may significantly diminish
capacity of the overall system to properly respond to the existing legislation. This reflects in statistics
on usage/abuse of the “negotiated procedure without prior notification”, number of fines prescribed by
relevant authorities in comparison to the number of inspections conducted and in other aspects where
lack of integrity and accountability in the system is visible and detectable.
In 2007, progress was made towards e-public procurement with the introduction of rules necessary to
implement public procurement procedures by electronic means
137
. The Albanian Power Corporation
conducted the first tender in the electronic procurement system to the value of EUR 220 million for
the purchase of annual supplies of electrical power in 2007. During 2008, electronic procurement
began to be applied by several institutions, and by 2009, the electronic procurement system was
mandatory.
138
In pursuance of item 1 of the DCM No. 918, dated 29.12.2014, “On Conducting Public Procurement
Procedures Electronically”, all procurement procedures are conducted electronically, with the
exception of negotiation without prior notice of contract, the second phase of the “Consulting
Services” and “Design Contest” procedures, procurement procedures valued under 100, 000 ALL (or
EUR 744), and those conducted in emergency cases, and procurement procedures for the “Purchase of
electrical energy”.
134
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
135
Ibid.
136
Public Procurement Agency (2017) Annual Report for 2016. Available here.
Public Procurement Agency (2016) Annual Report for 2015. Available here.
Public Procurement Agency (2015) Annual Report for 2014. Available here.
137
DCM No. 659, “On Rules on Electronic Public Procurement Procedures” dated 03.10.2007.
138
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
58
Category 15: Trends in public procurement contracts
TABLE A.15.1: Corruption Resistance Index Trends in public procurement contracts
TABLE A.15.2: Capture Risk Index Trends in public procurement contracts
Bosnia and
Herzegovina; -0,825
Albania; -0,441
Montenegro; -0,432
Kosovo; -0,280
Macedonia; -0,050
Serbia; -0,041
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Bosnia and
Herzegovina; -0,805
Montenegro; -0,573
Albania; -0,433
Kosovo; -0,424
Serbia; -0,027
Macedonia; -0,027
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
59
Interpretation of indices Albania Category 15: Trends in public procurement contracts
Statistics on public procurement contracts indicate an incidental response to corruption (table a.15.1
above) and high risk of capture of the system (table 15.2 above). A weak information management
system (see the category 4 above) was key to the evaluators’ assessment of developments in this area.
Inconsistent statistics and discrepancies between different statistics for the same period/same issue
indicate significant challenges for the entire PP setting in Albania. A lack of proper information
management diminishes the efforts of internal controls, horizontal accountability and external controls
to perform their role in protecting the public interest in PP in Albania. The fact that the total annual
value of contracts increased by approx. 45% in a three-year period, with a reduction in the number of
detected anomalies followed by discrepancies in statistical presentation of data, require immediate
attention by PP actors in Albania. This may suggest that a significant value of the contracts is not
properly managed and registered, and therefore are beyond the reach of the competent authorities in
conducting controls on procedures and actual contracts. While in the short run Albania may benefit
from observing the systems in Serbia and Macedonia in the area of monitoring of the public
procurement contracts, the long run solution needs to be addressed through more strategic regulatory
and institutional response.
Findings in detail
The total number of notices on procurement procedures published in the electronic procurement
system by type of contract, service, goods, works, in the PPA’s website was 5288 for 2014, 4630 for
2015 and 5109 for 2016.
139
The value of procurement per type of contracting authority is not available
in the Public Procurement System.
140
This represents another example of a partially established
system. While electronic procurement is mandatory in Albania, which sets precondition for
digitalization of the system, it becomes obvious that digitalization of the specific data still remain an
issue. If such systems are in place, extrapolating any kind of statistics would require less than hour of
work for purpose of calibrating the system. Rationale behind such development is not clear, as
frequent changes of the law never addressed this issue, which is fundamental for understanding
functioning of the pp system, behaviour of the pp actors and managing the very economy of the public
procurement in Albania.
Table 8 Breakdown of procurement notices by number and type of published contracts
Year
2014
2015
2016
Total number of published notices
5.288
4,630
5,109
Total estimated value of published
procurement notices
ALL 60 billion EUR
429 million141
ALL 90 billion EUR
649 million142
ALL 108 billion
EUR 787
million143
Number of consultancy services and
design contests
116
168
153
Value of procured consultancy services
and design contests
ALL 1.6 billion
EUR 11 million144
ALL 2.3 billion
EUR 17 million 145
ALL 1.8 billion
EUR 13.6
139
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
140
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
141
Average yearly exchange rate for 2014.
142
Average yearly exchange rate for 2015.
143
Average yearly exchange rate for 2016.
144
Average yearly exchange rate for 2014.
145
Average yearly exchange rate for 2015.
60
million146
Number of international bids
10
9
15
Value of international bids
ALL 7.7 billion EUR
55.2 million147
ALL 5.1 billion
EUR 36.7 million148
ALL 7,6 billion
EUR 55.3 million
Number of local bids
1,367
1,533
1,835
Value of local bids
ALL 42.6 billion
EUR 304.4 million149
ALL 74.3 billion
EUR 531.8 million150
ALL 89.5 billion
EUR 651.7
million151
Number of requests for proposals
3,789
2,914
3,106
Value of requests for proposals
ALL 7.9 billion
EUR
56,893,761.24152
ALL 8.8 billion
EUR 63,321,697.25153
ALL 9.2 billion
EUR
67,059,726.89154
Number of restricted local procedures
6
1
0
Value of restricted local procedures
ALL 257 million
EUR 1.8 million155
ALL 4,2 million
EUR 30.3 thousand156
0
Number of negotiated procedures with
prior publication
5
0
Value of negotiated procedures with
prior publication
ALL 20.4 million
EUR 146 thousand157
0
146
Average yearly exchange rate for 2016.
147
Average yearly exchange rate for 2014.
148
Average yearly exchange rate for 2015.
149
Average yearly exchange rate for 2014.
150
Average yearly exchange rate for 2015.
151
Average yearly exchange rate for 2016.
152
Average yearly exchange rate for 2014.
153
Average yearly exchange rate for 2015.
154
Average yearly exchange rate for 2016.
155
Average yearly exchange rate for 2014.
156
Average yearly exchange rate for 2015.
157
Average yearly exchange rate for 2015.
61
Category 16: Trends in framework agreements
TABLE A.16.1: Corruption Resistance Index Trends in framework agreements
TABLE A.16.2: Capture Risk Index Trends in framework agreements
Bosnia and
Herzegovina; -0,882
Kosovo; -0,819
Montenegro; -0,422
Albania; -0,246
Macedonia; -0,107
Serbia; -0,013
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 worst, 1 best)
Corruption resistance index
Bosnia and
Herzegovina; -0,869
Kosovo; -0,796
Serbia; -0,576
Montenegro; -0,473
Albania; -0,228
Macedonia; -0,192
-1,000 -0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 worst, 1 best)
Capture risk index
62
Interpretation of indices Albania Category 16: Trends in framework agreements
In the area of framework agreements, the Albanian system is placed among incidental responses to
corruption and high risk of the system capture. While the system does not show significant anomalies,
evaluators considered that the limited use of framework agreements - which started in 2015 and are
still not extensively used - restricts conclusions on the efficiency and effectiveness of the system in
preventing corruption. However, limited use of the FAs may in fact indicate the weak capacity of the
PP system and lack of expertise. This puts the system at high risk of capture and prone to undue
influence. For further development of FA use in the PP procedures, respective authorities should
consider introducing safety mechanisms that will assure detection (i.e. abuse of FA for the purpose of
limiting the competition), prevention and sanctioning of potential corruption in this area.
Findings in detail
Contracting authorities in Albania started to use framework agreements for the first time during
2015.
158
During 2016, data analysis shows that contracting authorities continued to use the framework
agreements, focusing mainly on procuring services such as the purchase of plane tickets, consultancy,
healthcare services, repair of vehicles and equipment.
Table 9 Contract notices on framework agreement procedures 2015-2016
2015
2016
Type of procedure
Number
Limit fund
Number
Limit fund
Open local
procedure
15
ALL 282.7 million
EUR 2 million159
20
ALL 789.9 million
EUR
5,749,954.54160
Request for
proposal
19
ALL 71.4 million
EUR 511
thousand161
23
ALL 101.5 million
EUR 739
thousand162
Consultancy
service
3
ALL 166.6 million
EUR 1.2 million163
Total
34
ALL 354.1 million
EUR 2.5 million164
46
ALL 1 billion
EUR 7.7 million165
158
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on July 11, 2017.
159
Average yearly exchange rate for 2015.
160
Average yearly exchange rate for 2016.
161
Average yearly exchange rate for 2015.
162
Average yearly exchange rate for 2016.
163
Average yearly exchange rate for 2016.
164
Average yearly exchange rate for 2015.
165
Average yearly exchange rate for 2016.
63
Category 17: The most successful tenderers
TABLE A.17.1: Corruption Resistance Index The most successful tenderers
TABLE A.17.2: Capture Risk Index The most successful tenderers
Kosovo; -0,851
Bosnia and
Herzegovina; -0,832
Albania; -0,806
Macedonia; -0,555
Serbia; -0,422
Montenegro; -0,416
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Resistance index (-1 - 1 best)
Resistance index
Bosnia and
Herzegovina; -0,854
Kosovo; -0,851
Albania; -0,793
Macedonia; -0,645
Montenegro; -0,589
Serbia; -0,430
-0,900 -0,800 -0,700 -0,600 -0,500 -0,400 -0,300 -0,200 -0,100 0,000
Capture risk index (-1 - 1 best)
Capture risk index
64
Interpretation of indices Albania Category 17: The most successful tenderers
In this area, Albania is assessed as a weak performer with indices in the zone of the elementary
corruption response (table 17.1 above) and Captured system (table 17.2 above). Data on most
successful tenderers are simply unavailable in the PP system.
166
Lack of digitalization and loopholes in
information management pose a fundamental challenge to any kind of substantive controls (whether
internal or external) over the outcomes of PP procedures. Inability of the system to provide data on
most successful bidders implicates multiplication of the challenges observed in earlier chapters. It is
not clear why system during establishment of the e-procurement was not previously digitalized in area
of data management, as it did not make sense to the evaluators to have one without another. As this
issue affects all aspects of accountability, integrity, internal and external controls, it represents one of
the key risks to corruption/capture of the system as well as obstacles to implementation of any
integrity and accountability initiative. This is especially important as local evaluators observed that
there is a public perception of “collusion” between local authorities and the most successful tenderers.
Therefore, data management structures and digitalization appear to be an ultimate priority in any
further intervention in the PP system in Albania.
166
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on October 11, 2017.
65
Category 18: Trends in petty public procurement
TABLE A.18.1: Corruption Resistance Index Trends in petty public procurement
TABLE A.18.2: Capture Risk Index Trends in petty public procurement
Kosovo; -0,873
Bosnia and
Herzegovina; -0,851
Montenegro; -0,832
Albania; 0,032
Macedonia; 0,101
Serbia; 0,110
-1,000 -0,800 -0,600 -0,400 -0,200 0,000 0,200
Resistance index (-1 - 1 best)
Corruption resistance index
Bosnia and
Herzegovina; -0,869
Kosovo; -0,866
Montenegro; -0,836
Serbia; -0,055
Albania; -0,009
Macedonia; 0,082
-1,000 -0,800 -0,600 -0,400 -0,200 0,000 0,200
Capture risk index (-1 - 1 best)
Capture risk index
66
Interpretation of indices Albania Category 18: Trends in petty public procurement
In the area of trends in Petty public procurement, Albania scores relatively high in comparison to other
countries. The corruption resistance index score is in area of moderate response to corruption (see
table 18.1 above), while Capture risk index is also in the area of moderate risk (see table 18.2 above).
The reasons for this kind of development mostly lie in the solid regulation of petty public procurement
(see the detailed explanation in category 7 above), low thresholds of petty public procurement, and
more advanced use of the electronic procurement in this area. In the long run, respective PP authorities
may consider full digitalization of the petty public procurement in order to increase ability of control
mechanisms to provide more comprehensive analysis in this area.
Findings in detail
Albania sees a positive trend in petty procurement purchases, with the number and value of petty
procurement having decreased in the last two years (2015 and 2016) compared to 2014. The same
trend applies when petty procurement is observed as a proportion of the total value of public
procurement: 13% in 2014, 11.3% in 2015 and 6.7% in 2016.
Table 13 Data on petty procurement, 2014-2016
2014
2015
2016
Total number of petty
purchases
46.537
22.435
21.914
Total limit fund of petty
purchases
ALL 9.2 billion
EUR 65.6 million167
ALL 10.2 billion
EUR 73.4 million168
ALL 7.5 billion
EUR 54.8 million 169
Total procured fund of
petty purchases
ALL 7.8 billion
EUR 56. million 170
ALL 4.4 billion
EUR 31.9 million171
ALL 3.1 billion EUR 22.7
million172
Total number of
ongoing petty purchases
31.164
19.828
17.010
Total number of
unfinished procedures
(annulled etc.)
15.373
2.607
4.904173
167
Average yearly exchange rate for 2014.
168
Average yearly exchange rate for 2015.
169
Average yearly exchange rate for 2016.
170
Average yearly exchange rate for 2014.
171
Average yearly exchange rate for 2015.
172
Average yearly exchange rate for 2016.
173
Public Procurement Agency (2017) Freedom of Information Act, written response retrieved on October 11, 2017.
67
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