Viimsi Municipality and the larger companies it owns have not organised all required public procurements

Toomas Mattson | 6/21/2013 | 3:34 PM

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TALLINN, 21 June 2013 - As a result of a recently completed audit the National Audit Office found that Viimsi Municipality and important companies it owns have failed to organise procurement procedures or entered into procurement contracts without submitting reports about them to the Public Procurement Register to a value of more than 6.3 million euros. When procurement procedures were organised, the contracts complied with the terms and conditions specified in the procurement documents and were in compliance with the Public Procurement Act. The contracts of some procurements were later amended, which is not in compliance with law.

Viimsi Municipality is the biggest in Estonia in terms of population and one of the fastest developing local authorities. The local taxpayer must be reassured that the money required for investments is used transparently, expediently and economically.

The National Audit Office found that in one case Viimsi Municipal Government had not organised an international procurement procedure; in two cases it had not announced public procurements via the Public Procurement Register; and in three cases it had not submitted the mandatory report about entry into a procurement contract to the Public Procurement Register. The breaches of these procedural rules related to procurement contracts whose total value exceeds 5.8 million euros. Viimsi Municipal Government did not have a procurement procedure during the audited period, even though having one has been a legal requirement since 2012.
 
AS Viimsi Vesi had not established the required procurement procedure either during the audited period. No procurement procedure had been organised for purchasing waste water removal services to a value of 242,865 euros. A contract for an unspecified term has been entered into with the existing service provider, which is why the other companies operating in this area of the market have been deprived of the opportunity to compete for the provision of the same service.
 
OÜ Viimsi Haldus did not organise the mandatory procurement procedure when it ordered bus stop maintenance work. The company had also purchased security services from the same company all the time without organising a competition. These breaches related to procurement contracts whose total value exceeds 260,000 million euros.
 
Viimsi Municipality has not guaranteed in its companies that the members of the companies’ supervisory boards it appointed use the option of supervising the activities of the management boards of companies in the organisation of public procurements given to them by law, although doing this would help ensure that public funds are used transparently, expediently and economically. Ascertaining the existence of conflicts of interest that damage competition in procurement procedures was also difficult for Viimsi Municipality. Namely, a company managed by the person who was also the chairman of the supervisory board of AS Viimsi Vesi participated in a public procurement organised by AS Viimsi Vesi. Such a potential conflict of interest could have been prevented with management procedures specified in the procurement procedure, but the auditee had not prepared them.
 
The National Audit Office finds that ascertaining conflicts of interest that damage competition and the obligation to remove a tenderer that received an advantage from the procurement procedure should be explained in greater detail in legislation. Local authorities also need clearer guidelines on how to prevent situations related to conflicts of interest. The Ministry of Finance is of the opinion that discussing the subject of conflicts of interest and obtaining an unfair competitive advantage in internal procurement rules is recommended and promised to explain this aspect during training and via the public procurement portal. In the opinion of the National Audit Office the current practice indicates that this has been insufficient for local authorities.
 
Of the total volume of the purchases made by the three auditees during the audited period (over 40 million euros) the National Audit Office chose transactions valued at 12 million euros for auditing. 7.3 million of this amount was transactions by Viimsi Municipality, 3.7 million by AS Viimsi Vesi and ca. 1 million by OÜ Viimsi Haldus. The audit covered the period from 2010 to 2012.

Toomas Mattson
Head of Communication Service, National Audit Office
+372 6 400 777
+372 51 34 900
toomas.mattson@riigikontroll.ee

  • Posted: 6/21/2013 3:34 PM
  • Last Update: 8/16/2015 12:30 AM
  • Last Review: 8/16/2015 12:30 AM

Viimsi Municipality

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