Public procurement in KCUS: One bidder each for equipment worth 4 million KM

During 2022, the Clinical Center of the University in Sarajevo acquired at least 20 different devices worth about 4 million KM through a public procurement procedure for which one bidder applied. Directors of several hospitals in Bosnia and Herzegovina, refusing to speak publicly about public procurement, appreciate that there is competition in the medical equipment market in Bosnia and Herzegovina. They warn that it is probably either an agreement between the bidders or a very precisely copied description of the requested goods.

 Written by: Rubina Čengić

In 2022, the Clinical Center of the University in Sarajevo acquired at least 20 different devices more expensive than 100,000 KM (total value of about 4 million KM) through a public procurement procedure for which one bidder applied.

These are, among other things, the following devices: 4D ultrasound machine, gamma counter, plasma sterilizer, electroencephalogram EEG machine, electromyograph EMG… transcranial Doppler TCD, colour doppler ultrasound machine, monitors for monitoring vital parameters, mini excavator, EKG machine 6/12 channel on a mobile cart, system for ventricular support of the heart (LVAD, RVAD, BiVAD and ECMO), machine for extracorporeal circulation (heart-lung), mobile X-ray machine with C-arm… (https://www. ejn.gov.ba/Registry/CASearch).

What do auditors look for first?

The Chief Auditor at the Institutional Audit Office in the FBiH Dževad Nekić says that he knows nothing about specific procurements by KCUS. However, he adds that auditors generally in public procurements first check the tender documentation to determine whether a supplier has been preferred by the invitation itself, that is, whether the possibility of competition has been ensured, that is, that several suppliers have applied.

– It is symptomatic that often only one bidder appears, because competition exists everywhere, in all areas. However, it is always possible to exclude all but one of the interested suppliers with some detail in the tender documentation. Even in these cases, it is difficult to recognize what prevents active competition and favours a particular supplier. In addition, it is also important how many potential bidders took over the tender documentation – says Nekić.

On the remark that in 2021, when KCUS bought 9 respirators (DRAGERWERK) from the company Diamedic from Sarajevo for 626,429.70 KM, 26 potential bidders took over the tender documentation, Nakić says that it is already strange.

– If potential bidders downloaded the documentation and did not send an offer – they must have found details there that made them unqualified. For example, we often come across a situation where, for example, mines buy a certain service, and as a request in the tender they very precisely specify the equipment that the supplier must have and thus make all others unqualified – explains Nekić.

(Un)fair treatment

From the Agency for Public Procurement, director Sanja Ćubela points out:

– If the contracting authority respects the principle of equal treatment of all participants in the procedure in all stages of the public procurement procedure, and the bidder’s interest in the specific procurement is reduced, and the contracting authority receives only one or a small number of bids – there can be no talk of irregularities on the part of the contracting authority.

However, they add that if the contracting authority does not respect the stated principles, and behaves unequally towards bidders through the public procurement procedure, for example favouring a certain bidder in a certain way, such behaviour may be subject to misdemeanour or criminal prosecution.

In addition, Ćubela clarifies that since 2018, the tender documentation for all completed public procurements is permanently available on the Public Procurement Portal https://www.ejn.gov.ba/ in the status of completed 60 days after the end of the public procurement, that is, the award of the contract.

What is the collusion?

Transparency International in BiH warns that public procurement based on only one offer is not prohibited. They also point out that there are probably few suppliers of medical equipment. However, they do not deny that there is also the possibility of suppliers colluding.

– It is not unusual for one bidder to apply for a tender. According to the data of the Agency for Public Procurement in Bosnia and Herzegovina, we often do not even have two offers. The average is 1.8 offers per tender. But, when it comes to purchases of higher value – it is a noticeable phenomenon that, in addition to contracting authorities agreeing with suppliers, suppliers agree when who will enter which tender because then they do not lower the prices and there are no complaints. This phenomenon is called collusion, it is extremely pronounced in practice. As far as we know – the Agency for Public Procurement in BiH will ask the Ministry of Justice to introduce this criminal offence into the Criminal Code of BiH. Because now it is difficult to prosecute the perpetrators of crimes among the suppliers. With the introduction of collusion in the criminal code, this problem will be solved – Damjan Ožegović, the senior researcher at TI BiH, is convinced.

Amendments to the Criminal Code

From Agency for Public Procurement Mostar, Sanja Ćubela, points out that this proposal for amendments to the Criminal Code of Bosnia and Herzegovina stipulates that a person responsible for a bidder or an entrepreneur who submits an offer based on false information or based on a prohibited agreement between bidders in the public procurement process will be punished with a prison sentence of six months to five years and a fine. And for acts in the public procurement procedure with a value greater than one million KM, the proposed prison sentence is from one to ten years and a fine from 1,000 to 5,000 KM, and for a legal entity from 5,000 to 50,000 KM.

– It is evident that in practice there is a phenomenon of a reduced number of bidders, submission of false information, division of the market, and fictitious offers, that bidders enter into agreements by completely faking the competition for public procurement contracts, agree on lowering prices, thereby pushing other bidders out of the public procurement procedure, distorting competition, the sudden withdrawal of the offer, different prices in different places, which basically has a fraudulent purpose, that is, acceptance of an offer based on prohibited agreements or false information. The perpetrator is the person who submitted the offer in the public procurement procedure. the form of guilt is premeditated-dolus. This practically means that the perpetrator acts with a certain goal, which is to accept the offer, and in these cases, there is no reference to delusion because the participants in the public procurement procedure cannot plead ignorance of the Law on Public Procurement. The essence of the mentioned criminal offence is that it was committed regardless of whether the criminal goal was achieved because the offence was completed by delivering such an essentially irregular and illegal offer – explains Ćubela.

If Srebrena malina could

When asked who will establish the existence of this criminal offence, the Agency replies that the Competition Council of Bosnia and Herzegovina is responsible for the procedure for the protection of market competition.

However, the BiH Competition Council says that they are not competent to interpret the Law on Public Procurement. However, they recommend that, if we have information about violations of market competition, we can provide them with evidence and relevant information or initiate proceedings.

Directors of several hospitals in Bosnia and Herzegovina, refusing to speak publicly about public procurement, appreciate that there is competition in the medical equipment market in Bosnia and Herzegovina. As with anything anyone wants to buy. They warn that it is probably either an agreement between the bidders or a very precisely copied description of the requested goods.

– If Srebrena malina could sell respirators – why can’t others – says one of the interlocutors.

 Messy and imprecise

A cursory look at the data on public procurement on the KCUS website (https://www.kcus.ba/javne-nabavke-svi/) shows that records are kept irregularly and imprecisely.

In the public procurement plan for 2022.

(Odluka-o-izmjenama-i-dopunama-Plana-JN-KCUS-a-za-2022.godinu-i-tabela-Izmjena-i-dopuna-Plana-JN (4).pdf) which was amended on November 9, 2022, and approved by the Board of Directors states that in the period from January to December 2022, the procurement of materials, equipment, small inventory, spare parts according to the actual needs of KCUS in the amount of 1.7 million KM is foreseen; Decisions on procurement or cancellation of tenders often do not have a name, with some public procurements there is no price…

Purchases of various devices based on one offer were also carried out for amounts less than 100,000 KM: apparatus for dehydration and processing of biopsy samples (tissue processor) – 99,000, supplier MEDIMAX; ultrasound machine for 70,000 – supplier Medical doo; ultrasound machine, which is necessary when placing a catheter for hemodialysis – 60,000 KM; supplier Sono Medical doo; digital dermatoscope – 80,000 KM, supplier Sono Medical doo; absorption spectrometer – 99,990 KM, supplier Alphacrom doo; atomic absorption spectrometer…

There are no bidders?!

For some time now, the procurement of a 3T magnetic resonance imaging unit with accompanying equipment, which is estimated at 4 million KM, and for the needs of the KCUS Radiology Clinic – an international tender was opened in June 2022, but the deadline for submitting bids has been extended several times. because there are no bidders.

Slobodan Golubović, the editor of the portal pratimotendere.ba, also reminds that the Law on Public Procurement does not prohibit the realization of procurements in which only one offer was submitted, but warns that the symptomatic background is the circumstances, that is, the answer to the question why only one bidder came forward.

– The answer given by the result of the conducted procedure is that there is no competition, and the reasons for the absence of competition can be different. One is that the BiH market is small and it may happen that objectively the bidder offering certain goods, services or works is the only one on the market, but this is not a justification because the Law has enabled tenders to be international as well. Another possible reason is that the contracting authority, by abusing the conditions of qualification and technical specifications, usually with prior agreement with the bidder, ensures that only one bidder is competitive in the procedure, and the third possible reason is the agreement of the bidders or the so-called collusion or the agreement of the bidders not to they interfere with work, which means that they do not compete in tenders and then there are no complaints and the like. As a result of all this, there is an additional destruction of competition on the market, but also the impossibility of potential savings of public funds – explains Golubović.

 Two online sessions

From KCUS until the conclusion of this text, we did not receive an answer to the questions: in more than 20 public procurements for goods more expensive than 100,000 KM, you had only one bidder – how do you comment on that? have you ever considered cancelling the tender because you have only one offer (except in the case when the offered price is much higher than the amount you planned for those purchases); have you ever analyzed your public procurement procedures, checked whether you might be making a mistake somewhere?

We learned from individual members of the KCUS Board of Directors that since May 2022, when the composition was changed, they had two online sessions and that they were very short.

There are no answers to many questions, because the management of KCUS mostly does not communicate with the media, does not answer the questions of representatives, and often ignores the requests of the founders for transparent and clearer business.

In 2018, we remember Dr Dragan Stevanović sent an open letter in which he asked the authorities for an explanation “why KCUS pays the oncology accelerator 5.5 million KM plus VAT when it costs about 2.5 million KM”.

– Information was published that I personally checked and that you can also check by looking at the UKCS documentation that an oncology accelerator was ordered for the needs of the UKCS at a price of 5,500,000 KM plus VAT slightly less than 1,000,000 KM through the company Medit, which is in close ties with the SDA. Although I am not an expert in the field of radiological therapy, I checked several independent sources and found that the ordered device costs 1,500,000 USD or about 2,500,000 KM with additional equipment, costs of transport, assembly and commission to the supplier and VAT, it cannot cost more than 4,000,000 KM – stated Stevanović.

He warned the authorities that, as he said, it is their legal obligation and duty to check why KCUS is paying 2,500,000 KM more for this expensive device and to whom the money is going.

– For this money, all the requirements regarding the salaries of employees in the health care of KS can be met or a state-of-the-art MRI machine can be bought – Dr Stevanović concluded.

None of the authorities checked his statements or asked him for information.