Successes and Failures of the Bulgarian Governments (1998-2011): Review of Audit Office Reports

Successes and Failures of the Bulgarian Governments (1998-2011)

Review of Audit Office Reports

third edition

February 16th 2012

The third edition of the report “Successes and Failures of Bulgarian Governments (1998-2011)” supplements the first two editions with 109 newly published reports of the Bulgarian National Audit Office. Thus, the total cumulative number of audit reports covered in the latest edition is 697.   

Using pre-defined indicators for evaluation, the activities of the administration that have been reviewed by the Audit Office, are being classified as “successes” or “failures”. Activities the results of which do not clearly assign them to either group are labeled as “unclassified.”

The audit reports cover government activities and programmes that account for around 40% of all public expenditures made during the 1998 – 2011 period or about 90 bn. leva out of total government spending for 225 bn. leva over the entire period.

Following our analysis of the 697 Audit Office reports, we came up with the following statistics in terms of audited activities:

• 173 cases of successes, estimated at 27 bn. leva.
• 283 cases of failure, estimated at 34 bn, leva.
• 241 unclassified cases, estimated 28 billion leva.

Moreover, we identified direct losses in 13,4% of all reports, and 26,5% of the reports categorized as failures.  

The total amount of the identified losses in the period between 1998 and 2011 is 976 613 583 leva[1]. Most of the expenses, identified as losses, are due to violations made in public procurement procedures. The most common violations are:

• Chopping of public procurement procedures, which means that instead of one big open procedure, two or more procedures for smaller amounts of money are held.  In many occasions, contractors of all the smaller procedures happen to be one and the same company.
• Substantial toughening of the minimum technical and financial requirements for participation in the public procurement procedure. This is often a hidden way of favoring a pre-determined firm to win the procedure.
• Placing requirements that have no regard to the capability of the potential contractor to get the job done, which is limiting the amount of potential contenders available and which is often giving priority to one of the contenders.
• Placing requirements for minimum annual turnover, which is above the one, specified in the Public Procurement Law.
• Limiting the number of potential contenders through requirements for specific experience or period of time, during which the contender has been practicing a particular activity on Bulgarian territory. 
• Assignment of public procurement orders even if less than three bids have been placed, which violates the line normative requirements.

Recommendations

Given this analysis there are some recommendations that could be made so that the occasions of illegal and inefficient public spending are curbed:

• Introduction of mandatory ex-ante and ex-post impact assessment of the programs and initiatives of the administration, which would help downsize potential losses and would lead to a more efficient targeting of programs.
• Tightening control on public procurement procedures, including the organization of tenders, assignment of orders and ensuing execution. Limitation of state intervention in the economy – the review made it clear that the Bulgarian administration often fails in performing the tasks that it assumes. This should lead to a more general reform of government functions.
• Introduction of specific deadlines for each large-scale government program . Whenever a deadline is reached,  the administration should convince the society that it would benefit from an extention of the programme.

The whole analysis is accessible here

[1] The public assets, which are spent inefficiently, are included to the total losses. Inefficiently spent assets are these which use haven`t reached its purpose. Unauthorized spent assets are these which use is in controversy with the normative requirements.