Red Flags website is part of the platform www.prokurimihapur.org. This website aims to prevent mismanagement and corruption in public procurement. The Red Flags website enables citizens, journalists, and other stakeholders to more easily identify procurement procedures that are questionable and begin analyzing them. In Kosovo, many contracts are signed within the year and it is very challenging to notice contracts that are mismanaged and if there is corruption. For this reason, Red Flags automatically absorbs data from procurement activities published on the official electronic platform e-Procurement, where it filters those which could potentially be misused, which is done through several formulas and algorithms. Those tenders that appear with a Red Flag, does not necessarily mean that they are tenders with abuses, but may raise a suspicion which is worth further research, because procedures with such elements are more prone to mismanagement and corruption.
The Red Flags website contains data on public contracts signed from January 1, 2020 until now and is constantly updated with new publications appearing in e-Procurement. Data is obtained automatically from E-Procurement through the API (Application Programming Interface), which uses the OCDS (Open Contracting Data Standard) standard. Democracy Plus has developed nine indicators for Red Flags taking into account data coming through the API and data limitations:
1. Deadlines – This indicator calculates whether deadlines are given for the economic operators to submit the bid in accordance with the Public Procurement Law. According to the PPL, the contracting authority may shorten the deadline for submission of the bid. This indicator measures exactly whether the deadline is shorter than the legal deadline. The shortening of the deadline for submission of bids sends signals that the contracting authority wants to make it difficult for some economic operators to submit bids. This happens especially when various certificates are required in the tender dossier, which take time to obtain. Since the deadlines are different depending on the estimated value of the tender, then this indicator makes three calculations:
• If the tender is of high value, and the deadline for submission of bids is shorter than 15 days, then it is considered as a Red Flag tender.
• If the tender is of medium value, and the deadline for submission of bids is shorter than 10 days, then it is considered as a Red Flag tender.
• If the tender is of small value, and the deadline for submission of bids is 4 days or shorter, then it is considered that the tender has a Red Flag. Since for small value tenders, the deadline for submission of bids is 5 days and it is not possible to shorten the deadline, the algorithm only calculates if the deadline is 4 days or shorter.
2. The contract price is 40% lower than the estimated value – This indicator shows a signal for improper tender planning and the estimated value and / or the company that won the tender may have knowledge of the work to be performed. If the result is 40% or higher then it is estimated that the tender has a Red Flag.
3. Negotiated procedure without publication of a contract – This indicator calculates whether the negotiated procedure without publication of a contract notice was used and only one company was invited to submit a tender, which is also the winner of the contract. If these two conditions are met, then it is considered that the tender has a Red Flag. This may indicate that the contracting authority intended to eliminate competition, using the negotiated procedure without publishing a contract notice and inviting only one company to submit a bid.
4. The contract price is higher than the estimated value – This indicator calculates if the contract price is higher than the estimated tender value. This indicates that the contracting authority did not calculate the estimated value properly. The indicator is divided into four categories classified according to the value of the contract:
• If the tender has an estimated value of EUR 10,000 or less (low value tender) and the contract price is 105% of the estimated value then it is calculated that the tender has a Red Flag.
• If the tender has an estimated value of more than EUR 10,000 and less than EUR 125,000 and the contract price is 103% of the estimated value then it is calculated that the tender has a Red Flag.
• If the tender has an estimated value of over EUR 125,000 and less than EUR 500,000 and the contract price is 102% of the estimated value then it is calculated that the tender has a Red Flag.
• If the tender has an estimated value of more than EUR 500,000 and the contract price is 101% of the estimated value then it is estimated that the tender has a Red Flag
5. Only one bidder – Compared to indicator no. 3, this indicator checks all tenders that have been conducted through open procedure, and whether only one economic operator has submitted a tender, which is also the winner of the contract. If these conditions are met, this gives signals that some criteria in the tender dossier may have been rigged for certain economic operators, especially given the fact that in Kosovo there are on average about 5 bids for a tender.
6. The contract price is very close to the estimated value – This indicator gives signals that the winning economic operator may be aware of the level of work to be performed and especially when the companies that have offered the cheapest price have not been selected as winners of the tender. The indicator is divided into four categories classified according to the value of the contract:
• If the tender has an estimated value of EUR 10,000 or less (low value tender) and the contract price is more than 95% of the estimated value then it is calculated that the tender has a Red Flag.
• If the tender has an estimated value of over EUR 10,000 and less than EUR 125,000 and the contract price is more than 97% of the estimated value then it is considered that the tender has a Red Flag.
• If the tender has an estimated value of over EUR 125,000 and less than EUR 500,000 and the contract price is more than 98% of the estimated value then it is considered that the tender has a Red Flag.
• If the tender has an estimated value of over EUR 500,000 and the contract price is more than 99% of the estimated value then it is calculated that the tender has a Red Flag.
7. Abnormally low price – This indicator calculates whether the contract price is at least 30% lower than the average of other bids. To meet this condition there must be at least three offers. This indicator is based in part on the existing formula based on Article 61 of the PPL. Abnormally low-price tenders indicate that the winner of the contract may have information on the quantities that will be ordered in certain items and which will not be ordered.
8. Winner is blacklisted – This indicator checks whether the contract has been won by the economic operator who during the time he was in the blacklist has submitted a tender and won. The companies that are blacklisted, according to the PPL, do not have the right to bid while they are on the blacklist. Because there is no automatic mechanism that prohibits these companies from being able to bid, it has happened in the past that economic operators, who have been blacklisted, won contracts.
9. Weighted price tender – In this tender the weighted price procedure was used. One of the most common forms of misuse is the use of this procedure where the contracting authority "does not know" the quantity of items and sets the quantity 1 for each item. Then through quotation, decides on the winner of the contract.
The website is updated with data every 24 hours, after midnight, with the data that were published in e-Procurement during the previous day. It is worth clarifying that each ‘lot’ of a tender is treated as a contract. It may therefore be that a procurement activity appears more than once in the table if the conditions for Red Flags are met by two or more lots.
The data in this portal are obtained automatically through the API from the E-Procurement platform which is managed by the Public Procurement Regulatory Commission (PPRC). Since the data is comes automatically and there is no human intervention, then all the data is presented as it is. If there are errors in the data in the API, then those same errors also appear on the website Red Flags in Procurement, as it is not possible to correct them manually. All possible errors in the data should be corrected by the PPRC.
Democracy Plus has also developed some additional algorithms to avoid data deficiency:
• If for any tender the basic data are missing (tender title, procurement number, contracting authority, name of the winning economic operator), that tender does not appear on this page.
Some of the data coming through the API is missing some elements. Therefore, tenders with those characteristics are not part of the Red Flag indicators:
• High value contracts that have published a Prior Notice, are not considered, as the API does not indicate which tenders have published this notice. For this reason, the indicator no. 1 (Deadlines) does not consider during the calculation if any tender has published the Prior Notice.
• Contracts with a minimum value of less than EUR 1,000 are not part of the calculation. Because there are many such contracts and their value is low, these do not appear, so the focus is on higher value contracts.
• API does not provide data regarding bid responsiveness. For this reason, the indicator for abnormally low price could not be calculated according to the official formula for calculating tenders with abnormally low price.
The Red Flags Portal is part of the Open and Transparent Procurement portal and is supported by USAID through the Transparent, Effective and Accountable Municipality (USAID TEAM) activity.
USAID established the five-year Transparent, Effective and Accountable Municipalities (USAID TEAM) activity to support the Government of Kosovo to implement anti-corruption reforms and to improve the transparency and accountability of the procurement process in all 38 Kosovo municipalities. USAID’s Transparent, Effective and Accountable Municipalities activity in Kosovo works to strengthen accountability and effectiveness in public procurement as a mean of improving public services and enhancing public trust, especially at the municipal level. By working closely with municipal partners and supporting linkages with the central government, independent agencies and civil society, the activity is strengthening key government champions and promoting local change, creating sustainable impact.
This portal was developed by Democracy Plus, through a grant agreement issued by USAID Transparent, Efficient and Accountable Municipality in Kosovo (USAID / TEAM). The views expressed by the author presented on this portal do not necessarily reflect the views of the United States Agency for International Development (USAID) or the United States Government.
Democracy Plus thanks the Public Procurement Regulatory Commission (PPRC) for the willingness shown to develop the API and to assist with other technical issues during the development of the Red Flags portal. This portal would not be complete without the readiness, cooperation, and support of the PPRC.
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