The question of public procurements classified as “state secret”
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- It resulted that military and classified “secret” procurement procedures were about 10-20 percent higher at minimum, or over 720 million lek (5.85 million euros) more. This comes due to vague legislation on procurement legislation.
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TIRANA, May 30- From 2014 to 2018, there have been an increasing number in public procurement contracts ranging from information technology, maintenance of public buildings to government services, that are classified as secret. According to the Supreme State Audit (SSA) and experts from civil society, contracts classified as secret have negative consequences for the state budget, limiting competition between economic operators and bringing additional costs.
The reasons that led the government to increase the use of state secretory classification in the public procurement field is still uncertain. What makes this situation a bit disturbing is the fact that some public institutions such as the Albanian Road Authority (ARA) also classify simple public work contracts such as building and maintaining roads as “confidential,” limiting in an illegal manner the access of media and citizens to their contents.
Under the law on classified information, an document is classified as “state secret” if its unauthorized exposure would endanger national security. Secrecy-classified documents, based on the content, values ”‹”‹and information they contain, may be classified in “top secret,” “secret,” “confidential,” or “restricted.” Over the past ten years 236 public procurement contracts have been kept secret by public authorities in Albania, including central and independent government institutions. The Classified Information Security Directorate (CISD) which is the institution responsible for maintaining state secrets where the index of secret documents is also kept, reports that the Albanian state does not currently have any “top secret” contracts.
Out of the 236 classified contracts from the past ten year, 20 classified contracts belong to the DP-SMI coalition government of 2009-2013 led by former Prime Minister Sali Berisha. Then from 2013-2018 when the Socialist Party is governing has a total of 216 classified contracts. A historic record is marked in 2018 with 76 classified contracts.
A notable case is a payment made by the National Agency of Information Society (NAIS) for the company Albsig, a company part of the Kastrati group. The NAIS made a 1.5 million euros contract on the security of its building in December 2018, an unusually high cost, and classified the contract as a “state secret.” The cost of insurance is known as “prim” in the technical language, and the cost of the premium fluctuates between one thousand and one or two percent of the value of the insured object or potential damage. It is unclear what danger or cataclysm the NAIS building faces to justify such a high insurance cost for only one calendar year. But such insurance contracts are not common to the Albanian state. In addition to securing third party liability for the fleet of public vehicles, no cases are known when state institutions have purchased insurance policies for other purposes.
During the government of former Prime Minister Sali Berisha in 2009-2013, secrecy classified contracts belonged entirely to the security institutions. Out of 20 such contracts, eight belong to the General Prosecutor’s Office, ten belong to the Information Service, and two to CISD. After 2013, other institutions began classifying public spending contracts as state secrets. NAIS holds the record in this regard with 18 contracts in 2017 and 28 contracts in 2018. The Information Service on the other hand which allegedly has secrets to maintain, classified as secret only six public procurement contracts in 2018.
One of the institutions that used the secret classification for procurements after 2013 is the Council of Ministers. The prime minister’s office signed a secret classified contract in 2017 and another in 2018. PM’s secret contract is tied to the AD-Star company, for which the Council of Ministers made a payment of 56 million (455 thousand euros) on 18 December 2018. Since this contract is secret, it can be found out what tendering procedure has been followed for the conduction of this contract and what works have been done.
Another institution subordinated to the PM, the Government Services Directory which deals with government services or other senior officials, such as vacation homes or other commodities like reception and escort, has made 26 secret contracts during the 2015-2019, of which 12 contracts were concluded only during 2018. It is uncertain what this contracts included, however from some cost analysis of this institution it resulted that most of the tendered costs related to waterproofing of government villas, furniture, media services and rented screens.
In a 2018 report the SSA wrote that military and secret procurement procedures were not carried through the Public Procurement Agency’s electronic system but with the “Handing Envelopes.” This negatively affected competition between economic operators, because the tenders were given to their full cost value, bringing thus additional costs to taxpayers as savings of funds were almost zero in these cases. To highlight the negative effects on the state budget, the SSA analyzed the differences between the values ”‹”‹for concrete items of goods, services and works carried out through public procurement procedures and those conducted through military and secret procedures. It resulted that military and classified “secret” procurement procedures were about 10-20 percent higher at minimum, or over 720 million lek (5.85 million euros) more.
“It is precisely the legal basis that allows for the implementation of uncompetitive procedures, which vacuum is well utilized by contracting authorities, thus resulting in significant adverse effects to the detriment of the state budget,” wrote SSA in its report, demanding an improved legislation on secret procurement.
Civil society actors are also concerned about the increasing number of secret procurement. They also admitted to state secret classification of tenders stifling competition. Redion Qirjazi who is security program manager at the Institute for Democracy and Mediation in Tirana, said that as data on classified tenders are not public, this allows the contracting authority to select an operator of his choosing although the classification is not always justified.
“This is not a standard procurement practice and SSA audits have shown restriction of competition with classified tenders,” he added.
ARA confidential contract
The International Monetary Fund and the Bank of Albania has criticized as ineffective some high expenditures made in December 2018. Part of these 2018 expenditures belong to ARA which in December alone made payments for road construction ranging from 1 million to 15 million euros to construction companies “2 T,” “Agbes,” “Alb Star,” “COBIAL,” “Euroteorema,” “Geci Albavia,” and “Gjikuria.” Investigative media Balkan Insight (BIRN) requested ARA for information on contracts related to these entities, but the Authority refused to respond. BIRN made a complaint at the Right to Information Commissioner, but director of ARA Sonila Qato, responded that she considers the contracts confidential and therefore refuses to make them public. BIRN complained again at the Commissioner, which this time ordered ARA to submit the contracts, and also imposed an administrative penalty of 150 thousand lek (1200 euros) for the responsible official. Despite this, director Qato refused to make transparency and also stated that she would challenge the Commissioner’s decision in court.
