Irregularities in public procurement are repeated year after year. This means that public funds are not used fully in accordance with the principles of economy, efficiency and effectiveness. Due to the potential risks that this area carries, such as corruption, lack of transparency, and uneconomical conduct, public procurement is always in the focus of the State Audit Institution of the Republic of Serbia. By conducting compliance audits and combined financial and compliance audits, the auditors have determined that irregularities in public procurement relate to the fact that the public procurement procedure was not carried out, that public procurement was not adequately planned, but also that the procedures for implementing public procurement and executing concluded contracts have significant irregularities.

In order to best answer the question of whether the auditees' public funds are used rationally, economically and efficiently, in 2022, the SAI conducted a combined compliance and performance audit in the area of public procurement for the first time. The aim of this type of audit is to examine systemic problems in public procurement among the same group of users of public funds. By combining the findings and recommendations from multiple reports into one, it provides easier insight into information from certain areas of the public sector, i.e. it facilitates access for the competent parliamentary committees and other stakeholders to the observed systemic problems listed in those reports.

In 2022, the SAI reviewed the public procurement systems of nine secondary school student dormitories and 15 local government units and prepared individual audit reports with conclusions and findings, as well as consolidated reports. In 2023, problems were observed in the public procurement system at nine secondary education institutions and nine healthcare institutions.

Regularity and efficiency of public procurement planning in local government units among direct users of budget funds

As many as 14 out of 15 local government units, i.e. auditees, did not prepare public procurement plans based on previously determined and expressed real needs in the procedure and in the manner prescribed by internal acts on public procurement, according to the Consolidated Report on Compliance and Performance Audit "Regularity and Efficiency of Public Procurement Planning in Local Government Units Among Direct Users of Budget Funds".

The same auditees, in the public procurement planning procedure, did not primarily use all the information collected through market surveys and research, because they did not implement the above actions in a regular and efficient manner in compliance with internal acts, nor did they fully record and document them in writing.

All auditees did not implement public procurement plans in a timely manner and to the planned extent, taking into account the planned timeframe for initiating public procurement procedures, the planned number of procedures, the estimated and contracted value of the procurement items, while several subjects implemented the procedures in a timely manner, but the overall Public Procurement Plan was not implemented to the planned extent.

The most common problem identified by the SAI in these audits is that, despite the legal obligation to record and document all actions in the public procurement planning process, no local government unit has fully documented them.

Local government units provide services that directly affect the quality of life of all citizens of the Republic of Serbia. In order for these services to be of higher quality, it is necessary to increase the efficiency of public procurement planning by involving all stakeholders in realistic and prioritized needs identification, along with market research. This will contribute to the adequate management and disposal of budget funds during the year and the timely satisfaction of needs, is the main message of the consolidated report.

Regularity and efficiency of procurement procedures in secondary education institutions

The subject of this audit was to examine the regularity and efficiency of procurement procedures in secondary vocational schools, which refers to procurement planning, implementation of procurement procedures and monitoring of the execution of public procurement contracts. In the audit of nine secondary schools, the SAI found that there were irregularities in all phases of the procurement procedure.

The main causes of this situation in secondary vocational schools are the lack of professional staff in the area of organizing and implementing procurement procedures, as well as the inability to adequately plan procurement due to uncertainty in securing funds for these purposes in the local government budget.

In order to use public funds more rationally, secondary vocational schools need to establish a more efficient procurement system, especially in the area of procurement planning and monitoring of contract execution, which could contribute to improving the conditions of education and upbringing in terms of space, equipment and teaching materials.

Regularity and efficiency of public procurement procedures in student standard institutions

Meeting the needs of children living in student dormitories could be more efficient if more attention was paid to procurement planning and monitoring the implementation of public procurement contracts, is the conclusion of the Consolidated Report on Compliance and Performance Audit “Regularity and Efficiency of Public Procurement Procedures in Student Standard Institutions”.

In the audit process of nine student dormitories, the SAI determined that they pay the least attention to the procurement planning process. In the procurement planning part, they mainly rely on the experience of their employees. Seven out of nine student dormitories did not have a developed methodology for expressing needs, nor clear instructions for planning procurement. In the case of expressing needs for food, they did not analyse in detail the parameters that directly affect the subject procurement, such as the number of enrolled students, planned menus, as well as the set standards for the quality of student nutrition, but mainly relied on the experience of employees in the food service.

Only two secondary school student dormitories had a developed methodology for determining the estimated value of the procurement, while the other student dormitories did not document the market research or the criteria they applied when determining the estimated value of the procurement.

The student dormitories did not examine the validity of the estimated value at the time of initiating the procedure, so it cannot be determined whether it was objective and valid at the time of initiating the procedure. The result was that two student dormitories concluded public procurement contracts with a value that was 25% to 50% higher than the estimated value, which indicates that the estimated value was not adequately determined. Also, one student dormitory changed the estimated value of public procurement by 54% compared to the original plan, without clear criteria and explanations. The planning team's control activities in this part were absent, so many of the actions carried out at this stage were not recorded and documented, which is contrary to the regulations.

The student dormitories generally complied with the regulations in the area of public procurement during the implementation of the procedure. However, when defining technical specifications and setting additional criteria for the selection of an economic entity, market research activities were lacking in terms of the number of potential bidders who could respond to the set procurement conditions.