Estonian audit: Ministry fails to exercise supervision over public companies, foundations

Photo: Mati Hiis / Õhtuleht

While the Public Procurement Act grants the Estonian Ministry of Finance the sole competency to exercise supervision over contracting authorities, the ministry has not exercised any supervision over tenders carried out by public undertakings and public foundations, it appears from the findings on an audit by the National Audit Office.

The Public Procurement Board that operated in the area of government of the Ministry of Finance stopped its activity in 2010 and its area of responsibility and duties were transferred to the Ministry of Finance from July 1 that year. The goal of the changes – to improve the efficiency of supervision – has not yet been achieved, the National Audit Offic said.

The audit also revealed that contracting authorities are not satisfied with the counseling provided by the Ministry of Finance, mostly because of its variability and the fact that opinions are changed later on.

"For instance, by the time the present audit was started the Ministry of Finance had not conducted any supervision proceedings at public undertakings and public foundations," said Ines Metsalu, director of audit at the financial audit department of the National Audit Office.

Supervision has been performed so far based on applications to start supervision, yet regular supervision has not been carried out to a sufficient degree despite the substantial preventive effect that it has according to the National Audit Office.

The audit covered the period from Jan. 1, 2011 to May 31, 2012. As of 2011 the number of public undertakings and public foundations was 89, 59 of which were foundations and 30 companies. At the time the audit ended there were 84 such foundations and companies, including 58 foundations and 26 companies.

According to the database of the Ministry of Finance the operating costs of these companies and foundations totaled 723 million euros in 2011 and 391 million euros in the first half of 2012.

The public procurement tender database shows that during the period from Jan. 1, 2011 to May 31, 2012 a total of 2,092 tenders took place at such companies and foundations, 31 percent of which were held using open procurement procedure, 56 percent using simple procedure and 13 percent using another tendering procedure.