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October 6, 2022

CDR : The activity of the Municipal Companies in Bucharest is seriously distorting the competitive environment

Coalitia pentru Dezvoltarea Romaniei  (CDR)– Coalition for Romania’s Development, one of the most important initiatives of the Romanian business sector, which brings together more than 25 business associations, bilateral chambers of commerce and confederations, is asking the Bucharest Municipality to observe the principles of free competition, the principle of transparency and the legal provisions related to awarding the public service contracts to the Municipal Companies set up last year. By assessing the manner in which the 22 companies set up in 2017 under the umbrella of the Municipality have operated, we found that there is a deep gap between the principles of action and the practice of the public administration in Bucharest, in awarding the public service contracts, on the one hand, and the legal provisions in force and the mechanisms of the free market, on the other hand. We are also worried about the lack of transparency that characterizes the entire activity of the municipal companies so far, in the absence of a proper communication from the local public administration on this issue. The disturbance of the competitive environment is the first consequence of setting up the municipal companies in Bucharest on the edge of the law. The information existing so far indicates that most of the purchases have been made by direct award, sometimes in record time, which excludes from the beginning any serious analysis of the possible offers. Eluding the regulations related to the public procurements rises a big question on the quality of the services provided to the beneficiary, exactly because the obligation to submit the certifying documentation of the financial, technical and human capabilities of the companies to implement the project is excluded. “Thus, the municipality opens the path for establishing a sort of a monopoly of bad quality against a lot of money, which cannot be according to an operational free market” the business sector points out. Moreover, the lack of experience and competence of the Municipality in managing such companies raises many questions on the efficiency of the provided services, and the lack of any control on how the funds are spends can allow the waste of public money.

The lack of transparency that characterizes the activity of the 22 companies breaches any democratic principle according to which public administrations are functioning today in the European Union. The fact that large-scale journalistic investigations are needed in order to find who manages these companies, where they are and what are they dealing with actually, is a worrying thing for the entire public opinion. “A local public administration that doesn’t understand properly its role in relation to those who appointed it is self-positioned outside the rules of the democratic game. In this regard, we are asking the Bucharest Municipality to provide us as soon as possible with complete information related to the structure, the management, the headquarters, the procurements and the projects carried out by each of these companies”, the representatives of the business sector added. Spending public money by a discretionary manner, both by the practice of the direct awarding and through the financial resources mobilized for the maintenance of the Municipality’s holding (salaries of the management, boards of directors and bonuses, premises, endowments, etc.), jeopardizes a budget which is anyway very burdened and excludes any efficiency criterion. Considering these remarks, the point of view expressed by the Competition Council and the complaints from some of the CMB members, the representatives of the Coalition for Romania’s Development appreciate that the current manner of regulating and functioning of these companies is deficient, discretionary and it distorts the local competitive environment.

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