eProcurement and the fight against corruption in Moldova

The eProcurement system MTender is trying to curb corruption in Moldova, and running up against a lack of political will.

This blog post is based on a study and its policy recommendations which were published in March 2021 as a result of a cooperation between the Moldovan-German Forum (FMG) and the Institute for the Danube Region and Eastern Europe (IDM) within the framework of the BACID grant scheme (Building Administrative Capacities in the Danube Region & Western Balkans). For the full report, see here.

Corruption in Moldova is endemic and widespread. The country loses upwards of  €500 million due to corrupt practices each year, an amount which is equal to around 5% of its national GDP and half of all its social security expenses. In 2017, the estimated volume of bribes paid by Moldovans was higher than investments in the country’s road infrastructure. Aside from its economic effects, widespread corruption also undermines citizens’ trust in their public officials. An overwhelming majority of citizens perceive those working in the public sector institutions to be “the most corrupt” individuals.

Within the public sector, procurement is one of the areas most vulnerable to corruption schemes, as it involves large amounts of money, many different public and private actors, and a reportedly low degree of transparency. To put it in concrete terms: the estimated cost of corruption in public procurement is around €150 million each year. Preferential treatment in the form of bribes and kickbacks hampers economic competitiveness, productivity and the efficiency of resource allocation and, thus, poses a serious threat to Moldova’s developing market economy.

In recent years, the Moldovan government is betting on the digitalisation of procurement processes, known as “eProcurement”, as one of its key strategies towards battling corruption in public procurement. Its proponents argue that easily accessible data, coupled with the standardisation and automation of processes, will enhance transparency, allow civil society to spot ‘red flags’ signalling corrupt activity and safeguard competition among bidders.

A follower of ProZorro, the Ukrainian open source and open data eProcurement system, Moldova’s MTender was launched in 2018 with the support of the European Bank for Development and Reconstruction (EBRD). A mandatory standard for all public entities, over 70% of contracting authorities and businesses acknowledge that MTender has significantly contributed to increasing transparency in public procurement procedures.

However, there are still many outstanding challenges related to MTender’s implementation. Besides its inherent technical limitations, the system faces serious legal and institutional constraints. The convergence of Moldovan legislation in the area of public procurement with EU standards remains an unfinished business. Moreover, the legislative framework is contradictory and incoherent and allows for questionable exceptions.

Most significantly, economic operators complain that Moldovan authorities are sticking to  unnecessary paperwork requirements, despite MTender having all the technical functionalities to offer a dematerialised and automated digital service. They also report that uploaded public procurement documents in PDF format are not machine-readable, although, according to the EBRD, MTender has already implemented this feature. Technical scoring is available in MTender, but economic operators criticise that Moldovan authorities still base their decisions solely on cost, significantly restricting the margin for negotiation and often leading to arbitrary price-setting practices. These issues open the gate for various illicit practices, and unsurprisingly, progress in terms of tackling corruption in public procurement is so far only incremental.

There are thus significant contradictions between the EBRD’s fact-based confidence in the technical capabilities of MTender versus the success of its application in practice. Moldovan public officials offer paltry excuses in this regard, going so far as to compare the system with an old Zhiguli automobile too faulty to bother fixing.

In truth, while implementing eProcurement is indeed a costly, strenuous and difficult process, its biggest challenge in Moldova is that bureaucrats are simply not interested in making it happen. How else could it be explained that, despite the EBRD's continued technical and financial assistance, significant delays have been the norm throughout MTender’s implementation?

In December 2019, the EU and Moldova awarded European Dynamics, a leading IT service provider and software developer in the field of e-government, a contract to replace MTender with another eProcurement system. It is unlikely that such a replacement will improve the low political will for reform, and it is misguided to so quickly condemn MTender a failure before giving it the chance to run at full capacity.

The case of MTender emphasises that no matter how perfect an eProcurement system is, it is only as good as the regulatory and institutional environment in which it operates. In particular,  good governance, institutional reforms and a stronger involvement of civil society are the most indispensable factors for tackling corruption in public procurement. Without these prerequisites, even the best performing eProcurement tool in the world will remain unsuccessful.


Photo by Michal Matlon, Unsplash