Procurement controversies -- Czech Republic

Czech-American Business Body Seeks Tender Rule Change

PRAGUE (Dow Jones)--The American Chamber of Commerce in the Czech Republic, known as AmCham, Wednesday invited peers from other countries to join forces and push for revisions of government public tender regulations in order to stem alleged corruption.

According to recent research by the Association of Small and Medium-sized Enterprises and Crafts in the Czech Republic, known as AMSP, bribes account for 15% of the value of public contracts, including procurement and construction, awarded by local government offices.

Last year, Czech local and national governments awarded contracts and procurement deals worth over 200 billion koruna ($10.6 billion), AMSP said.

AMSP also said kickbacks account for less than 9% for contracts in the Czech private sector, although the union has no data on the overall volume of contracts tendered by nongovernment-affiliated companies.

A key element of AmCham's proposed changes would require companies to fully disclose their ownership structure to be allowed to bid for procurement or other contracts. At present closely-held companies with opaque ownership structures in the form of bearer, or anonymously-held, shares are allowed to bid in government tenders.

Soucek went on to say local government committee meetings held to pick public tender winners should be made public. Generally these meetings are held behind closed doors.

"The opening of envelopes with individual bids should be made transparent," she said.

Public tender committees should also follow standardized, clearer rules for the wording of tenders, she said. Often bidders are disqualified on the basis of formal mistakes in the wording of their bids, Soucek said.