Recently, during the hearings held at the Seimas Committee on State Administration and Local Authorities, it became evident that not only businesses have legitimate questions regarding the flexibility sought by municipalities in concluding in-house transactions and the lack of transparency. During the session, representatives of various institutions raised questions about the methodology, criteria, control mechanism, and what information about in-house transactions should be public. The Public Procurement Office also supported the aim to make information about in-house transactions more widely public.
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Therefore, a simple question arises: why is it proposed to establish broader opportunities for in-house transactions, but at the same time, no proportional public disclosure obligations are proposed? Why is more flexibility desired, but not more transparency?
And this is not just a business concern. The Seimas Audit Committee spoke about the need for transparency in in-house transactions, and the Public Procurement Office acknowledges that we are talking about public money, so information must be accessible to the public.
Despite the comments and concerns expressed, the amendments continue to progress, even eliminating the initial seeds of transparency they contained. For example, provisions that would oblige local authorities to publish their market analyses and inform the public about the actually paid amounts in the case of an in-house transaction.
What if transparency disappears?
The proposed amendments to the law suggest that an in-house transaction could be concluded not only after a failed public procurement or market consultation but also based on a so-called analysis supported by specific data, which is not intended to be made public, and there is a continuous effort to remove the provision obliging such action.
It is precisely the third alternative that poses the greatest risk to transparency. The aim is to create another way for municipalities not to purchase services on the market, but it is not entirely clear who and how will check whether this path has been chosen justifiably.
If an in-house transaction is an exception, it must be publicly proven, not based on a document whose publicity and verifiability are not clearly ensured.
In-house transactions in Lithuania are not just a theoretical exception anymore. During the committee hearings, I pointed out that, according to data declared by the Public Procurement Office, the value of in-house transactions reached almost 2 billion euros over five years, and their duration is constantly increasing.
This means that some services are eliminated from the competitive market for an increasingly longer period. It becomes more difficult for residents to assess whether a reasonable price is being paid for them.
When talking about hundreds of millions of euros and long-term commitments, we cannot limit ourselves to the argument that it is simply more convenient. The less competition, the more transparency there must be.
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If a municipality wants to assign a service to its company without a tender, residents must see why this is being done, how much it costs, and whether such a decision is truly better than a market alternative.
Information is a right, not a privilege
Businesses do not propose to prohibit in-house transactions. However, if the Seimas decides to retain or expand their application possibilities, clear safeguards must be established at the same time.
The analysis on which the in-house transaction is based must be made public. Valid in-house transaction agreements must be published, and the actually paid amounts declared. Also, the revenue ratio of the municipal company must be publicly visible, showing whether it meets the requirements for in-house transactions.
Today, much of this information can only be obtained by going to court. This is not normal. If we are talking about public money, the information must be public. Otherwise, it is simply impossible to talk about public, media, or market control.
The Seimas should not adopt amendments that would give local authorities more freedom of action but would not oblige them to act more transparently. Otherwise, in-house transactions, which should be an exception, may become an even more difficult-to-verify method of organizing public services.
The correct sequence should be: first – methodology, criteria, and transparency, only then – broader opportunities for in-house transactions.
If the opposite is done, in-house transactions will become even more closed, and municipal decisions will only be verifiable after long disputes in court. This is not a transparent public services system.
The desire of local authorities to have more flexibility is understandable. However, it cannot be more important than the right of residents to know how public money is being used.
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