Latvia’s State Audit (VK) board member Kristīne Jaunzeme admitted to the Public Expenditure and Audit Committee of the Saeima that the head of the Procurement and Contracts Department of the Supply Department of the Latvian National Armed Forces (NBS) at the time, Imants Freibergs, proposed to set the amount of 220 million euros for the food procurement.
VK indicated last week that the planned sum, of the contract, was up to 220 million euros with the right to increase it by 50% to 110 million euros, the total maximum amount of the contract was expected to be up to 330 million euros in the five years. It was mentioned for the first time only when the commission decided to make a contract with SIA Zītari LZ, the winner of the procurement procedure.
The sum of the contract was determined based on the assumptions of the official of the procurement commission
and without taking into account the funding provided for in the centralized procurement plan for food purchases.
According to the accounting records, from the 1st of January to the 30th of April of this year, NBS received food items for 992,000 euros from Zītari LZ. For the specified time period, NBS has received an invoice from Zītari LZ for the administration of the provided service in the amount of 30,000 euros.
Jaunzeme stated that there was no order that allowed the amount to be increased to 220 million euros at the last moment. “The sum of 220 million is the initiative of one member of the procurement commission, who made estimates of what the amount of this contract could be. No one had instructed the person responsible for procurement to do so and it was not coordinated,” stated Jaunzeme.
This happened at the final meeting of the procurement commission when the winner of the tender was announced.
It has already been announced that in December 2022, the company Zītari LZ, registered in Roja, won a contract worth 220 million euros for the supply of food for the needs of the NBS for the next five years.
A contract was concluded with SIA Zītari LZ for the building of a logistics system that unites a number of food producers and other merchants to ensure food supply to all NBS units throughout the territory of Latvia. According to the contract, the company should also provide the necessary food stocks at the request of the NBS.
Also, the agreement provided for the company’s obligation to ensure the production and supply of food necessary for the NBS in case of war.
Recently, the Defense Ministry reached an agreement with the company on the early termination of the army’s food supply contract. The contract will be terminated on the 31st of December of this year, including an agreement that the merchant will not make any claims and the state will not incur any losses accordingly.
At the same time, work is underway to organize a new procurement.
The management of the Defense Ministry has informed that the conclusions of the inspections carried out within the Defense Ministry regarding the mentioned procurement “to a large extent mirrors” the conclusions of the audit of the Defense Ministry. A large number of VK’s recommendations have already been implemented to make the procurement system more transparent.
In the financial audit carried out by the Supreme Court, it was concluded that the procurement of logistics services for the supply of food for the needs of the NBS was organized in violation of the procedures for the planning and organization of procurement.
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