Public procurement in Lebanon has long grappled with two persistent deficiencies: firstly, the government’s proclivity for granting monopolies in service provision. This monopolistic tendency often results in subpar services for the public and exorbitant prices. Secondly, there is the recurring issue of a limited number of bidders participating in these tenders. This paradox is perplexing, given that the monopolistic nature of these services should theoretically attract a wide array of bidders keen to capitalize on the monopoly rents. A prime illustration of this monopolistic service delivery in Lebanon is the vehicle inspection tender.

LIMS has released an exclusive policy brief delving into the latest tender for mechanical vehicle inspections in Lebanon, a mandatory requirement for Lebanese drivers. After years of flawed tenders, the Ministry of Interior has, commendably, issued a new tender in adherence to the principles of public procurement law, marking a significant achievement. The fresh tender also endeavors to foster competition and enhance the participation of small and medium-sized enterprises (SMEs). However, akin to its predecessors, this tender restricts the number of inspection centers to the existing four facilities located in Mount Lebanon, the South, the Bekaa, and the North. LIMS has argued that this approach perpetuates a monopoly in car inspection within each region, burdening citizens with bad service quality, the inconvenience of dedicating an entire day to the inspection process, enduring lengthy queues, and incurring additional fuel expenses for the round trip to the inspection center. LIMS advocates a paradigm shift away from awarding monopolies through tenders and instead, granting licenses to repair shops to conduct inspections, thus introducing much-needed competition. Such an adjustment could potentially expand the number of inspection centers to hundreds, break free from monopolistic constraints, stimulate investments, particularly in underserved rural and peripheral areas, encourage healthy competition, streamline citizen procedures, reduce financial burdens, and bolster state revenues.

Additionally, LIMS has released another exclusive policy brief elucidating why Lebanon consistently faces a challenge in attracting bidders. The report underscores that the procurement law contains several flaws. Chief among these are stipulations that necessitate contracts to be executed in Lebanese pounds, amidst an environment of extreme exchange rate volatility, thus exposing suppliers to substantial potential losses, which disincentivizes their participation. The law’s unrealistic timelines for contract validation and payment order issuance also deter potential bidders. Moreover, the requirement to establish new procurement units mandating the hiring of specialized staff may inadvertently encourage the unwarranted expansion of the public sector workforce. The policy brief suggests amending the law to introduce flexibility, align timeframes with real-world conditions, permit contracts in stable foreign currencies, and curtail hiring while allowing for the transfer of excessive employees from other government departments to the public procurement authority. Those reforms would attract a more diverse pool of bidders, ultimately leading to improved public procurement outcomes for the benefit of both the population and the government.

• LIMSLB Exclusive: The Mechanical Inspection Tender “Formally” Adhered To The Public Procurement Law… And “Implicitly” Violated The Need To Dismantle Monopolies, September 18, 2023: Article AR
• LIMSLB Exclusive: Harmonizing “Public Procurement” To Motivate Suppliers To Submit To Tenders Instead Of Repeating Single Bidder Scenarios, September 25, 2023: LIMSLB, Article AR