Multimillion-euro procurement continues — how should Latvia measure its promised savings?

A procurement review should be assessed by its actual budget impact, not merely the number of cancelled tenders. Equally, a decision to proceed does not itself demonstrate that the most economical solution was chosen. Both the need and the price require justification.

What does the review show?

LSM reported on 11 November: the State Chancellery will retain all ten reviewed procurements worth €4.5 million excluding VAT. The Finance Ministry’s administrative sector reviewed 42 worth €46.4 million and decided to drop two worth €295,594.

The government’s 25 August instruction covered supplies and services from €140,000 and construction from €1 million. The Finance Ministry required assessment of necessity, costs, proportionality, alternatives and risks, rather than a mandatory cancellation quota.

Why does specific justification matter?

On 10 November, the Transport Ministry explained that the Civil Aviation Agency’s €511,500 procurement included in its review was cleared to proceed. It covers aviation data software maintenance and additions; the system also supports certification and supervision.

This example makes it possible to assess a purchase’s function. However, a necessary function leaves a separate question unanswered: could it be delivered at a lower total cost without compromising quality?

Four questions that would reveal actual savings

What need disappears if the procurement is cancelled, and would a necessary service disappear too?
Does cancellation reduce spending or merely shift it to another year or contract?
Has the entire solution’s cost been compared, including maintenance, training and replacement?
In which budget year and item will the actual reduction appear?

Editorial assessment: cancelled procurements’ estimated value is not automatically money already saved. Conversely, the value of retained purchases does not prove waste. Transparent accountability would mean giving each decision a comparable justification and subsequently verifiable outcome.

What does this mean for businesses?

Suppliers should follow the specific tender documents and amendments when planning bid costs and resources. A general announcement about savings is insufficient grounds to assume that an order will disappear.

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Official information sources

Additional source

LSM — summary of ministries’ and State Chancellery’s findings