Ministry of Interior to rent vehicles for the same amount as they cost

The Ministry of Interior is leasing 9 vehicles from two car companies through operating leasing for which it will have to pay almost 307,000 euros for three years and then have to return them. On average, for those 36 months, the Ministry will pay 35,000 euros per vehicle, which is roughly the same as the base price of the vehicles, with no additional equipment if they buy them from an auto dealership and become MoI property. The vehicles are for the Public Security Bureau and will be driven by VIPs, delegations and guests.
The contracts were signed at the end of July, and the grant was won by Porsche Leasing and Euroimpex. Porsche Leasing will have to lease 7 Skoda Superb Ambition passenger cars for 247,000 euros, which MoI will use in the next 36 months and later return. Or in other words, the Ministry will pay almost 1,000 euros per vehicle each month, or about 35,000 euros in three years. The agreement stipulates that the police officers will have to travel up to 100,000 kilometers during those three years, and the Ministry will pay an additional 17 denars for each subsequent kilometer.
The deal with Euroimpex is worth nearly 60,000 euros, which MoI is due to pay the company for a three-year lease of two vans from the Peugeot Traveler model. Or, monthly, the MoI has to pay 1,200 euros for a van. Under this agreement, if police officers travel more than 100,000 kilometers during the three years, the Interior Ministry will have to pay 30 denars for each subsequent kilometer.

MOI: Prices of rented cars are realistic

The Ministry of Interior says the prices of the rented cars are realistic. The vehicles had to be rented because the previous grant for buying the vehicles had failed. And the fleet of the police was outdated and unsafe.

“This procurement is carried out in order to ensure the smooth and professional operation of the Department for the security of foreign delegations and participation in events (transport of delegations and guests, as well as designated VIP persons). Its existing fleet is old and unsafe and is unable to meet the needs of the daily operations of this department, which can have unintended consequences”, the MoI said, adding:
“According to the market research for this type of procurement, starting with the fact that the same subject was previously subject to a public procurement procedure with the option of purchasing vehicles in monthly installments, which ended with the cancellation of the procedure because there were no bidders, from Economic operators were required to pay interest on vehicles under the financial leasing or lending services. According to the Public Procurement Plan and the budget of the Ministry of Interior, the procedure for car hire services was performed as an optimal option, thus responding to the needs for smooth and professional operation of the Department for securing foreign delegations and events. Regarding the offered prices for this type and subject of procurement, the value of the procurement is of real market value and after the expiry of the operating lease agreement, the Ministry of Interior has the right to purchase the vehicles, subject to this procurement”, said the Ministry of Interior.
The ministry said that with the rental, they get free service and maintenance of the vehicles, but also free replacement of winter and summer tires in the next three years. They emphasize that the seven passenger motor vehicles, in addition to the technical characteristics stated in the specification, possess a minimum of Euro 6 or its equivalent, ESP vehicle stability program, automatic front-wheel drive system, frontal collision risk braking system at low speed etc. Whereas the two vans, in addition to the technical features stated in the specification, have a minimum of Euro 5, electronic stability system, anti-slip system, start-stop system, minimum 1 + 8 seats, intended for the transport of multilateral delegations. The three-year warranty period (100,000 kilometers covered) includes full vehicle maintenance and free tire replacement for each season over a three-year period”, said the MoI.

The MoI will pay for the basic versions of the cars

The prices of the Skoda Superb Ambition rented by the Ministry of Interior at a motor show in the country are about 35,000 euros without any additional equipment. And the MoI will only have to pay around 35,000 euros per car for rent for three years and then return the vehicles. While the Peugeot vans in the showroom cost from 30,000 to over 46,000 euros.

Due to “technical error” citizens would have paid additional 27,000 euros

Inbox7 discovered a mistake in MoI’s contract with Euroimpex for the purchase of two Peugeot vans where citizens would have paid for an additional car, or 27,000 euros more for this rental car purchase. But after Inbox 7’s math showed that MoI’s math in the already signed contract with the company was wrong, the ministry corrected the error through an annex to the contract.
According to the total amount of the contract for renting two vans which is 59,777 euros, the MoI will have to pay 29,888 euros per van for three years. But it was confusing that the monthly amount to be paid per vehicle which is stated in the contract is 74,340 MKD with VAT, which if multiplied by 36 months, it turns out, however, that the MoI will have to pay 43,516 euros for three years per vehicle, or a total of 87,000 euros, not 60,000 euros or nearly 30,000 euros as the total sum of the contract shows. After waiting a few days, the MoI responded that they had made a “technical error” and corrected it with an annex to the contract.
“We inform you that a technical error has been made in Article 4 of the contract and that it has been amended by an annex to the contract where Article 4 reads: The monthly lease amount for a single vehicle (passenger motor vehicle) van is 51,059,65 with a calculated value added tax”, the Ministry of Interior replied.

Police with “richest” fleet

The public reacted to the procurement through operating leasing of several state institutions. Experts have responded that it should be taken into account whether such purchases are purposely spent on citizens’ money.

“What is more efficient – to buy and keep them as your own, or lease and return. The principles of efficiency and economy must be respected in public procurement. These are the main principles of public procurement”, said Vanja Mihajlovska, former member of the Anti-Corruption Commission.
Office for General and Common Works rented 45 vehicles last year via operative leasing and needs to pay 1.7million euros. The explanation from the government was that it was cheaper to rent than to buy a vehicle, as it cost a lot of money to maintain the fleet. The company that was unable to pay salaries to its employees, state-owned Vodostopanstvo, leased 15 vehicles earlier this year for which it needs to pay 417,000 euros over five years. Media calculations show that if he bought the vehicles, the company would pay 270,000 euros or 150,000 euros less than he would pay to rent and return them. Although both the Prosecution and the Anti-Corruption Commission are interested in this procurement, there is still no information on whether any action will be taken.
Otherwise, the main difference between financial and operating leasing is that financial leasing is the financing of the purchase, in the case of cars, ie the lessee becomes the owner by the payment of the last lease installment. In the case of operating leasing, used by the state institutions and in this case MoI, the vehicle is being used as a car rental. After the lease is completed, the vehicle is returned to the lessor, in the case of the car companies.
The Ministry of Interior has always bought cars so far, and this is the first time it has been renting. So in April this year, the Ministry bought 10 vehicles for transport and fast deployment of the Fiat Ducato brand for which it paid 287,000 euros. The previous government, in June 2016, bought 45 off-road vehicles for which it paid 619,000 euros.
The Special Prosecutor’s Office’s “Trista” case involved the purchase of 300 vehicles for the MOI which damaged the budget by over 450,000 euros because the cheapest bid was not selected, a case for which former Deputy Interior Minister Gjoko Popovski is serving a prison sentence.
The MoI did not respond to our question about how many vehicles the Ministry owns. But according to a survey by the Center for Civil Communications, MOI has the “richest” fleet of 1,559 vehicles, or owns 70 percent of all vehicles in the ministries.

Aleksandra Filipovska