The Audit Office has issued recommendations concerning legality, transparency and equal treatment in interstate cooperation linked to the ‘Digital Citizen’ project. The findings are contained in a Special Report examining the award procedure, implementation and financial management of the application.
The project, which enables interoperability with Greece’s corresponding application, has already incorporated the Identity Card, Driving Licence, Vehicle Roadworthiness Certificate and Fan Card, although delays are recorded in the inclusion of additional documents.
Legal basis and award procedure
According to the Report, the project was implemented through a Memorandum of Cooperation and Contract between the Republic of Cyprus and the Hellenic Republic. The legal basis cited is Article 39(4) of Directive 2014/24/EU.
The contract was awarded by the competent Ministry of Digital Governance of Greece to the existing private contractor of the Greek national project gov.gr, through a negotiated procedure.
The Audit Office notes that, although it did not have jurisdiction to examine the procedures followed by the Greek Ministry, the choice of this procedure at a stage subsequent to the implementation of the Greek project and without prior joint planning and joint tendering by the two states raises questions as to whether the principles of transparency and equal treatment of economic operators were fully served.
It adds that while cooperation between Member States may bring benefits, particularly through the exchange of expertise, such agreements cannot function as a mechanism for indirectly bypassing public procurement procedures, with the risk of preferential treatment for specific economic operators.
Interoperability and public procurement rules
Regarding interoperability between the two applications, the Report states that this was initially used as a reason for exemption from public procurement procedures.
In the Audit Office’s view, this was not technically justified, as interoperability could have been incorporated as a mandatory requirement or criterion in an open tender process, thereby safeguarding transparency and equal treatment.
The Audit Office observes that best practice would have required the award of a joint application to a single economic operator to have been a clear strategic decision from the outset, based on joint planning by both states and prior to Greece proceeding with a separate tender for its national wallet. This, it notes, would have ensured that economic operators were aware from the beginning of the overall scope and scale of the project.
Financial management and cost documentation
In examining the financial component of the Contract between the Deputy Ministry and the Greek Ministry of Digital Governance, the Audit Office found a lack of detailed cost estimation and itemised costing for individual activities. This, it states, creates uncertainty and raises questions regarding the objectivity and reasonableness of the agreed cost.
The same observation applies, in the Audit Office’s view, to the inclusion in the Contract of the €200,000 to be paid by the Greek Ministry to a third contractor to add additional functionality to its existing gov.gr wallet, for which the Deputy Ministry will provide only expertise.
The total value of the Contract amounts to €1.7 million, consisting of €1.5 million from Cyprus for the development of the Digital Citizen application and €200,000 from Greece for the integration of electronic signature and identity into its existing gov.gr wallet, with Cyprus providing expertise.
However, for the €1.5 million to be paid by Cyprus, as well as for the individual activities, no cost estimate or detailed costing existed at the time of signing the Contract.
The Report adds that the final total implementation cost of the project is expected to exceed the €1.5 million ceiling covered by the Contract under review. Additional expenses include €156,000 for project management by a private company, €3,200 for integration with the Department of Road Transport, €267,832 for promotional campaigns and €12,503 for the procurement of QR-code scanners for Citizen Service Centres. These costs were not examined further, as they fall outside the scope of the present audit.
Future development and contractor dependence
The Audit Office expresses concern regarding the project’s future development. For further expansion, such as the integration of new certificates, as well as for software adaptation and maintenance, the participation of the same third parties and subcontractors will be required, creating complexity and potential related issues.
On the positive side, the Report notes that the Contract includes a clause obliging the Greek Ministry to deliver the source code to the Deputy Ministry in the event of termination or expiry of the agreement. However, the existence of this provision does not remove the reservations expressed regarding the initial award procedure and the creation of a potentially advantageous position for the existing contractor.
Recommendations for future action
In its recommendations, the Audit Office states that cooperation between states must comply with the principles of transparency, legality and equal treatment of economic operators, while safeguarding the public interest. Exemptions from public procurement procedures, it stresses, should be applied only under strict conditions and with full justification.
It also recommends that the Deputy Ministry develop a comprehensive strategy for digital transformation, taking into account European specifications for the European Digital Identity Wallet (EUDI) and conducting a cost-benefit analysis for interim solutions.
Finally, the Audit Office calls on the Deputy Ministry to reduce dependence on specific contractors and to ensure that future contracts are conducted through open tender procedures, unless there are fully documented reasons for the use of alternative procedures, thereby ensuring transparency and equal treatment of all interested parties.