78 Abstract Romania is currently facing a lot of challenges in the public administration (PA) field. In this paper, we are going to show how the European Union Services Directive implementation impacted the Romanian PA reform process by achieving one major objective: the implementation of a Point of Single Contact (PSC) in Romania. We started this quest by identifying and conducting an analysis of the existing administrative framework within the Romanian Trade Register Office (TRO), as part of the EUSDRO project. We developed a model for the TRO front and back office administrative processes. Our findings suggest that although progress has been made there are still several drawbacks associated with the administrative process, within the Romanian TRO. Thus we proposed an improved model for the Romanian PSC. Keywords: EU Services Directive, public administration reform, e-government, PSC, administrative process, PSC model. EXTENSION OF THE EUROPEAN UNION SERVICES DIRECTIVE IMPLEMENTATION IN ROMANIA* Iuliana DOROBĂŢ Laura MINA Radu CONSTANTINESCU Alexandru PAVEL Iuliana DOROBÃŢ Assistant Professor, Department of Economic Informatics, Faculty of Cybernetics, Statistics and Economic Informatics, Academy of Economic Studies, Bucharest, Romania Tel.: 0040-213-191.900 E-mail: iuliana.dorobat@ie.ase.ro Laura MINA Assistant Professor, Department of Administration and Public Management, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania Tel.: 0040-213-191.900 E-mail: laura.mina@maa.ase.ro Radu CONSTANTINESCU Assistant Professor, Department of Economic Informatics, Faculty of Cybernetics, Statistics and Economic Informatics, Academy of Economic Studies, Bucharest, Romania Tel.: 0040-213-191.900 E-mail: radu.constantinescu@ie.ase.ro Alexandru PAVEL PhD Candidate, Public Administration Department, Faculty of Political, Administrative and Communication Sciences, “Babeş- Bolyai” University, Cluj-Napoca, Romania Tel.: 0040-264-431.361 E-mail: alexp@polito.ubbcluj.ro * The present paper disseminates a part of the results provided by the ongoing research for the international project “Extension of the EU Services Directive”, developed through Asociaţia “Centrul de Studii Avansate pentru Servicii Electronice (E-CAESAR)” and registered at the Academy of Economic Studies from Bucharest under Grant contract no. 625/25.03.2009, with the title “European Union Service Directive in Romania (EUSDRO) Project”- phase II “Analysis and synthesis of the administrative process”. Transylvanian Review of Administrative Sciences, No. 35 E/2012, pp. 78-92 79 1. Public administration reform in Romania The rationale of the public administration is generally accepted to be the fulfillment of the continuously evolving public needs. In order to do so, PA has to deliver services in a transparent, democratic, effective and efficient manner. However, in most EU new Member States (MS), PA is characterized by traditional bureaucratic procedures, mainly attachment to routine and repetitive activities, which considerably limit PA’s capacity to perform strategic tasks and to react to new and diverse social needs. As a result, PA activities are more likely to ameliorate problems than to solve them. This highlights the necessity of adjustment, not only to comply with European guidelines, but also to raise public acceptance of PA (Goldschmidt et al., 2005, pp. 11-12). Although public administration has never been an explicit part of the Acquis Communautaire, the various EU regulations influence more or less directly the administrative actions of the MS. These regulations mainly refer to the civil service, the decentralization process, improving financial control in order to access EU funds, e-government etc. The development of information and communication technologies was rapidly perceived as a solution for fulfilling the principles of modern public administration activities, particularly by simplification, speeding and reduction of costs (Špaček, 2007, p. 120). However, in Romania, electronic government is still an underdeveloped area, as there is no homogenous and interconnected system for public information, capable of reducing administrative costs induced to citizens and the business environment, which have to run from one office to another in order to get various certificates and authorizations. By contrast, other EU Member States have come up with various solutions to cut down the administrative burden. Slovenia for example has issued the rule according to which information once supplied by public administrations, are no longer solicited by PA (Bouckaert et al., 2009, p.11). Looking retrospectively at the PA reform process in Romania, three main phases can be identified. Thus, the first phase of reforming the public administration system begun immediately after the change of political regime, in 1990 and focused on changing the relationship between PA and society, meaning that PA must serve the society and not subordinate the society, as well as on the separation between the state and the civil society. By the end of the 1990s, PA reform enters a new phase, triggered by the goal of achieving the EU Member State status. It was then the Romanian Government became aware of the necessity to create a modern and efficient public administration system. Ever since, all government programs formally incorporated PA reform as their supreme objective. Between 2001 and 2006, the administrative reform aimed at promoting values and principles such as: separation between political and administrative functions; creating and strengthening a new corps of professional and neutral career civil servants; bringing the decision-making processes closer to the citizen, decision-making autonomy, transparency, administrative simplification and respect for citizens; 80 competence delegation and service deconcentration; protection of citizens’ rights. Several reports from the European Commission signaled that many of the initially set goals as well as the adopted laws were not effectively respected and implemented and the new created entities did not manage to entirely fulfill their mission (Hinţea, 2011, p. 182). This is the reason why the PA reform kept the top of the pre and post EU integration agenda. When talking about PA reform process in Romania, both academics and practitioners argue the outcomes did not meet the expectations because the changes that have been made either had a top down logic or they were too fragmented and slow. Moreover, the government always focused on the economic reform, neglecting PA reform most of the times, although the latter is a boosting framework for the economic environment (Mina et al., 2009, p. 307). If we instead take a look at the post-accession period we can say for sure that the stimulus for transformation and for the adoption of most reform measures in Romania was to a large extent generated by factors outside the national governments, mainly the European Union. After the EU accession, pressure for change diminished and in consequence in order to continue the catching-up process, reforms should become a “voluntary” and domestically generated process. Thus, in recent years, the structural and functional modernization of public administration in Romania was triggered forward not just by the need for efficient public institutions, but mainly by the EU adhesion process. In this context there is no doubt that among the major challenges the Romanian public administration must face there is the creation of the most appropriate mechanisms, capable of supporting the continuous European Union integration process (Profiroiu et al., 2006, p. 4). Moreover, in the new context, the Romanian public administration has to be more flexible, open, close to citizens, capable of doing more with less, and responding to the changing context (Ţigănaş et al., 2011, p. 213). One of the most pressing deadlines lately imposed to Member States by the EU integration process was for sure the implementation of the European Union Services Directive (Directive/2006/123/EC). Thus, by December 2009, all EU countries had to adopt a combination of legislative and non-legislative measures, which included amendments of existing laws, as well as adoption of new specific pieces of legislation. 2. The European Union Services Directive The EU Services Directive was adopted by the European Parliament in December 2006 and is aimed at creating a single European services market, by eliminating all the obstacles service providers might face. The Services Directive is a big step forward in ensuring that both service providers and recipients benefit more easily from the fundamental freedoms guaranteed in Articles 43 and 49 of the Treaty establishing the European Community – the freedom of establishment and the freedom to provide services across borders. In order to achieve this, the provisions of the Directive aim to simplify the administrative procedures, 81 remove obstacles for services activities as well as enhance both mutual trust between Member States and the confidence of providers and consumers in the Internal Market (European Communities, 2007, p. 7). Chapter 2 of the EU Services Directive, more precisely Articles 5 to 8 establish a very ambitious program of administrative simplification and modernization, which sets three major objectives for Member States: 1. simplification of the administrative procedures and formalities applicable to service providers; 2. provision of the possibility to complete procedures at a distance and by electronic means and to make information on national requirements and procedures easily accessible for service providers and service recipients; and 3. creating “unique desks” or Points of Single Contact. The Handbook on Implementation of the Services Directive (HISD) states that the “points of single contact” are meant to be the single institutional interlocutors from the perspective of the service provider, so that he does not need to contact several competent authorities or bodies to collect all relevant information and to complete all necessary steps relating to his service activities (European Communities, 2007, p. 16). PSCs can be considered one of the innovations brought in by the Services Directive. Thus, when wanting to start up a business in another country, service providers do not have to deal anymore with different national, regional or local authorities, but to simply contact a “unique desk” (Single Point of Contact) which will help them with all due formalities. Moreover, Member States are required to simplify as much as possible their formalities and to eliminate discriminatory treatments for foreign businessmen, by making PSCs available for all service providers whether established on their territory or on the territory of another Member State. On the basis of Article 6, Member States are obliged to ensure that service providers can complete all procedures and formalities needed for access to and exercise of their service activities through “points of single contact”. This is one of the obligations of result in the Services Directive (European Communities, 2007, p. 18). However, MS have the freedom to decide the manner of organizing their “unique desks”. The implementation of a PSC could bring major benefits for citizens, public and private sector: it would not require anymore the physical presence of the applicant at any desk involved in the process of opening a business, it would make the actual business registering process more dynamic and would eliminate human errors and unnecessary filters. Last, but not least, a PSC could help reduce corruption by eliminating the contact between the public servant and the citizens and could also help raising the economic competitiveness of the country, as it is a well know fact that one of the first indicators foreign investors look at when choosing to start a business overseas is the number of days required to open a business (less time needed for opening a company means less bureaucracy and corruption, strong institutional structures and competitive economic environment) (NTRO-ISEF, 2010). 82 Until now, if a service provider wanted to provide services in another Member State, this may have required multiple administrative paths, dependening on the sphere of service activity. As a rule departments and public authorities are only responsible for very specific tasks and for specific regions. The division of administration into material and localized responsibilities leads to multiple collections and redundant saving of data both from service providers and about service providers. This causes additional work and sometimes creates inconsistent databases. This fragmentation within the public sector creates additional time and energy expenditure. Effort, energy and money are required to overcome this problem. For many service providers a lot of things are unclear, such as which proposals and formalities are actually necessary for their service activities and which government departments they must track down for explanations, notification and authorizations, enrolments and registrations. With the establishment of points of single contact, Member States should ensure that service providers can carry out all procedures and formalities related to the start up and carrying out of services activities through a PSC by the end of 2009. In conclusion, the EU Services Directive was meant to strengthen the principles of the European Administrative Space, especially the efficiency principle of PA, as it is well known that there is a conflict between the rule of law principle and the requirement for due procedures on one hand and the micro-economic efficiency requirement on the other hand (Goldschmidt et al., 2005, p. 25). Thus, the provisions of the EU Services Directive were designed to fight against the extensive use of formal procedures, which may be cost intensive and may slow down administrative performance. The Romanian Government considers that PSCs are a modern instrument for administrative simplification, capable of assuring a more rapid and direct access to public services (CUPAR, 2008, p. 3). In order to support the implementation of PSCs, the Central Unit for Public Administration Reform (CUPAR) has developed a strategy for implementing the single point of contact within public administration, which includes a statement of goals, values and priorities, as well as a SWOT analysis and a stakeholder analysis. 3. The EUSDRO project The major goal of the EUSDRO project is to set-up a generic PSC model for Romania within the public service for creating a private company provided by the Trade Register Office. To this respect, three major phases have been completed: documentation of the business opening process, analysis and modeling of the business opening process and architecture and development of a pilot solution for a Point of Single Contact, taking into account that the Services Directive gives Member States the freedom to decide how to organize the “points of single contact” on their territory. The project started from one scenario: the opening of a limited liability company (LLC) with a single Romanian associate. Afterwards the program focused on developing several other scenarios for different company types and different operation categories within the Trade Register Office. 83 3.1. Research methodology The EUSDRO project focused on creating and implementing a model for a single point of service concerning the opening, changing and closing of a business in Romania. The research team was composed of researchers from the Polytechnic University, the Academy of Economic Studies of Bucharest and Babeş-Bolyai University from Cluj- Napoca. The project had two main phases: 1. creating the model for the Romanian PSC; and 2. implementing the Romanian PSC model. The first phase was conducted by the Academy of Economic Studies research team. In order to develop the prototype, we relied on an extensive requirements analysis and modeling stage. The initial work took place at the Romanian Trade Office premises and consisted in on-site documentation related to all the aspects of the administrative process. We managed to benefit from the agreement of the management in order to obtain access to all the departments. This helped the research team obtain valuable information which was used to elicit the business use cases and to deliver the process model for the registration, changing and closure of a business. The administrative process was modeled using UML (Unified Modeling Language) as we have developed use-cases, activity and state diagrams for both the front office and back office processes. While conducting the requirements analysis and modeling phase we noticed several issues regarding the administrative process and in the following we will suggest optimizations and improvements in order to increase the efficiency and to reduce redundancy. The second phase was conducted by the Polytechnic University research team. The prototype application is focused on interoperability as a critical requirement. This paper addresses the research results of the Academy of Economic Studies team. 3.2. The Romanian TRO administrative process modeling phase In the process of documentation we focused our efforts on business registration, business modification and business closure of a LLC with a single associate due to the fact that according to the National Trade Register Office (NTRO) 2009 statistics, this is the most common type of company in Romania (see Figure 1). Figure 1: Number of business openings according to the company type (December 1990-February 2009) Source: NTRO, 2009, [Online] available at http://www.onrc.ro/ statistici/sr_2009_02.pdf 84 The results of this entire intercession were delivered under the form of UML diagrams. Thus the modeling phase implied the application of some successive steps (Constantinescu et al., 2009): 1. Actor identification; for this target, we start from the assumption that an actor implies a role played in the process by an individual or system within the studied administrative environment, thus we identified fifteen actors for the analyzed process; 2. Building the use case model; this step mainly aims to describe the manner in which the above-specified actors interact. In the analyzed model, the administrative processes are divided into two categories: front-office processes (Figure 2) and back-office processes (Figure 3 and Figure 4). We identified the following use cases for the business registration process: – verification and reservation of the LLC name; – verification and reservation of the LLC logo (optional); – the applicant compiles the dossier with all the necessary documents; – the dossier is checked and validated by the TRO advisers and the clerk; – the dossier is checked and validated by the TRO judge; and – the TRO issues the LLC registration certificate. We identified the following use cases for the business modification process: – the applicant compiles the dossier with all the necessary documents; – the dossier is checked and validated by the TRO advisers and the clerk; – the dossier is checked and validated by the TRO judge; and – the TRO issues the LLC registration certificate and the certifying certificates for which mentions exist. We identified the following use cases for the business closure process: – the applicant compiles the dossier with all the necessary documents for the dissolution with concomitant liquidation of the LLC; – the dossier is checked and validated by the TRO advisers and the clerk; – the dossier is checked and validated by the TRO judge; and – issuing the documents for dissolution with concomitant liquidation and cancellation of a LLC. 85 Figure 2: The TRO front office administrative processes For each case of the business modification process we identified the following sub-cases: – changes in the LLC name; – nominating an administrator for the LLC; – adding a new associate by selling LLC shares; – increasing the social capital of the LLC by co-opting a new associate; – opening a new working office; – extending the purpose of activity for the LLC; and – increasing the social capital of the LLC. / Create the dossier The dossier was created / Deposit the dossier at the SVC office The dossier was deposited at the SVC office [The dossier is correct and complete] [The dossier is incorrect or incomplete] / Add new documents to the dossier The dossier was updated at the SVC office The dossier was withdrawn / Pay the taxes The taxes were paid / Deposit the dossier at the RI office The dossier was deposited at the RI office 86 Figure 3: The TRO back office administrative processes – the dossier inspection 3. Provide detailed description of each use case identified for the administrative process; for all the identified use cases associated to the administrative process, we provided a detailed description, according to a predefined template, which included: goal, actors, main phases and decision nodes; and / The SPD office receives the dossier The dossier was deposited at the SPD office / Register the dossier The dossier was registered / Add new documents to the dossier The dossier was updated at the SPD office / The BVUSAU office receives the dossier The dossier was deposited at the BVUSAU office / Add new documents to the dossier The dossier was updated at the BVUSAU office / The SVC office receives the dossier The dossier was deposited at the SVC office / Check the dossier [The dossier is incomplete or incorrect ] The dossier presented problems The dossier was accepted [The dossier is correct and complete] / The clerck receives the dossier The dossier was deposited at the clerck's office / The clerck checks the dossier observations [The observations were unfounded] [The observations were well founded] The clerck did not update the dossier The clerck updated the dossier / The clerck receives the dossier The dossier was deposited at the clerck's office / The clerck checks the dossier / The dossier is sent to the court room / The dossier is sent to the court room 87 Figure 4: The TRO back office administrative processes – the dossier validation 4. Provide a description of the entire administrative process by means of UML activity diagrams; due to the complexity of sub-processes encapsulated in each use case, but most of all to the existence of decision points identified in all use cases, it was necessary to graphically represent the flow of activities for every use case. Also for the business registration process we thought necessary to compile a state diagram. / The dossier is analyzed / Send the dossier to the court room [The dossier was accepted ] The dossier was postponed [The dossier has solvable problems] The dossier was closed [The dossier has unsolvable problems] The dossier was rejected The dossier was updated by solicitant [in short period of time] [in the court room] The dossier was updated in the court room / Update the dossier at the SPD office The dossier was updated at the SPD office / Close the dossier / Check the dossier at SVC office The dossier was checked by the SVC office / Update the dossier at the BPDE office The dossier has ORC codification / Send the dossier to MFP The dossier has MFP codification / Archive the dossier The dossier was archived [The dossier is complete] [The dossier is incomplete] The dossier was suspended [The dossier is updated in six months] [The dossier is not updated for six months] The dossier was canceled 88 3.3. Analysis of the Romanian TRO administrative process By studying the progresses that have been made so far (NTRO-ISEF, 2010), in order to simplify the administrative procedures required for business registration, business modification and business closure of a LLC in Romania, we can state that although the first two goals set by the Services Directive have been to a great extent reached (NTRO-ISEF, 2010), we identified further improvements for the administrative processes conducted in the Romanian TRO. After analyzing the entire administrative process we identified the following drawbacks for the business registration process: 1. the process of creating the dossier for a LLC registration is complex because it involves too many actors, too many documents (thus creating bureaucracy) and it has too many loop-backs; 2. the front office processes are partially automated; we identified an application called E-Forms (this application needs furthermore improvements) that helps the applicant to deposit the dossier documents and does partial validation of the documents; 3. the back office processes are partially automated, we identified several applications that are used in the dossier analysis at several TRO departments; the front office processes involve only the dossier creation and it is considerably simpler compared to the back office processes which involve the probation of the dossier, the analysis of the dossier and the process of issuing the Registration Certificates for the LLC; in consequence, the lack of an integrated system leads to time consuming activities which cause significant delays in the whole process; and 4. the business registration process of a LLC involves other institutions beside TRO, for example the fiscal records for the company is issued by the Public Ministry of Finance and the authorization certificates by several governmental agencies.; these kinds of interactions are characterized by slow inter-institutional feedback. We also have identified the subsequent drawbacks for the business modification process: 1. several tasks generate document redundancy; this manifests in the case of tax payment and also in certain sub-cases presented above (for example “Changes in the LLC name”) where the TRO officials ask the applicant to submit the dossier copies and originals of documents that have been previously issued by the same institution; 2. the process of validating the dossier for a LLC modification is complex because it has too many loop-backs; for example, all the data registration made in the SPD office has to be rechecked in the SVC office and then the dossiers are sent again to the SPD in case of error with a list of correction; 89 3. the bureaucracy has reached a higher level, for example the applicant must submit additional documents in order for tax fees to be calculated. Also, in the back office documents like the “Operations and observations flow form” circulate and these documents have the only purpose of documenting and what has been done and by whom to alter the contents of the applicant’s dossier; and 4. the business modification process of a LLC involves even more institutions beside TRO (for example now are involved more actors: evaluation experts, notary attorneys, The Land Register Office, Romanian Official Monitor etc.) compared to the previously analyzed process and thus produces more delays. For the business closure process we identified the problems stated below: 5. the legislation imposes several time consuming tasks in order to close the LLC, for example, 30 days must pass between dissolving the LLC and the actual closure of it; and 6. the degree of bureaucracy, redundancy and time consuming tasks reaches the same level as in the previous processes. After the analysis of the administrative processes conducted in the TRO we came to the conclusion that we should propose a model for a PSC which should integrate the front office and back office processes that take place in the TRO departments and which in consequence will simplify the entire TRO administrative process as it is shown in Figure 5. This model is based on the assumption that the subsequent improvements for a future state of the art PSC will be implemented: 1. online submission of all the documents required for registering a LLC; this means that the applicant should not submit any papers at the TRO desk (for the moment the current Romanian legislation states that the dossier submission on paper is mandatory) and the documents must be digitally signed; 2. online document management for all the papers submitted by an applicant; 3. online document validation for the entire dossier submitted by an applicant; 4. multilingual features; this system must be available to foreign applicants too, not just Romanian ones; 5. online payment of all fees; the fees should be paid after the entire administrative process is over and not in between process tasks; 6. online free assistance for Romanian and foreign applicants in order to understand the administrative process, to complete the necessary documents, to submit the dossier and to follow its course of action; 7. the tasks that judges perform in the back office to be automated; the presence of an applicant in the court room should not be mandatory even if the applicant’s dossier presents particularities; and 8. integration with other institutions applications in order to diminish the time consumed for inter-institutional feedback. 90 Figure 5: The TRO administrative processes after the implementation of the PSC 4. Conclusions From the institutional perspective, introducing the Services Directive into the national legal framework requires prompt and sustainable efforts of reforming current procedures, by modernizing and simplifying administrative formalities and processes imposed to service suppliers. From the technological perspective introducing the Services Directive into the national legal framework requires prompt and sustainable efforts for achieving the third objective set by the Services Directive (creating “unique desks” or Points of Single Contact) which has not been achieved yet. The rationale of the PSC is to offer citizens access to public services through one single access point, / Create the dossier The dossier was created [The dossier is correct and complete] [The dossier is incorrect or incomplete] The dossier was withdrawn / Check the dossier / Check the dossier observations The dossier was registered The dossier was inspected The dossier was updated The dossier was validated The dossier was rejected The dossier was suspended The dossier was canceled / The dossier resolution [The dossier was incomplete] [The dossier is not updated for six months] [The dossier has unsolvable problems] [The dossier is accepted] / Check the dossier [The dossier is updated in six months] 91 in order to eliminate the common labyrinth of redundant and complex administrative procedures. The administrative procedures we address in this paper concern the business registration, business modification and business closure of a Romanian LLC with a single associate. First, we present the TRO administrative front office and back office model (Figure 2, Figure 3, Figure 4) as a result of an extensive requirements analysis and modeling phase conducted as part of the EUSDRO project. Then we conducted an analysis of the models we created in order to optimize them. We stretched out several improvements and proposed a simplified model (Figure 5) adapted to accommodate the necessity of reforming current administrative procedures. After this model a PSC was further developed and implemented by the Polytechnic University research team. References: 1. Bouckaert, G., Nemec, J., Nakrošis, V., Hajnal, G. and Tonnisson, K., Public Management Reforms in Central and Eastern Europe, Slovakia: NISPAcee, 2009. 2. Central Unit for Public Administration Reform (CUPAR), ‘Methodological Guide for Simplifying Administrative Procedures’ (in Romanian), [Online] available at http://www. prefecturabraila.ro/integrare/Ghid%20final%20(3).pdf, accessed on June 15, 2011. 3. 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List of abbreviations: BPD/E: Bureau for Data Processing and Editing BPDE: Bureau for Preparing Documents for Issuing BRI: Incoming Registration Bureau BRIn: Bureau for Inter-institutional Relationships BVDDE: Logo and Name Availability Verification Bureau BVUSAU: Bureau for Verification of Name Logo Headquarter Uniqueness and Single Associate CUPAR: Central Unit for Public Administration Reform EU: European Union EUSD: European Union Service Directive HISD: Handbook on Implementation of the Services Directive LLC: Limited Liability Company MFP: Ministry of Public Finance MO: Official Journal of Romania MS: Member States NTRO: National Trade Register Office PA: Public Administration RI: Issuing Bureau SGG: General Secretariat of the Government SLG: Legal Procedure Documents Department SPD: Data Processing Department SVC: Requests Validation Department TRO: Trade Register Office UML: Unified Modeling Language