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About the reform

Not so long ago Ukraine had legal, regulatory as well as the institutional framework that regulated “paper” procedures of public procurement. However, as international experience has shown, formal compliance of Ukrainian legislation did not guarantee effective, transparent, and fair purchasing procedures and did not promote solving the main problem in public procurement – eliminating corruption. The experience of other countries shows that launching public e-procurement system in the first year brings 10 – 20% savings due to improved procedures. In Ukraine, this rate can increase significantly through eliminating corruption in this sector. Since the budget of the country`s public procurement is about 250 billion UAH per year, we can conclude that each day without the reform costs 55 million UAH for our tax payers!


 

Objectives:

  1. The elimination and systemic prevention of corruption
  2. Transparent public procurement
  3. Inadmissibility of discrimination and objective assessment of tenders
  4. Simple application of the procedures
  5. Implementation of an electronic workflow
  6. Full accounting and analysis of all public procurement.

 

The idea of the reform:

Launching a full-cycle electronic system of public procurement. In the ProZorro system, the Central Database and auction module (bidding) are designed by the team of the pilot project and are transmitted to the state administration. Prior to transmission to the state, the system technically belongs to the Transparency International.

Principles of the reform:

  1. The implementation of the reform through public/private partnership (PPP)
  2. Promoting maximum participation of all the stakeholders in the reform
  3. Transparency in all decisions
  4. Crowdsourcing and crowdfunding, public involvement
  5. Accessible software code, standard protocols of data exchange
  6. Principle “from simple to difficult”

 

Budget:

  1. Central modules of the system are funded by e-platforms
  2. The cost of the present system is $35,000
  3. Designing and maintaining the software that can run public procurement require about $150,000
  4. Hardware expenses are difficult to foresee since configured hosting of the system after transmission to the state is not known and the state resources have not been assessed

 

Stages of the reform

Stage 0 (finished)
  • Concept
  • Involving the stakeholders
  • MVP – ProZorro
  • HPP demands that Central Bodies of Executive power switch to ProZorro
  • Consensus of the authorities on the necessity of e-procurement
Stage 1 (finished)
  • The reform of the Department of Public Procurement Regulation
  • Pilot version of ProZorro e-procurement
  • BI Module for monitoring
  • Deregulation and reducing of the corruption
  • Reaching international standarts (WTO GPA)
Stage 2 (finished)
  • Legislation on the system of public e-procurement
  • Unifide system of public e-procurement
  • Filing complaints online
  • Joining the WTO GPA
Stage 3 2016+
  • Gradual implementation of the public e-procurement system
  • Integration of the open public registers
  • Public advance monitoring
  • Proactive promotion of the public e-procurement
  • Education on the procurement procedures

 

Next steps

The next step is implementation at the national level. However, it does not mean merely adding several servers. There are about 15,000 public procurers and about 25,000 tender committees in Ukraine. The system should withstand their simultaneous work, manage the overload and be well protected. The next step lies in improving access for businesses to the bidding process. Companies have not considered participation in public tenders to be important for development for a long time. Very few believed that Ukraine was ready for fair trade. Therefore, our task was to involve as many people as possible. We created competition that first provides conditions that are more convenient for the procurers and prevents misconduct since only competition can control the arrangements. Another big step is that soon Ukrainian business will have access to public tenders abroad. This will be possible due to the joining of Ukraine to the Agreement on Government Procurement (GPA). This important decision was made in Geneva after lengthy negotiations with representatives of foreign delegations. GPA spreads the main principle of WTO – equal access to the markets of public procurement. Joining the Agreement means access to the global market for Ukrainian companies. The public procurement market of member countries of WTO is estimated at $1.7 trillion. It is thirty times more than the total worth of Ukrainian export in 2014. Accession to the agreement opens the easiest path for Ukraine to export products. One of the most important steps is education. Unfortunately, public procurement in Ukraine is not yet a profession but often an additional responsibility. We need to teach the officials as well as the businesses how to handle the procurement procedure, in particular how to operate the system of electronic procurement. For that purpose, we organise workshops and seminars in the regions. Currently, these activities cover the majority of the Ukrainian regions.


 

Leaders of the reform