The introduction of ProZorro, an electronic system for state procurement, has been heralded as one of the biggest steps ever taken to bring transparency to Ukraine’s public sector.
From April 1, central authorities and large state enterprises were obliged to use the system. By Aug. 1, all state purchases must be done through ProZorro.
It works like this: ProZorro is a single database that holds all the tender information, and provides it to seven privately operated platforms. All the platforms have exactly the same information and differ only in their interfaces. State purchasers and businesses can choose to use whichever platform they prefer.
Before, state purchases were conducted through auctions where participants could apply through a non-transparent online form or by sending an application by mail.
The results of auctions were published online in the confusing and complicated Journal of State Purchases. The journal reported who won tenders and what the winning bids were, but gave no details about other participants and their bids.
Now, with ProZorro, anyone can see the participants and their bids.
The system charges participants for making a bid. The fee starts at Hr 20 for bids under Hr 20,000 and goes up to Hr 1,700. The payment is shared between the platform that handles the payment, and the department within the Economy Ministry that maintains the ProZorro server.
How businesses benefit
“Maximum competition is the aim,” Deputy Economy Minister Maxim Nefyodov told journalists on April 22.
Nefyodov said that the electronic system would for the first time make state tenders accessible to everyone.
A businessperson no longer has to travel to a state institution or have connections with its staff in order to do business with it. In addition, under the old paper system applications often got lost, causing a huge waste of time.
“The more people use ProZorro, the more competition there will be. State purchasers will get better quality and prices,” said Nefyodov.
ProZorro user guide
A full list of platforms is available at prozrro.gov.ua.
Registration: Foreign and Ukrainian businesses can register on ProZorro. Six of the available platforms have English language options: SmartTender, Derzhzakupivli.online, Privat Market, Etender, Public Bid, and Newtend.
Non-Ukrainian businesses can bid, too, although so far only the Ministry of Defense has received bids from foreign companies. Larysa Luzinka the spokeswoman on ProZorro for the Economy Ministry, says however that the system was designed on a non-discriminatory basis and they hope to see more foreign companies participating.
Deputy Economy Minister Maxim Nefyodov talks about ProZorro at a VoxUkraine event on April 25 in Kyiv.
Searching: Businesspeople can search auctions by key words, product code, institution, region, timeframe, purchaser, status (pre-auction, ongoing, complete) and purchase number. The various filters can be combined.
Businesses can subscribe to receive notifications about auctions for certain products or services.
Nefyodov claims ProZorro is the most advanced electronic bidding system in the world. Other countries where corruption is a problem, like Georgia or Portugal, also have similar electronic systems for state procurements, but ProZorro is the most modern out of them all, according to him.
Choosing the right tender for your business: The tender will consist of a list of products, required documentation (to demonstrate reliability, for instance), sample contracts, a starting bid and bid timeframe.
A period of not less than three business days (one business day if the procurement is under Hr 50,000) is set for bidders to ask questions. All questions are asked anonymously. During this period, the state purchaser can make changes to the tender.
Documentation and requirements for tenders are divided into two: above and below Hr 200,000 for goods, and above and below Hr 1.5 million for labor.
Auction: The auction has to last no less than two days (one day if it’s a purchase less than Hr 50,000). Participants can only place bids – they can no longer ask any questions. The purchaser cannot change the tender or see the proposals of the participants.
The auction has three rounds, during which the participants compete anonymously against each other.
Only once the auction has ended are the participants’ identities and documents revealed to the state purchaser. The state purchaser has to consider the participant who offered the lowest price first, and if there are no technical issues, sign a contract. If they chose to disqualify the first participant, then the state purchaser has to consider the second best offer, and so on.
Complaints: Participants can complain if they think the tender was completed illegally or unfairly. If it’s below the Hr 200,000 threshold, then they can contact the ProZorro complaints department, which is monitored by Transparency International. If it’s above the threshold, they must contact the Anti-monopoly Committee.
Transactions: The job of ProZorro ends when a contract is signed between the state institution and the participant.
ProZorro for journalists
No system is perfect, however. That’s why, according to Nefyodov, journalists and activists must actively monitor the bids and investigate any cases that look suspicious.
The best way to do this is through the analytics interface and the state database, which can also be filtered and keeps an archive of all completed and ongoing tenders.
By the time every state purchaser is using ProZorro there will be thousands of transactions being made a day, and it will be impossible to monitor every single one.
But using the filters, journalists can zero in on information about a particular ministry, department in a city hall or hospital, either because it features as part of an ongoing story, there have been problems in the past, or because of a particular individual involved in that state institution.
Analytical tool
The analytics tool (https://bi.prozorro.org – it must be a secure site) allows searches and filter by date, timeframe, participant, state purchaser, ministries, competition, councils, departments (sub departments), region (city, town village).
This is done by clicking the top right-hand tab and selecting a sheet. On the sheet one then selects a filter. For instance: Geography>>region>>Vinnytska Oblast. The main tab ‘indicators’ allows a user to view several different filters at once.
It might be worth investigating a tender, for instance, if one spots a small company that sells incongruous goods at the same time, such as slippers and missiles. A company that wins every tender with a particular government department every time could also be suspicious.
At the moment the analytics resources are only available in Ukrainian. There are plans to translate them into English, but at present there are no funds for this, according to Luzinka.
Violations, wrongdoing
Documentation
There has been one instance of a purchaser not including the documentation the participants were required to submit in order to decide if they were eligible to take part in a tender. The participants complained and the tender was annulled. By law, purchasers have to include certain documentation for specific tenders. If they fail to do so, as in this case, it is regarded as a violation.
However, the system does not oblige state purchases to include documentation with the tender when they enter it. This is because not all tenders require it.
Hiding illegal purchases within large lots
Activists in Dnipropetrovsk found that the state company Dnipropetrovsk Elektrotransport hid an order for alcohol within a word document listing food that they needed to purchase. That tender was also annulled.
Small windows for proposals
Small time windows for placing proposals, or ones set over the weekend might also be a sign that the purchaser is trying to fix the tender by not giving proper notice to those who might want to participate.
The price
Another sign is if a company has won a tender by proposing a bid well below or above the asking price. A simple Google search will detect if 200 lamps can be bought for the price a participant is proposing.
Appealing a completed tender
Even after a tender has been completed, participants can complain to ProZorro’s complaints department and the Anti-monopoly Committee.
All contact details of participants and purchasers are publicly accessible, so those involved in a transaction can easily be contacted for information.
