Starting April 19, Ukrainian public e-procurement system ProZorro, which has saved the country nearly $4 billion over the four years of its existence, will impose new rules to further increase its efficiency and make the procurement market more open.
“This is a really big ProZorro update,” said director Vasyl Zadvornyy, according to the platform’s website. “Changes to the tender legislation will make the procurement of state organizations more efficient, fair and open for business.”
The changes will come into effect after a number of amendments to the law on public procurement were adopted four months ago on Dec. 19.
The amendments lower the threshold for mandatory public procurement four-fold. It will be just Hr 50,000, or nearly $2,000. As a result, an additional 250,000 tenders will be open for participants annually. Before that, such contracts were signed directly with suppliers and bypassed ProZorro.
According to the Ministry of Economic Development, Trade and Agriculture, the change will create an additional market worth over $1 billion for businesses in Ukraine.
In addition, every government bidder will be obliged to report on all purchases, regardless of the cost.
Among other changes, fines for gross violations of the tender legislation will more than double. For example, if a bidder unreasonably rejects the tender offer, and the State Audit Service of Ukraine confirms it, the fine will be around $1,800.
At the same time, fines for minor violations, such as technical or spelling mistakes, will be reduced almost 7 times to $60. Participants will have 24 hours to fix such mistakes in order not to lose the tender.
Bidders will also be able to protect themselves from price dumping, as ProZorro is launching a mechanism to detect “atypically low prices.”
The system will automatically highlight offers with a price 30-40% lower than other participants give. If detected, the bidder will have an option to find out why the price is so low. If that is not explained, they can reject the offer.
According to Liliya Lakhtionova, director of the public procurement regulation department at Ukraine’s Ministry of Economy, the major reason for improving the procurement system was Ukraine’s commitment to match its legislation with the European Union directives under the EU-Ukraine Association Agreement.
During the Forum.Zakupki online conference on April 15, Lakhtionova said that it took about a year and a half to develop the new version of ProZorro, which will be more “convenient for both bidders and business.”
