State Audit Service to oversee public procurement under Ukraine Facility in line with European Commission recommendations

The European Commission, at the request of the State Audit Service of Ukraine, provided clarifications on the specifics of controlling and optimising public procurement processes funded by the Ukraine Facility macro-financial assistance.

The rules and restrictions are established in accordance with Article 11 of Regulation (EU) 2024/792 of the European Parliament and Council of 29 February 2024 and Article 5 of the Framework Agreement between Ukraine and the European Union on special mechanisms for implementing EU financing for Ukraine under the Ukraine Facility instrument.

In particular, supplies and materials financed and procured for the implementation of the Ukraine Plan must originate from countries deemed eligible by the European Commission.

Restrictive measures may apply to procurement participants (suppliers, contractors, subcontractors, and individuals) based on citizenship from countries on the EU sanctions list. Additionally, the entire supply chain must be considered during procurement.

Experts from Prozorro developed and presented to State Audit Service specialists new functionality in the electronic procurement system, enabling contracting authorities to “tag” procurements conducted for the Ukraine Plan. Over 1,000 auditors and inspectors have participated in training sessions on the State Audit Service’s oversight responsibilities under the Ukraine Facility.

This new functionality will facilitate the rapid identification of Ukraine Facility procurements in the Prozorro system and the detection of non-compliance with eligibility requirements for suppliers/goods and sanctions restrictions. These changes in the Prozorro system will enable the State Audit Service to prevent potential procurement violations and protect contracting authorities from possible European Commission sanctions under the Ukraine Facility.

As recently noted by Alla Basalaieva, Head of the State Audit Service of Ukraine, during a meeting with local government leaders, Ukraine Facility funds are subject to a strict system of control and reporting. The State Audit Service will inform European partners of any instances of violations, abuses, or fraud.