A public procurement mechanism through Prozorro to allow to save up to UAH 9 bn per annum – a bill approved

On September 19, the Verkhovna Rada approved in its second reading and as a whole bill No. 1076, which is aimed to improve a mechanism of public procurement through Prozorro system.

In particular, the adopted bill introduces personal responsibility for violations of procurement law and improves the mechanism of judicial appeal, as well as harmonizes public procurement standards with international standards.

In addition, the draft law lowers the threshold for mandatory procurement through Prozorro from UAH 200,000 to UAH 50,000. This means that more than 250,000 procedures a year will now occur on the system and have an auction stage.

“The aforesaid bill will help to improve control over how the state spends taxpayers' money, as well as will significantly strengthen the responsibility for abuse and plunder. Due to that solution, we also simplify control over irresponsible suppliers, thereby allowing to increase the efficiency of Prozorro's public procurement, to reduce risks and ensure equal conditions for all the participants”, said Minister of Economic Development, Trade and Agriculture Tymofii Mylovanov.

Improving the mechanism of appeal will give businesses greater opportunities to assert their rights. The changes include the return of payment in case of redressal of the supplier's complaint, payment of the complaint through the system, anti-trolling mechanisms. Therefore, only the paid appeals will be accepted for consideration to counteract the trolling and blocking of the tender and it will be impossible to withdraw them. The business will also be able to appeal the cancellation of the procedure and the rejection of all biddings. It is forbidden to cancel the procedure during the appeal. For failure to comply with the decision of the AMCU (Anti-Monopoly Committee of Ukraine), there is envisaged the responsibility of the head of the ordering customer and a fine worth UAH 85,000.

The passed bill strengthens the responsibility for the breach of law for unscrupulous customers. For example, if the customer improperly applied the negotiation procedure, unreasonably rejected the tender offer, violated the terms of the tender offer, he would be fined from UAH 25,500 to UAH 51,000. For failure to comply with the decision of the body of appeal provides there is envisaged a liability of leaders and a fine worth UAH 85,000.

“With this decision, we bring out of the shadow economy over a quarter of a million purchases. They will now take place in Prozorro. Additional savings from that could amount to over UAH 9 billion annually. The law also mandates the use of Prozorro Market e-catalogs that allow one to sell and buy small batches of goods as easily as you would from an online store. The mechanisms for combating trolling are also envisaged, the appeal procedure is improved, and the focus is on the professionalization of procurement”, commented Pavlo Kukhta, First Deputy Minister of Economic Development, Trade and Agriculture.

It should be noted that the bill also addresses the issue of international medications purchases. Certain medicines will further be procured through international organizations over the next two years on approval of the list of such medicines and the procedure for their procurement through the Cabinet of Ministers.

Other innovations of the draft law include expanding the list of competitive procedures and consolidating the right of customers to conduct pre-tender communications with business. A new anti-dumping tool is also being introduced - the system will highlight an abnormally low price. The supplier will have to justify it in order to conclude the contract with the customer.