Today, September 25, at the initiative of the Ministry of Economic Development and Trade, the Cabinet of Ministers of Ukraine has determined the Professional Procurement State Institution as a centralized procurement organization for tendering and procurement under framework agreements on goods and services (except for ongoing repairs) for customers.
“A decision to designate the Professional Procurement State Institution as a centralized purchasing organization (CPO) is a step towards streamlining the entire procurement process, as by transferring their purchases to the CPO, customers will have a chance to significantly save their money at the account of combining similar items within a single procedure. In addition, during operation of the pilot project of the Professional Procurement State Institution, we could ascertain its efficiency and resulting quality. In particular, the contracts concluded resulted in savings of over 13% of the expected value of the procurement items. Meanwhile, the average number of participants amounted to 3.65, which is 1.5 times higher than the average showing for the electronic procurement system”, Pavlo Kukhta, First Deputy Minister of Economic Development, Trade and Agriculture, commented on the Government's decision.
Throughout 2017-2018, within the framework of implementation of the pilot project, the Professional Procurement State Institution performed the functions of a centralized procurement organization. Therefore, given the knowledge and experience of tendering for the benefit of other customers and the positive results from the implementation of the aforementioned pilot project, the Professional Procurement State Institution will continue to perform the functions of a centralized procurement organization for the benefit of customers who have expressed a desire to transfer the procurement function to the professional organization.
It should be noted that the establishment of a centralized procurement organization will help solving the following public procurement problems, inter alia:
- professionalizing of public procurement sector (there are over 30,000 contracting entities operating in Ukraine, most of which prove ineffective. Therefore, the CPO is a powerful driver of professionalizing of procurement due to the availability of professional staff);
- increasing cost savings through volume aggregation (more than 30,000 corporate customers make similar purchases of consumer goods. Combining such items into a single purchase through aggregation will result in a better price and significant reduction of administrative costs for conducting procurement procedures);
- procurement standardization (it is assumed that the CPO is actively working with potential suppliers, which will significantly reduce the risks of disputes and supply disruptions);
- reducing the level of corruption (centralization of procurement creates more opportunities for public control, monitoring and implementation of preventive control measures by consolidating procurement and significant reducing the total number of procurement procedures).