Public procurement has become a lot more transparent with e-procurement.
ProZorro, an online platform, was launched in February to shift state purchares online, with the aim of increasing transparency, saving money and reducing that corruption that costs the state $2.3 billion in annual losses.
ProZorro was developed by activists, said Deputy Economy Minister Maxym Nefyodov. “It was designed in the fourth quarter of 2014 by Alexander Starodubtsev and Andriy Kucherenko and many other people,” he said.
More than 800 state agencies are already using the system.
While the Kyiv City State Administration and two ministries – infrastructure and energy – use it the most, the Defense Ministry has held the most expensive tenders by far. Its share is Hr 2.73 billion, or 74 percent, of the total amount.
A similar system in Georgia spurred the development of ProZorro in Ukraine.
In comparison to closed-door paper tenders, where administrators see all bidders and can adjust terms to manipulate who wins, administrators of the tender cannot see applicants in ProZorro.
In addition, the platform opens up data on the tender to anyone, not only to potential bidders. The terms of the tender and the bids are also visible to anyone, while competing bidders cannot see each other in the system.
The ProZorro system reviews the cheapest offer and, if it fits requirements, is automatically accepted.
The new way has worked well enough to save more than Hr 306.4 million, or $14.4 million as of Oct. 2.
“In electronic format you can see everything,” says Natalia Abesadze, who is in charge of legal coordination at ProZorro.
Most state agencies can currently place tenders for goods and services worth up to Hr 200,000 and tenders for labor worth up to Hr 1.5 million. However, state enterprises that are monopolists – like Ukrposhta, Ukrzaliznytsya, Energoatom and others – are allowed to hold tenders that exceed these thresholds.
With adoption of the e-procurement bill, there will be no restrictions on tender amounts,
ProZorro is operated by Transparency International Ukraine. But by the end of the year, its databases will be transferred to a state enterprise managed by the Economy Ministry, while bidding platforms will remain in private ownership.
The team working on ProZorro consists of more than 100 people, including specialists in tech, support services and those who attract new suppliers for participation. Some are being paid for their work by Transparency International and others are being paid by providers that work with ProZorro. The Economy Ministry’s employees are also involved in ProZorro, but don’t get paid for the work by the government.
Andriy Kucherenko, who is in charge of IT system coordination at ProZorro, says state officials’ reaction to ProZorro varies.
“There are those who have a positive attitude towards the platform and become leaders in using it. For example, Defense Ministry, Infrastructure Ministry, Kyiv State City Administration, Energoatom and others,” according to Kucherenko. Other agencies are not as accepting and legislation will be needed to get them to use ProZorro.
Oleksiy Soloviov from Gide Loyrette Nouel said ProZorro is still a work in progress.
“The full integration of ProZorro into the legislation on public procurement will require assurance from its developers for its reliability and, most importantly, predictability,” says Soloviov. “Who will be the system’s administrator? Who will do the technical expertise and audit?”
Kyiv Post staff writer Bozhena Sheremeta can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by AVentures Capital, Looksery, and SoftServe.
