Public Procurement Reform in Ukraine Olexandr Starodubtsev Séminaire : Les procédures des achats hors marchés via TUNEPS et les procédures de recours en matiére des marchés publics - Tunis le 26 Avril 2016

1. Public Procurement
Reform in Ukraine

2. General data
• Population – 44M people
• GDP – 177B USD
• Annual public procurement budget 12B USD
– The threshold – 8K USD
– Above the threshold – 6,5B
– Below the threshold – 5,5B
• Quantity of procedures
– Above the threshold – 100K tenders
– Below the threshold – 1,5M tenders

3. Public procurement was a synonym of corruption
in Ukraine!

4. The Revolution of Dignity
It becomes absolutely clear that reforms in public procurement are strongly needed

5. The results of the first brief analysis
• Key target groups in the sphere:
– Contracting authorities (buyers)
– Suppliers (business)
– Policy makers
– Controlling bodies
– Infrastructure
– Experts
– Civil activists
Nobody trusts anybody

6. The role of Ukraine’s internal specialties in
eProcurement development
• EU Directives
• WTO GPA
• EBRD and OECD
recommendations
• Well-developed IT sector
• Developed market of
commercial ePlatforms
• Absence of budget funding for
development and support of an
eProcurement system
• Available databases of suppliers
and necessity of deregulation
International
experience
Internal specialties
The strategy of the reform combined international
experience and internal specialties

7. The solution
We created electronic system altogether

8. Key outcomes for participants
• Government – new tool for analytics and
policy
• Business – easy access
• Civil society – full transparency
• Controlling bodies – all data for monitoring
and risk management
• Experts – room for expertise
• Infrastructure – absolutely new model
Commercial electronic platforms appeared!

9. Pros and cons for commercial platforms
• Business trusts more in B2B
than B2G
• Financial model inspires for
competition
• Competition improves service
and quality of infrastructure
• First money for creating a
system
• More complicated system
because of cross-access and
interoperability
• The myth of more expensive
infrastructure that leads to
political difficulties
• Persistent position of some
European experts
Advantages Disadvantages
We made our choice for
multiplatform (hybrid) system!

10. Ukrainian model - ProZorro
• one central
data base and
many
platforms
• cross access
• open-source
• MVP
Administrator
User User
Platform PlatformPlatform Platform
Central Database
Auction Module
Appeal council

11. Private electronic platform

12. Pilot projects – the results
• 74K of procedures is the system
• 4K contracting authorities (20%)
• 14K suppliers
• 40+M USD saving for the budget

13. BI module
ProZorro Explorer

14. Stage 0
(completed)
Stage 2
until 01.01.16
Stage 3
2016+
From the beginning of 2016, stage-by-stage, Ukraine is
transiting to e-procurement system, simultaneously reforming
other public procurement spheres
•Department reform
•E-procurement pilot
in ProZorro
•BI module for
monitoring
•Deregulation
•Reduction of
corruption
•Alignment with
international
standards (WTO
GPA)
Stages of the reform of public procurement
Stage 1
until 01.09.15
•Reform concept
•Stakeholders’
involvement (gov’t,
business, NGO, ІТ,
experts)
•MVP – ProZorro
•NRC ordered central
authorities to switch
to ProZorro
•Authorities consen-
sus on importance of
e-procurement
•Law on Public
Procurement E-
System
•Single e-procurement
system
•Е-remedies
•Integration of open
public registers
•Joining WTO GPA
• Stage-by-stage
transition to e-
procurement
• Dev’t of monitoring
by civil society
• Active promotion of
e-procurement
• Introduction of
professional
education in public
procurement

15. Why our reform became possible
The golden triangle of trust in the reform
Commercial
platforms
Civil Society:
monitoring and
control of
procurement
Government:
“the rules”,
professionalization
and data storage
Commercial
platforms:
suppliers acquiring
and service

16. How we did it – principles
• Full openness and transparency
• Simplicity
• Trust each other and challenge the system
• Responsibility – no suggestions without
participation
• We are working in teams (Scrum, Agile etc)
Synergy of the golden triangle!

17. Business’s role is crucial for the reform
The law of diffusion of innovation
Concept &
MVP
Pilot Scale Up & Implementation
Gov’t Low Medium High
NGO High Medium Low
Business High High High

18. Key insights for engaging business
• The participation of business is critical in all
stages of the reform
• The more promotion and support from the
government – the better
• The more will of CAs – the more bids per tender
• Small and medium companies benefit more from
electronic procurement
• Businesses with devoted function win more
You should listen to your business!

19. Contacts
Olexandr Starodubtsev
Head of the department
Department of Public Procurement Regulation
Ministry of Economic Development and Trade of
Ukraine
Bulvarno-Kudryavska street, 22
Kyiv, Ukraine
Mob: +380 (67) 209 62 50
E-mail: olexandr.starodubtsev@gmail.com
starodubtsev@me.gov.ua