What are CPOs?

Centralized procurement organizations (CPOs) are state or municipal entities established to arrange procurements in the interests of other customers in accordance with Article 1 of the Law of Ukraine "On Public Procurement".

Purposes and Objectives of CPOs

Resolution of the Cabinet of Ministers No. 1216 "On Special Procedure of Creation and Operation of Centralized Procurement Organizations" establishes the procedure for creation and operation of CPOs. According to that Resolution, the core functions of CPOs are:

  • conducting tenders in the interests of customers in accordance with legislation;
  • development of technical specifications for goods and services (except for routine repairs) during CPO's tenders in the interests of customers;
  • development and approval of a methodology for analyzing the market of goods and services (except for routine repairs) subject to CPO's tenders in the interests of customers;
  • development and approval of a methodology for determining the expected value of procurement items for CPO procurements in the interests of customers;
  • regular analysis of the market to consider the needs of customers in which interests CPOs conduct tenders;
  • Data analysis of the "Prozorro" system;
  • providing customers with consulting, training, information, and legal assistance related to the organization and holding of tenders;
  • unification of technical requirements and specifications for procured goods and services (except for routine repairs), creation of standard technical specifications, tender documentation, and procurement agreements during tenders arranged by a centralized procurement organization in the interests of customers.

Normative regulation of CPO's operations

CPO's establishment and operation procedures are established by the following normative legal acts:

  • The Law of Ukraine "On Public Procurement"
  • Resolution of the Cabinet of Ministers of Ukraine No. 1216 dated December 12, 2018 "On Special Procedure of Creation and Operation of Centralized Procurement Organizations"
  • Resolution of the Cabinet of Ministers of Ukraine No. 822 dated September 14, 2020 "On Approval of the Procedure for Creation and Use of Electronic Catalog"
  • Order of the CMU and Decisions of local self-government bodies on appointment of certain entities as centralized procurement organizations.
  • Regulations of relations between CPOs and customers are developed by CPOs directly.

Conditions for
creating CPOs

In accordance with the provisions of Resolution No. 1216, a centralized procurement organization is appointed from among legal entities that are established in the following organizational and legal form:

  1. by a decision of the Cabinet of Ministers of Ukraine (the CMU) — a state institution or state enterprise;
  2. by a decision of a local self-government body (the LB) — a municipal institution or a municipal enterprise.

The CMU creates CPOs to conduct tenders and procurement under framework agreements (hereinafter referred to as the tenders) in the interests of state authorities, social insurance bodies, and legal entities that are customers under the Law, namely:

  • legal entities that are managers and recipients of state budget funds;
  • legal entities where authorities or other local budget funds managers have the majority of votes in management boards;
  • legal entities in which authorized capital the state share (stake, unit) exceeds 50 percent;

LBs create CPOs to hold tenders in the interests of local self-government bodies and legal entities who are customers under the Law, namely:

  • legal entities that are managers and recipients of local budget funds;
  • legal entities where LBs or other local budget funds managers have the majority of votes in management boards;
  • legal entities in which authorized capital the part of shares (stakes, units) in the municipal ownership of the relevant territorial communities (represented by local self-government bodies) exceeds 50 percent;

It is worth noting that Resolution No. 1216 provides for a limited number of cases when LBs, namely city (town) and regional councils may establish CPOs. An organization may be determined as a CPO by a city or regional council, if the population of the city or region is 1 million people or more.

Resolution No. 1216 also defines the criteria that all CPOs must meet:

  1. presence of at least four authorized persons;
  2. presence of structural divisions, the tasks and functions of which include the analysis of the market of goods and services, interaction with customers, organization and holding of tenders, and legal support of the organization's activities.

Initiators of the creation of centralized procurement organizations have the opportunity to determine the list of goods and services to be procured by that CPO. Depending on that list, it is possible to single out specialized CPOs that procure goods and services of a certain narrow group. For example, there are purely medical CPOs, such as SE "Medical Procurement" and ME "Regional Base of Special Medical Supplies" of Kherson Oblast Council as well as CPOs specializing in software and hardware, such as SE "Ukrainian Special Systems". There are CPOs that procure a very wide range of goods and services, such as, for example, the MI "Sumy Oblast Entrepreneurship Support Fund" of Sumy Oblast Council

As of August 2023, there are ten centralized procurement organizations operating in Ukraine. A complete and up-to-date list of accredited CPOs may be found on Prozorro portal.

When creating a CPO it is important to understand the purposes and needs it will cover. It is also advisable to know the expectations from CPOs, their actual positive effects and challenges. Understanding and justifying the purpose of creating a CPO will help ensure its effective operation in the future.

Expectations of
stakeholders
from CPOs