Procurement usually only makes the news when something goes wrong — suspected overpayments, shady contractors, or the usual public outcry. But broader overviews of the sector — what’s really going on and whether things are improving or not — are much rarer. We’re here to change that.

This is the second time we at TI Ukraine are taking stock of a full year in public procurement. We review changes in regulations and the electronic system, analyze key statistics, and outline what lies ahead. This is not an analysis of individual procurements — whether scandalous or exemplary — but a look at the sector as a whole. So, what will we remember about 2024?

Transparency and competition are growing

Overall, tender outcomes in 2024 were encouraging. 

The vast majority of funds are paid to contractors selected through competitive procedures on Prozorro — they account for 77.9% of the total estimated value of all procurement transactions. This figure excludes direct contracts for natural gas, as those are reports on transactions between companies within the Naftogaz group. The share of value attributed to competitive procurement has been increasing for the second year in a row. 

Competition increased by 18% — with an average of 1.88 bidders per tender. Looking slightly ahead, this figure remained above 2 throughout the winter — a level we haven’t seen since Prozorro was launched. This positive trend was largely driven by procurement via Prozorro Market and framework agreements. That said, there’s still room for improvement: open auctions saw an average of only 1.26 bidders, and just 38.7% of procurement transactions had two or more participants. The construction sector performed even worse, with averages of 1.2 bidders and only 19.4% of tenders attracting at least two participants.

Developments and challenges of the e-catalog

At the beginning of the year, the Cabinet of Ministers expanded the list of medicinal products and medical devices that must be procured through the e-catalog for procurement transactions starting from UAH 50,000. A similar requirement was also introduced for food products exceeding UAH 100,000.

The transition to the mandatory use of Prozorro Market carried several risks. For example, it was unclear whether all regions had an adequate number of proposals for every food product, and whether procuring entities could select all the necessary product characteristics and acceptable values. Procuring entities themselves have repeatedly highlighted these shortcomings in the e-catalog.

However, dry data show that the success rate of product procurements through the e-catalog is higher than through open bidding — 84% compared to 77.5%. The level of competitiveness is also higher.

However, the catalog still requires further improvement. In particular, it is essential to establish a mechanism that allows businesses to appeal procurement transactions conducted through Prozorro Market.

Amendments to the regulation were made less frequently

The pace of amendments to Resolution No. 1178 has slowed. While it was amended 12 times in 2023, there were only 7 amendments in 2024. 

The government has extended the minimum deadline for submitting tender proposals for works from 7 to 14 days. TI Ukraine advocated for this change, as one week is insufficient to properly prepare for such complex tenders. We also emphasize the need to publish calculation documents for construction tenders in the formats used by specialized estimating software — where these documents are actually created. This would help businesses prepare their proposals more efficiently and with higher quality. 

Some of the amendments to the resolution were aimed at ensuring the stable operation of the power system. For example, in certain cases, the government permitted the use of direct contracts for this purpose. However, the overall list of exceptions to competitive procurement still can — and should — be further revised. In particular, it is worth reinstating the negotiation procedure in cases where it was allowed prior to the full-scale war. For context, in the last year before the invasion, over UAH 145 billion was spent through negotiations in the system.

Another change in construction procurement is the adoption of a law requiring the publication of material prices in a machine-readable format along with the contract. This is generally a positive step toward greater transparency in such procurement transactions, although it’s important to keep in mind that prices may change during the course of the work. 

And already in 2025, these tenders highlighted another issue in the sector. The State Audit Service began monitoring the publication of prices, but its interpretation of the requirement for when and how to publish machine-readable files differs from that of the Ministry of Economy. Based on the monitoring results, auditors believe that pricing documents should be published for all construction and repair transactions, while the Ministry’s department, in its consultations, interpreted the requirement as applying only to competitive procurement and direct over-threshold contracts. This is not the first time such a situation has arisen, and the lack of alignment among key institutions in the sector — the Ministry of Economy, the State Audit Service, and the AMCU — remains a significant challenge moving forward.

Localization

There were also some contradictory changes — for example, the tightening of formal requirements in the localization rules. It is worth noting that localization was introduced by MPs as a way to support domestic producers by granting them preferences in public procurement, specifically for mechanical engineering goods. However, since this approach contradicts several of Ukraine’s international commitments, localization does not apply to procurement transactions that fall within the scope of those agreements.

At the same time, as we previously warned, the initiative has proven ineffective in practice. In response, the government introduced changes to the rules, now requiring manufacturers to submit additional documents — without them, goods may be blocked in the Register of Localized Goods for one to two years. While this appears to target violators in the register, in practice, it results in increased bureaucracy for Ukrainian producers, the very group that localization was intended to support.

We continue to call for the abandonment of this approach, which distorts competition and creates unnecessary obstacles for businesses. Instead, we advocate for more effective, evidence-based measures to support domestic manufacturers.

The State Audit Service has officially started using updated risk indicators

Staying on the topic of oversight, in September, the Ministry of Finance approved 13 new risk indicators that can serve as grounds for initiating procurement monitoring. These include, for example, mass disqualifications, contract term extensions, and non-compliance with AMCU decisions. Tenders flagged by these risk indicators can be viewed on a dedicated portal.

Since their introduction, the share of monitoring initiated based on risk indicators has fluctuated significantly. Initially, it rose — from 1.25% in October to as high as 61.35% in December. However, by April 2025, it had already declined to 20.88%. We believe that a risk-based approach to selecting procurement transactions for monitoring is essential, as it enables a more objective focus on cases with the greatest potential risks and harm. 

In addition, we at TI Ukraine emphasize that violations should be detected as early as possible. In 2024, state auditors initiated more than 81.8% of monitoring operations only after procurement contracts had been concluded and published. At the same time, on average, almost two months passed from the publication of the contract to the start of such monitoring. In this case, they do not perform a preventive function. We have passed these calculations to the State Audit Service, and we are already seeing the first positive changes — so let’s hope that this trend will continue.

The issue of the purpose of monitoring remains relevant. According to our research, auditors often focus on formal violations. While efforts are being made to adjust internal processes and reduce the number of such cases, addressing this problem requires changes at the legislative level.

The defense industry has a new procurement method

From the start, it is important to clarify that both here and in our report we refer to the more public aspects of defense procurement — not to arms contracts. At the beginning of 2024, new framework agreements were introduced in this area, which in practice function as dynamic procurement systems. These frameworks allow participants to qualify and join throughout the duration of the procurement process. So far, only three procuring entities can use them: the State Rear Operator, the Defense Procurement Agency, and the State Service for Special Communications and Information Protection

In 2024, Prozorro announced 226 tenders under dynamic procurement systems, worth nearly UAH 13.6 billion. Of these, 82.74% resulted in successful procurements, leading to contracts worth UAH 9.48 billion. The average level of competition was 5.06 bids per procurement.

Unmanned aircraft systems were mainly procured using this method. And there were also some vehicle and food products.

Defense procurement also introduced a 24-hour window for correcting errors and aligned the grounds for direct contracts with those used in public procurement — both of which are positive developments.

More digitalization

Of course, changes occurred not only in the rules but also in the electronic procurement system. 

Prozorro was integrated with the Trembita system — to put it simply, Trembita enables secure data exchange and communication between state registers. This integration is expected to further strengthen and accelerate connections with various government databases. Also, the first stage of integration with DREAM has been completed. Now, when a responsible official adds procurement plan numbers to a recovery project profile in DREAM, the system automatically retrieves data on the corresponding tenders from Prozorro.

There were also updates related to the digitalization of tender documentation, reports, and proposals; the introduction of a feature to label tenders under the Ukraine Facility Program, the revision of the electronic appeal form, and much more.

Prozorro is also continuously improving functionality for tenders funded by donors. In 2024, for example, tenders were conducted for the installation of a structured cabling system at the Okhmatdyt Polyclinic as part of a joint project between the Ministry of Health and the World Bank, as well as for the procurement of computer hardware and software for the territorial offices of the Pension Fund, financed by the World Bank. In March, functionality for such tenders was separated from simplified procurement procedures and placed under a dedicated format for bidding according to the organizer’s rules.

EU accession negotiations — public procurement opened the process

As part of European integration, Ukraine and the EU will conduct negotiations across six clusters, each thematically grouping 35 areas (or chapters) — ranging from agriculture to foreign relations, and from taxation to energy. Public procurement falls within the “Fundamentals of the EU Accession Process,” a core cluster where negotiations are opened first and closed last. Notably, this summer, public procurement became the first chapter to complete the screening stage — an analysis of the current state of legislation that precedes formal negotiations. 

Ukraine’s procurement rules have already been partially aligned with EU standards through the Association Agreement, but the process remains incomplete. In 2024, the government submitted a draft of a new public procurement law to the Verkhovna Rada — another step toward further harmonization with European procurement directives. The draft law proposes new procurement procedures, raises threshold values, revises the list of exceptions, and introduces several other changes. On September 17, MPs approved the draft in the first reading. At TI Ukraine, we generally support the principles behind the draft law, but we immediately noted that it requires further refinement. The draft contains both potential risks and underdeveloped provisions. The European Commission also provided its comments, and the draft law is now being refined for the second reading. This is a meticulous and time-consuming process — as expected, given that it involves a comprehensive overhaul of the legislation rather than just amendments to existing laws.

What’s next?

At TI Ukraine, we emphasize several key recommendations — regarding the strategy, legislative updates, stronger oversight, and a more effective appeals system. However, the main challenge for the coming year remains the adoption of the new law. It must not only be passed, but also undergo broad public discussion beforehand. After adoption, it will be essential to implement the necessary updates in Prozorro and clearly communicate the changes to both procuring entities and bidders.

This material is funded by the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.