Since the beginning of the pandemic, the number of medical purchases through Prozorro has grown rapidly — Ukrainian hospitals and businesses needed everything at once: personal protective equipment, medical equipment, medicines, disinfectants, and antiseptics. Medical facilities did not have enough time to find everything they needed to fight the virus in the face of shortages. For this reason, at the end of March, government officials introduced the COVID-19 procurement procedure. Hospitals and other procuring entities could buy goods, works, and services from a special list without bidding, through direct contracts.
Such purchases in Prozorro have a special label through which they can be tracked and analyzed. However, it is important to remember that the amounts of COVID-19 purchases are not equal to the total cost of fighting the virus. This procedure is an opportunity, not an obligation. Some procuring entities used regular procedures to buy what they needed, including auctions. Hospitals were also helped by business and volunteers. However, it is the COVID procurement reports that make it possible to track how facilities were provided to operate in a pandemic and to save lives.
General COVID-19 Procurement Dynamics
To control COVID procurement quickly and conveniently, you can use the Prozorro COVID-19 Procurement tool by the DOZORRO team. It collects, visualizes and helps to process data on COVID-related public procurement. According to the module data, between March 18, 2020, and March 18, 2021 (inclusive), 148,500 COVID tenders were held for a total amount of UAH 30.9 billion.
Traditionally, the most active month in procurement was December. At the end of the budget year, procuring entities tried to spend all the funds allocated to them as quickly as possible. In addition, several major coronavirus agreements were concluded in December. For example, the end of the year was marked by a centralized purchase of ambulances for UAH 728 million. On the last but one day of 2020, SE Medical Procurement signed the agreement for supply of 1.9 million doses of the Sinovac Biotech vaccine for UAH 964.3 million. In total, in December, 11 agreements were signed for amounts exceeding UAH 100 million each.
At the same time, in other periods during the year, you can track the link between the increase in the number of coronavirus patients and COVID-related tenders. For example, after a relatively quiet summer, the number of infected and patients in hospitals began to rise sharply in the fall. Accordingly, the needs of medical institutions increased. This trend of coronavirus agreements was also caused by the changes that the Cabinet of Ministers made to the list of goods, works and services that can be purchased under the COVID-19 procedure. In 2020-21, this list was amended 14 times—and almost always expanded.
Coronavirus Procurement: Most Active Procuring Entities
The COVID-19 procurement procedure is used not only by medical institutions, but also by other budgetary institutions and enterprises. For example, schools purchased masks, antiseptics, protective shields, etc. to start the school year offline. And local authorities or regional administrations could centrally purchase, for example, medical equipment, which was then distributed to city / oblast hospitals. In total, almost 9,000 procuring entities have used the coronavirus procedure at least once.
At the same time, three of them account for 35% of the total amount of concluded COVID-19 contracts (UAH 10.8 billion). The top three procuring entities by the value of all coronavirus agreements include the State Enterprise Medical Procurement of Ukraine, the Kyiv City State Administration and the Ministry of Internal Affairs of Ukraine.
Medical Procurement conducts centralized procurement for the Ministry of Healthcare. In 2020, the enterprise spent most on CAT scan machines under the coronavirus procedure—UAH 2.3 billion. The procuring organization also signed agreements for the supply of COVID-19 tests (UAH 988 million), the aforementioned COVID vaccine Sinovac Biotech (UAH 964 million), ventilators (UAH 840 million) and ambulances (UAH 728 million). By the way, there was a plan to buy ambulances in 2020 even before the pandemic started. Initially, the funds were allocated to the regions, but after the start of quarantine, they were transferred back to the Ministry of Healthcare so that the SOE could conduct centralized procurement.
The second buyer by the total amount of COVID-19 agreements is Kyiv City State Administration. Enterprises and institutions controlled by the Kyiv City State Administration spent UAH 1.65 billion on goods and services to combat COVID-19. That includes over UAH 630 million on medical equipment (ventilators, X-ray machines, ultrasound machines), and over UAH 411 million on pharmaceutical products and medication.
The last place in this trio of leaders is occupied by the Ministry of Internal Affairs. Structures subordinate to the MIA spend UAH 1.27 billion on fighting COVID-19. Law enforcement used this money to buy PPE, disinfectants, and medical equipment. Before mid-summer, the MIA led the rating of procuring entities by biggest spending under the COVID-19 procedure. Interestingly, the main supplier of PPE for the Ministry of Internal Affairs is the state enterprise Fort. It is also subordinate to the MIA. Before the pandemic, Fort specialized in the development and manufacture of firearms and special equipment for law enforcement officers. But when the coronavirus started in Ukraine, the SOE started supplying imported PPE to structures subordinate to the Ministry. During this time, more than 12% of all MIA’s coronavirus-related expenses, almost UAH 154 million, ended up on Fort’s accounts.
How Money under COVID Procedure Was Spent
The coronavirus procedure cannot be used for all goods, works and services that the procuring entity wants to buy to fight the virus, but only those on the list approved by the Cabinet of Ministers. For example, it does not include the COVID-19 insurance that hospitals purchase for their staff.
In general, medical equipment was the biggest part of spending under the COVID-19 procedure—the total amount reached UAH 14.7 billion (47.5% of the total spending). Procuring entities purchased ventilators, ultrasound and X-ray equipment, CAT scan machines, and oxygen concentrators. Another UAH 7 billion was spent on medicines, UAH 2.4 billion on ambulances (in addition to the SOE, they were bought by other procuring entities). Tests have cost UAH 1.3 billion total.
Violations and Risks in COVID-19 Procurement
At the beginning of the pandemic, the COVID-19 procedure undoubtedly greatly helped the medical system to respond quickly to new conditions and to meet acute needs in the situation of shortages. At the same time, exempting such procurement from the Law has a number of risks of inefficient use of funds and violations in procurement.
In the spring, the rampant demand for personal protective equipment, antiseptics and other products that had not been so popular before, led to a deficit and a sharp rise in prices. For example, in March and April 2020, masks became 15-20 times as expensive as in January. However, as early as in May, the market started to even out, and some procuring entities even successfully held open bidding for goods that had recently been in deficit. This trend persisted.
However, not all procuring entities analyze market prices before signing COVID-19 agreements. Some of them continued buying goods for prices twice or even three times as high as their colleagues did at the same time.
For example, the city healthcare department in Sumy bought 10 ventilators for prices exceeding market prices. Thanks to the media and activist outcry, the cost of the procurement was eventually reduced by UAH 250,000, and the prosecutor’s office started a criminal proceeding on inefficient spending. In Cherkasy, the oblast laboratory center bought disinfectants and medical masks at inflated prices, and the municipal consultation and diagnostic clinic significantly overpaid on PPE. In Zhytomyr, the prosecution also started a criminal investigation into the procurement of respirators.
These are just some examples, but civic analysts and journalists encounter such situations rather often.
The procurement of goods, works, and services which are not on the list
At the beginning of the pandemic, procuring entities used the COVID-19 procedure to buy everything they needed to fight the virus, in their opinion, from household appliances to food or even toilet paper. In the first weeks of the quarantine, Odesa hospital of infectious diseases started actively buying furniture, including cabinets and couches, at high prices. At the beginning of April, Kyiv municipal enterprise INFORMATYKA wanted to buy 400 cameras with a thermal screening function for UAH 64.9 million under the specialized procedure.
Today, doctors, scientists, and experts speak about the start of the third wave of COVID-19 in Ukraine. Four oblatss are in the red quarantine zone: Zhytomyr, Zakarpattia, Ivano-Frankivsk and Chernivtsi oblasts, plus the city of Kyiv. On March 19, Lviv imposed strict quarantine. The number of infections is growing, and there’s no single idea what to do with the COVID-19 procurement procedure next. A prudent decision would be to review the approved list in detail and limit it to the most essential goods, works and services whose procurement cannot be planned effectively. In addition, this procedure should be restricted to particular procuring entities. This will support hospitals in these difficult times, as well as protect budget funds from inefficient use. In the meantime, we will continue to monitor COVID-19 procurement.
The material was prepared with the support of the U.K. Government through UK Aid.