Over the years of openness of public procurement, we have become accustomed to obtaining the necessary information about it easily: from the details of a separate tender to consolidated statistics on industries, regions, or on the whole country. However, at the end of February, procurement was removed from the scope of usual rules. During the war, procuring entities are allowed to sign contracts directly and report on them later after the war. So, there’s a lot less information in the system. We tried to estimate how much data now goes beyond Prozorro.
At the time of martial law, public procurement is regulated by Resolution No.169, which the Cabinet of Ministers approved on February 28. According to the current version:
- Procuring entities must purchase anything without simplified procurement and procurement procedures. How to do this remains at everyone’s discretion. At the same time, procuring entities must comply with the principles defined by the Law of Ukraine “On Public Procurement”: to maintain fair competition, openness, and transparency; not to discriminate against participants; to conduct procurement as efficiently and economically as possible; to prevent corruption and abuse.
- Since procurement is removed from the scope of procedures and simplified procurement, it follows that it can be conducted by anyone in the institution/enterprise, and not only by an authorized person.
- Before purchasing something under the resolution, the procuring entity must determine the list and scope of needs. In what form it should be done, how to approve such a list, or whether it should be published — these and other details are not enshrined yet. However, the requirements may be imposed at any time.
- Procurement up to UAH 50,000 can be conducted through Prozorro and electronic catalogs.
Until today, the resolution had already been amended 6 times, but the availability of data has not changed: almost all the information was withdrawn from the system at the beginning, and was not restored.
At the same time, the law “On the Openness of the Use of Public Funds” is still in force, which has not been amended. According to it, procuring entities must report on the contracts concluded on a quarterly basis, including counterparties, procurement items, prices, the status of implementation of contracts and payments under them. If you do not publish this information at all, you will have to pay a fine (up to UAH 850). However, if you do this later by delaying the deadline, there will be no liability.
There are no consolidated statistics on procurement outside Prozorro. So, we compared how the data in the system changed in comparison with last year, in the period from March 1 to May 31:
- The number of the lots announced. In 2021, there were 1,290,492, in 2022 — 366,702. Decrease by 3.5 times.
- The number of competitive lots (i.e., those that provide for an auction). In 2021, 166,304 competitive procurement transactions were announced during this period, and 15,280 in 2022. Decrease by 10.9 times.
- Number of organizers. In 2021, 28,490 procuring entities entered information about at least one procurement transaction into the system, in 2022 — 19,379. Decrease by 1.5 times.
- The number of published contracts. In 2021, information about 1,227,965 contracts was entered in Prozorro, in 2022 — 372,951. A decrease by 3.3 times.
The number of competitive procurement transactions is now approximately 9% of the previous period’s figures. Therefore, assuming that the total procurement volumes have remained more or less the same as last year, the loss of data on competitive procurement is 91%. Although, of course, it should be understood that the amount of funding has also decreased.
We also looked at the data gaps by region. There are two oblasts where the number of the published lots fell less than twice: Chernivtsi and Ivano-Frankivsk. Zakarpattia, Lviv, Volyn, Ternopil, Khmelnytskyi, Vinnytsia, Cherkasy, Poltava oblasts follow — there is the difference from 2 to 2.5 times. The most striking gap is expected in Kharkiv region (11.9), Donetsk region (12.4), Kherson region (16.6), and Luhansk region (65.8).
The situation with competitive procurement is similar. Regarding last year, most procurement transactions were announced in Chernivtsi and Ivano-Frankivsk oblasts, in absolute terms — in Kyiv oblast (3,032, in particular due to large procuring entities in Kyiv), Lviv oblast (1,560), and Dnipropetrovsk oblast (1,364).
We also looked at how the number of competitive procurement transactions changed in different months. The most of them were announced in March — probably because not all procuring entities had figured out how to act under the Resolution at that time. They continued to conduct procurement under the old rules. Then the number of competitive procurement transactions stagnated more than 2 times, and in May — increased. In particular, in the last month, compared to April, the number of competitive procurement transactions in Chernihiv oblast increased by 7.7 times, by 3 times — in Sumy oblast, by 2.9 times — in Rivne oblast. These are the highest rates among the regions.
However, there was no April decline in Kyiv region — the number of competitive procurement transactions increased both then and in May.
We had two hypotheses:
- Procuring entities stopped updating information on agreements that expired during the war.
- The number of terminated contracts has increased dramatically.
To check these assumptions, we compared data on completed agreements from March-May 2020-2022.
The number of the reported contracts decreased, but not critically — to about the 2020 level. The share of terminated contracts increased by several percent. None of the hypotheses have been confirmed, but it should be emphasized that these conclusions now are rather reasonable assumptions. After all, it is impossible to establish the real number of concluded contracts, and, accordingly, those that were completed during the war.
The loss of data is the cost of the speed of procurement, which was justified in the conditions of war. However, it also poses threats: reduced business confidence in the system and access to tenders, risks of corruption and overpayments. Therefore, in order to balance all the pros and cons, we will need to slowly return to competition in procurement where it is possible and appropriate.