Procurement through Prozorro is quite an attractive market for businesses due to the ability to sell a lot and competitively. In 2020, the expected cost of procurement transactions accounted to more than UAH 830 bln. These are potential income and business opportunities.
However, although procurement is conducted electronically, businesses may face discrimination due to unfair competition, collusion between competitors participating in procurement, or collusion between a competitor and the bidder. Such situations create risks of monopolization of markets and discourage businesses from cooperating with the country.
Unfair competition and violations can be combated and prevented. It is important to identify them and restore order and fairness, so that the procurement sector performs its functions properly and does not lose its attractiveness for business. If we are talking about collusion and discrimination — the main arbiter and regulator is the Anti-Monopoly Committee of Ukraine.
However, a lot has changed in the anti-monopoly legislation recently, and this will also have an impact on public procurement. Let’s try to partially understand how changes in the AMCU’s activity may affect Prozorro.
AMCU chooses which complaints to consider
Let’s start with draft law No. 5309, which was adopted in June. It amends the Law of Ukraine “On Public procurement” and other laws to improve the appeals system of public procurement. The amendments also oblige to attach to the complaint documentary evidence or evidence that the rights and interests of the procurement participant are violated, if this is an appeal against the tender documentation. Otherwise, the Complaints Commission will not consider the appeal.
However, in fact, such a norm actually allows the Anti-Monopoly Committee to choose at its own discretion which complaints to consider. This can damage the ability of businesses to protect their rights.
Priorities and inspections
Moreover, in summer, the Verkhovna Rada of Ukraine supported draft law No. 5431 in the first reading, which makes changes to the work of the Anti-Monopoly Committee.
In expert circles, this draft law is criticized because it is problematic. For example, it proposes to allow the AMCU not to consider cases on applications if the signs of violation indicated in them do not correspond to the priorities of its activities established by the Anti-Monopoly Committee. At the same time, the draft law does not contain a list of these priorities. If it is adopted, the AMCU will be able, at its own discretion, to make a decision on consideration or refusal to consider a particular case.
In addition, this draft law proposes to allow employees of the Anti-Monopoly Committee to now come with inspections not only to enterprises, but also to private homes. At the same time, the document does not specify the procedure and order in which such inspections will take place. They should be established by the Anti-Monopoly Committee itself. That is, the AMCU will be able to come to you even at night, if it wants.
The National Agency on Corruption Prevention has already recognized this draft law as corrupt. The American Chamber of Commerce, the Bar Association, the Anti-corruption Committee of the Verkhovna Rada, the Chief Scientific and Expert Department of the Verkhovna Rada of Ukraine Secretariat, the League of Antitrust, and the European Business Association also gave it a negative assessment.
Higher thresholds — fewer complaints
A government draft law is also being actively discussed aiming to raise the thresholds for purchasing goods and services to UAH 500,000. These are, on the contrary, changes in procurement that will affect the work of the AMCU. Now, the threshold is UAH 200,000. On the one hand, procuring entities will be able to conduct simplified procurement instead of open bidding. However, on the other hand, businesses will no longer be able to contest these procurement transactions because simplified ones are not subject to appeal.
The range of UAH 200,000-500,000 is about a quarter of all open bidding. If such procurement had been withdrawn in 2019, 36% of complaints filed with the Anti-Monopoly committee would have disappeared. If in 2021 — 45%. This is actually a large percentage, behind which is the desire of businesses to protect their rights. In 2020, the committee considered a total of 11,463 complaints.
Therefore, it is necessary to maintain the ability to protect business interests through the AMCU, even if the thresholds are revised.
And finally: what do we see? The AMCU wants to regulate its workload. And the committee is really loaded: according to our research, there have been more appeals in 2021. However, the regulation of the AMCU work should not take place at the expense of the opportunity for businesses to defend their rights in procurement. To reduce the amount of work in the AMCU, we need to investigate options for optimizing the procurement itself, so that procuring entities and participants have fewer reasons to break the rules.