Tests, Masks and Ventilators: COVID-Related Procurement in Ukraine

It is no secret that Ukraine was not ready for the pandemic. Since the first official case of COVID-19, our state has faced a shortage… of everything. Even the most common and simple things for medicine, such as disinfectants, masks or gloves for healthcare workers, have become scarce.

Therefore, it is quite natural that in early March, the number of medical tenders on Prozorro increased rapidly — Ukrainian hospitals and businesses needed everything at once.

First of all, you need to remember that Prozorro only accounts for a part of what they actually buy to fight the coronavirus. A lot of essentials are supplied by business through local coordination centers. Other things are coming from other countries as humanitarian aid. Of course, you cannot track most of those things.

Our DOZORRO team monitors procurement of several basic types of products through Prozorro: COVID-19 tests, masks, ventilators, gloves, and disinfectants. We try to update this information regularly and to actively monitor tenders under the simplified procedure labeled COVID-19.

Here’s some more information for you.

The Procurement Procedure 

On March 17, MPs amended the Law of Ukraine “On Public Procurement.” They enabled all procuring entities, primarily hospitals, to buy what they needed to fight the epidemic working around the typical procurement requirements. In these conditions procuring entities do not have to hold open auctions: announce an auction, wait for an offer, and so on. Everything happens quickly and almost painlessly.

The list of goods and services that can be purchased without an auction is determined by the Cabinet of Ministers of Ukraine. These are mainly personal protective equipment, medication and medical equipment, as well as services for sanitary and hygienic treatment of facilities, transportation and catering for doctors and patients.

Most purchases related to COVID-19 are made using the new procedure: the procuring entity selects a supplier independently, signs a contract with this supplier, publishes it in Prozorro and reports on its implementation. However, there are some tenders that are carried out through the usual negotiation procedure and open bidding.

How Much Do They Buy?

We are seeing a big surge in the procurement of masks, ventilators and disinfectants (we are preparing a material about this). In addition, there is now no oblast left in the country that has not bought COVID-19 tests through Prozorro. In January 2020, a little more than 100,000 medical masks were purchased through Prozorro. In February, more than half a million. And in March, over 2 million. In other words, the volume has increased 20 times.

Now we are studying the procurement of medical gloves, and according to preliminary data, in March, almost twice as many were bought as in January. I suspect that this difference will be more significant when we include procedures where gloves are only one of several items purchased into our sample.

Overall, we can say that the country was not ready for a problem of this scale. It needs some time to streamline these processes. The budget was adopted last year. Only minimum expenses were planned for such procurement. For instance, if we consider tests, they were not included at all, because no one knew that we would need to buy them.

The entire government needs to adapt — it is necessary to make changes to the national and local budgets. Each procuring entity must reformulate its budget and understand what they are willing to give up in order to reallocate funds for procurement of the goods which have become essential. Above all, this concerns local authorities.

Corruption Risks

In the situation of an epidemic, the main goal of the system is to meet the needs for the necessary goods in time. This is why a special procurement procedure has been introduced, without auctions, and a list of goods and services it applies to has been defined.

Unfortunately, not all procuring entities follow the rules of the game: perhaps unknowingly, perhaps consciously. For example, the most recent case was when Kyiv City Administration bought cameras with facial recognition and temperature measurement. It was trying to buy them through the COVID-19 procedure, though the list issued by the Cabinet does not include cameras, naturally. The violation was noticed just in time. It was confirmed by the State Audit Service of Ukraine, and the contract was terminated. But this is not a unique case.

However, not everything that seems to be a violation at first glance is really corruption. Often, DOZORRO experts find reports on purchases under the COVID-19 procedure for goods, and sometimes even works, that are not included in the list. This happens when procuring entities mistakenly label the procedure as a COVID-related. Usually these procedures are for pre-threshold amounts, which do not require an auction in the first place. For instance, it could be a small tender for sports equipment or food, repair of roads or buildings. In such cases, we call the procuring entities, and it turns out that they did not even know that they labeled the procedure as COVID-19-related.

Another potential risk is price gauging. For example, we are already seeing a significant surge in prices for medical masks. While in January of this year, they were sold at about UAH 1 per piece, in March, we already observed prices over UAH 25.

Again, this should not be immediately regarded as corruption. This may be normal market reaction to the deficit and increased demand. Yet, the Anti-Monopoly Committee should take a close look at such tenders. The AMCU can record collusion on the market and punish those guilty of it.

Overall, the most important thing now is for procuring entities to be able to find suppliers quickly. To help with this, we have developed guidelines on how to use the BI Prozorro Public Module to find a supplier in the situation of product shortage. This is not going to solve all problems, but it can help to find a supplier for a certain category of goods.

We will keep watching procurement to ensure compliance and prevent violations.