What’s Wrong with Public IT Procurement in Ukraine — and How to Make It More Efficient

Digitalization of the state is not merely a trend, but a real necessity in the 21st century. For a digital state to function effectively, it requires modern IT solutions. And for these solutions to materialize, they must first be procured.

Imagine a government agency sets out to create a service essential for the community. It allocates a budget, announces a tender, selects a winner—only to end up with a product that doesn’t work or requires substantial rework. 

This happened, for example, during the development of the eQueue service for Ukrainian consulates. It turned out that several consulates had unique internal processes that the developed functionality failed to accommodate.

Why? Because IT procurement in Ukraine is a complex story with many “buts.”

At the request of the Ministry of Digital Transformation, TI Ukraine, in cooperation with KSE, examined what exactly doesn’t work in IT procurement, and how to fix it. The findings of this study formed the basis for proposals to the State Anti-Corruption Program (SAP). 

The key finding of our study is that Ukraine does not need additional or parallel systems for IT procurement. Prozorro is already functioning effectively, and efforts should focus on improving and adapting it, rather than building a new system from scratch. 

To make IT procurement clearer and more effective, the study organized it into four main categories—each with its own risks, challenges, and corresponding recommendations:

• basic hardware without customization — equipment with standard characteristics, such as computers, servers, printers, and network devices;
• typical out-of-the-box IT applications — software that does not vary significantly between institutions, such as office suites, antivirus programs, operating systems (e.g., Windows), and backup systems;
• development and modernization of custom IT applications — unique projects involving the creation or upgrading of software products that require an individual approach, such as citizen or business services, electronic document management systems, and cybersecurity solutions;
• related IT services — essential services that support the proper functioning of core IT products, such as staff training, preparation of technical documentation, cyber defense, and compliance with the Integrated Information Security System (IISC) requirements.

IT tenders are no longer limited to one-off contracts for a few laptops—they have become large, costly, and complex processes that demand clear planning, strict oversight, and a professional approach.

When it comes to developing a new IT product or upgrading an existing one, each project is unique—there is no one-size-fits-all approach. Success depends on clearly defined requirements, the experience of the team, and ongoing communication between the procuring entity and the contractor. While hardware or standard IT products are relatively straightforward—allowing specifications to be reviewed and the best option selected even before the tender—software development is quite the opposite. The quality of the product often becomes apparent only after development is complete. If something goes wrong, the consequences go beyond budget losses: time is wasted, and the trust of both the procuring entity and end users in the developer may be undermined. Such mistakes tend to be significant, complex, and costly. That is why our study focused in particular on this category of IT procurement.

The scale in numbers

• ≈UAH 13.2 billion is allocated under the National Informatization Program for 2024–2026, according to information from the Ministry of Digital Transformation.
• 42.4% of all tasks involve new digital solutions or upgrades to existing IT products, amounting to UAH 3.4 billion of the total budget (and this is where most failures occur). 
• Only 4.3% of the tasks are dedicated to training, cyber defense, and other critical activities.

What exactly is wrong?

• Each procuring entity reinvents the wheel

Different government agencies procure similar IT products, but each does so in its own way. One agency may choose one solution, another—something entirely different, and as a result, these IT tools often fail to work together. This creates chaos, incompatibilities, and unnecessary expenses. 

Developers noted that when working with government procuring entities, they encounter entirely different approaches to IT each time—each agency has its own technologies, architecture, and even deadlines. In other words, a solution that worked well for one ministry often cannot be transferred to another without significant rework. As a result, development teams are frequently forced to recruit new specialists for each project, and system integration becomes technically challenging and costly.

• Procuring entities often pull the price out of thin air

Government procuring entities do not always know the real cost of IT products or their development. As a result, price estimates are often made arbitrarily, based on previous, similar tenders, without conducting preliminary market consultations. This can lead to two outcomes: either the price is inflated, resulting in inefficient use of public funds, or it is underestimated, discouraging potential bidders. In one case, a developer reduced the price so drastically during the auction that, after winning, the company was unable to complete all the tasks due to a lack of sufficient funding.

• Lack of standardized template documents for typical IT products

Due to the lack of standardized tender documents tailored to different types of typical IT products, each procuring entity prepares the documentation in its own way—some too superficial, others overly complex, attempting to specify even unnecessary details. As a result, market participants are forced to decipher these documents each time to understand what is actually required, spending time and resources on interpretation rather than preparing high-quality bids. This complicates participation, especially for new or smaller companies, and ultimately reduces both competition and the quality of implemented projects.

• Procuring entities lack specialists with sufficient IT experience

Many government procuring entities struggle to identify their actual needs and lack the knowledge required to procure IT products effectively. They are often unable to write technical specifications, do not fully understand the market, and are unclear about what they truly require. Without this foundation, it is difficult to procure a high-quality product. Even when they do manage to procure the right solution, they often lack the capacity to oversee its development. Cases from the study confirm that when a procuring entity lacks qualified IT specialists who can describe internal business processes and formulate technical requirements, the resulting systems are frequently inconvenient or poorly suited for practical use. 

What can be done to address these challenges?

For most categories of IT procurement, we collected and adapted international best practices that can also be effectively applied in Ukraine. However, when it came to software development and modernization, we went further—incorporating real-world examples and problems observed during the study to provide more accurate and practical recommendations. 

The challenges are real—but so are the solutions. They are practical and within reach. Here’s how to begin.

1. Ensure consistency in what and how the state procures

Now, each procuring entity procures IT equipment and standard software at its own discretion. This leads to confusion, system incompatibilities, and unnecessary expenditures. We recommend:

• creating a unified database of standards for typical IT solutions (e.g., on Prozorro Market);
• clustering hardware—dividing it into standard categories for centralized procurement.

This will:

• reduce costs;
• facilitate technical support;
• ensure compatibility of systems and software across institutions.

2. Create a centralized procuring team

Not all government agencies need to manage IT tenders independently. A Centralized Procurement Organization (CPO)—or several—can be established to specialize specifically in IT procurement.

This will allow to:

• bring together experts in one place;
• establish fair market pricing;
• reduce the burden on individual procuring entities.

3. Tailor game rules to the realities of IT industry

The existing legal framework is not fully adapted to the unique characteristics of IT procurement.
We recommend:

• developing tender documentation templates to avoid starting from scratch each time;
• allowing longer deadlines for proposal submission;
• introducing a points-based evaluation system—not solely price-based—to account for quality, experience, and other factors;
• encouraging more active use of preliminary market consultations.

This will make the process more transparent and business-friendly, and help ensure that the best offer is selected, not just the cheapest one. 

4. Invest in people

Quality procurement is impossible without people who understand IT.
We suggest:

• organizing specialized training programs for technical specialists focused on enhancing their skills in IT, cybersecurity, project management, procurement, business analysis, and public administration;
• establishing in-house IT departments within government agencies to effectively manage IT products.

This will allow:

• better identification of needs and preparation of technical documentation;
• more effective and faster control over the IT product development process;
• reduced dependence on external contractors.

Why is this important?

Because IT is the infrastructure of trust, convenience and transparency. If it doesn’t work, nothing works.

• Diia, registers, e-inquiries, and public services—all rely on IT.
• Each unpolished system undermines public trust in the state.
• Inefficient procurement = losses, corruption risks, lack of benefits.

IT procurement is the first real step toward meaningful digitalization. It’s not about presentations or strategies—it’s about clear technical specifications, well-structured tenders, functional products, and effective communication with businesses.