At the end of January, the Verkhovna Rada registered draft law 6537, which could amend public procurement of territorial communities. On February 21, it was supported by the specialized committee, and this week, the document can be considered in the session hall. However, the TI Ukraine team warns that the draft law violates procurement principles and threatens exclusion from the rules.

MPs propose:

  • to raise the threshold of simplified procurement to UAH 500,000 for cases when goods, works, and services from a certain list are purchased at the expense of the local budget. This list includes fuel and energy resources for schools, hospitals, and other social institutions, transportation of children to schools, and development of design and estimate documentation for current repairs.
  • to provide up to 10% preference on food procurement to suppliers who are registered in the procuring entity’s community.

First of all, these changes will set a precedent when for a particular type of procuring entities and the list of goods, works, and services rules with privileges are outlined. The proposed changes discriminate against the buyers themselves: some of them will have to hold open tenders from UAH 200,000, while others — from UAH 500,000. In the future, this approach may be extended to other procurement, the list of goods and works and services with exceptional conditions of procurement may be expanded. Whereas the law exists precisely to ensure that the rules are equal for all.

In addition, the authors of the draft law do not justify the proposal to provide a 10% price advantage to entrepreneurs registered in the territorial community of the procuring entity. Local suppliers are mostly involved in food procurement, as it is easier and cheaper for them to organize food storage and delivery. Such a rule violates the basic principles of the Law of Ukraine “On Public Procurement” regarding non-discrimination and equal treatment of business, as well as contradicts fair competition.

At the same time, such preferences for locals will not help improve the quality of food, which procuring entities sometimes complain about. After all, suppliers will receive an advantage simply based on their registration address. Moreover, such an innovation could negatively affect competition in food procurement. It will be less profitable for suppliers to come to auctions in neighboring communities.

Moreover, if the threshold is raised immediately to UAH 500,000, it will be more difficult for businesses to defend their rights in procurement with such a value. After all, simplified procurement cannot be contested.

Moreover, there are legal inconsistencies in the draft law. For example, simplified procurement is called a procurement procedure, but it is not so, it’s a separate term in the current law.

Procurement really needs to be improved, and the expert community, including TI Ukraine specialists, is also working on it. However, the new rules should improve the field and leave the rules equal for everyone. We call on MPs not to support draft law 6537.