Position of Transparency International Ukraine and the Anti-Corruption Action Centre.
Starting from January 3, 2023, the Cabinet of Ministers temporarily replaced three-round auctions in public procurement with a first-price sealed-bid auction. The decision was made without discussing it with business and the professional community, and, in our opinion, with insufficient justification.
What will change in public procurement
According to Resolution No.1495, the government refused one of the stages of competitive procurement — a three-round auction. If earlier, after the submission of documents, the participants on the appointed day and time could reduce the price three times to get the contract, now, the winner will be determined by the price of their initial offer. The decision was justified by the problem of connecting business to auctions in conditions of electricity shortage.
This change is temporary — for 6 months. At the same time, the return to three-round auctions is not clearly spelled out in the government decree because of which, in six months, there may be a legal conflict regarding which auctions to hold.
Other stages of open bidding with features remained unchanged, that is, the complete cancellation of tenders is not in question. They will continue to be in the system, competitive, and open to all.
Risks and disadvantages of the solution
The idea of blind auctions without rounds for price reductions is not new to public procurement. Based on the data analysis of the Prozorro system, we allow the possibility to test blind auctions without rounds for price reduction. For example, to make them optional — available under certain conditions, such as for procurement more expensive than a certain limit, or develop a way to program the tactics of the game in the auction in advance.
However, three-round auctions were canceled immediately for all tenders, without prior discussions and consultations with market players. Procuring entities, business, and the public learned about the innovation when it was already adopted and technically implemented. Moreover, the Ministry of Economy did not provide sufficient information on how the problem with connection to auctions is widespread among entrepreneurs and how critical its impact on tenders is. Therefore, the lack of comprehensive information from the government raises doubts in the public about the feasibility of such a decision.
What to do next
First of all, we urge the government to adhere to the sequence of implementation of changes. It is necessary to develop them on the basis of analysis and to substantiate them in detail, to submit them for public consideration, to introduce first legal and only then technical changes. It is also unacceptable to make decisions that are designed to help the business without discussing it with the business itself.
Moreover, Transparency International Ukraine and the Anti-Corruption Action Centre urge to consider the possibility of making the adopted decision more flexible: to introduce it for a separate procurement segment or to provide participants with the opportunity to program participation in the auction in advance. And it is necessary to agree on a new option with the players of the sphere.