Preventing Budget Waste and Procurement Corruption: Practical Steps

During wartime, the primary allocation from the budget should prioritize supporting the military. Of course, the crucial needs of the state must be covered: repair roads to ensure logistics, build housing for IDPs, procure electricity and gas for enterprises, and buy necessary equipment and supplies for hospitals to save the lives of defenders injured at the front…

Who decides what public funds will be used for? The Parliament approves regular annual budgets at the end of each year. The Ministry of Defense received UAH 1.16 trillion of allocations in 2024 budget. The total planned expenses for the next year are UAH 3.35 trillion. That is, at least a third will go to defense. Why at least? In comparison, UAH 858 bullion was planned for the defense in 2023 (also about 1/3) but as of early October, the actual spending is more than UAH 1.4 trillion, that is almost 60% of the total state budget in 10 months of 2023.

Defense is a priority for the state now. And we see that from the budget. However, one of the problems is that we can only fund it with our own income. Social security and other needs are partially covered by partners’ funds.

In addition to the state budget, there are also local ones. Each community approves its own budget and everyone can see the expense details of their city or locality.

We don’t have much money for anything other than the Victory. Therefore, effective spending free from abuses is crucial.

Can citizens influence the budget?

Back in 2020, the Ministry of Finance approved recommendations on how local authorities can encourage people to be involved in budgeting. These include public hearings, round tables, creation of public councils and participation budget procedures, when citizens can submit their own projects for funding.

However, the first thing that can be done is to analyze community’s draft budget when it is made public (usually October – November). For example, Kyiv activists have done that this year.
They found projects in the city budget which they consider uncritical: the construction of new interchanges and parking in Obolon. They urged for redirecting that money for military needs. So they drew up the petition that received the required number of signatures less than in a week.

Communities have the right and power to influence the budget. But to make it rationally, there must be concrete proposals rather than empty slogans as “Money for the Armed Forces”. That gives you more chances to make tangible impact and change, although not guaranteed at 100%.

Where to check what is procured?

So, the budget has been adopted. Where can you see what they procure and for what price? Fortunately, in Ukraine, public procurement can be monitored by everyone on Prozorro. But before you start, we strongly recommend spending an hour of your time to find out the procedure: what are thresholds, how to distinguish a tender and not a tender, and what is the difference between the expected cost and contract price.

Figured it out? Now you may proceed with studying search on Prozorro. Consider starting with something small and close to you: check procurements of your housing and utility service, the nearest hospital, or your child’s school. By the way, school procurements are often made by local education departments, not school administrations. You did not think it would be easy, did you?

Usually, Prozorro is enough to get started with procurements. But when you feel like a pro and want to move to a higher level, you may consider using BI Prozorro, a more advanced and powerful analytical instrument by DOZORRO TI Ukraine. There you can analyze procurements in dynamics, compare regions, and much more. However, you will need a couple of hours to figure it out.

So, you found violations in procurement. What next?

The algorithm of your actions will depend on violation. Before you start, we must warn you that the “Report violations” button of the State Audit Service in the top right corner of the website page is not the best way to contact auditors. While you’re welcome to use it for a request, it’s rare for auditors to thoroughly read these and even rarer for them to respond.

So we recommend to follow the link under the button which explains in what cases you may consider contacting auditors. They are, among others:

• procuring entity chose the wrong procedure, for example, direct procurement instead of special open bidding,
• procuring entity rejected the proposal although it met all the requirements,
• procuring entity did not reject the proposal although it had to because of some issues.

If you did follow the link, you may see that most other grounds for contacting auditors include violations in particular details of procurement procedure: deadlines, documents, etc. It takes more than one article to learn how to read tender documents and understand all the nuances of public procurement information.

What about overspending? Yes, you may contact auditors if you find overspending in procurement. For example, when the product price is significantly higher than market. For example, you read the repairs procurement estimate and found that foam blocks are three times more expensive than in online stores. You may also report overspending to the police and local prosecutor’s office. We recommend contact both them and auditors via email addresses of their branches in your locality. Auditors have their local offices.

And what if certain procurement is simply inappropriate during the war? If you believe that specific spending is very irrational, try contacting the procuring entity and its governing body first (for example, the city council, if appropriate). Neither the State Audit Service, the police, nor the prosecutor’s office have the authority to cancel procurement because it is irrelevant. This can only be done by the respective procuring entity.

Who can help?

You’ve probably already realized that procurement isn’t very easy? In fact, we are very lucky in Ukraine with e-procurements, as transparent as possible. In most countries they are only partially open.

It really takes time to figure it out. But as long as you’re just starting your journey as a public procurement monitor, you may ask for help. Try contacting public organizations monitoring procurements in your region. They are usually happy to receive a request. If you could not find any, contact us at DOZORRO on Facebook.

Journalists are another good option. Maybe there is a reputable media in your community which covers procurements from time to time. You may contact journalists if you come across suspicious tenders and have good reasons to see potential violations there.

Specialized NGOs and journalists have a lot of work to do but they are usually willing to help exposing complicated cases and contact regulatory and law enforcement authorities, and make the case public.

Do not forget about the power of social media. You may post the details of your discovery on Facebook or any other social media platform.

Here are some disclaimers (please read them, they are very important)

Always remember why we are trying to monitor procurements. We want to make Ukraine stronger, help it win the war, and use our very limited funds efficiently. Finding and spreading hype is a bad reason. Prevent violation is good.

That is why it is crucial to understand the field of your procurement monitoring. Or try asking for help from those who is good in that.

At DOZORRO, we have been monitoring procurements for seven years and have identified a number of rules that we try to follow:

1. Analyze carefully. Test hypotheses. Double check with your colleagues.

Being professional buyer is very difficult and not generously paid job. We do not want to give them hard times with unreasonable audits.

2. Ask procuring entities.

If you find violations, especially in an ongoing procurement, a procuring entity is the best candidate for elimination. Also, procuring entities may give you information unavailable on Prozorro. For example, not so long ago we thought that we had found an overspending in the procurement of a cleaning machine by Ukrzaliznytsia. It turned out however, that additional batteries were included. We rushed to communicate violation and we are sorry for that.

3. Don’t give up.

Not all reports from even our analysts and professional lawyers are responded to or lead to criminal proceedings. But the significant part still does. Over the past year alone, we have had 35 criminal proceedings opened based on our reports and auditors have confirmed violations on more than 180 reports. In another 42 cases, violations were corrected by the procuring entities. And this is the motivation not to give up and continue monitoring.