On Thursday, 4 October, members of the Ukrainian parliament will review draft law No. 8265, submitted by President Petro Poroshenko on 13 April 2018, in the first reading. Passage of amendments to the Law of Ukraine “On Public Procurement” and a number of other legislative acts will resolve a number of problems in the sector of public procurement. For instance, it will regulate pre-threshold procurement, improve the contesting procedure, allow businesses to fix technical errors in the documentation rapidly, introduce electronic catalogs and broaden the list of punishable violations on the part of procuring entities.
The Ukrainian chapter of the global anti-corruption network Transparency International urges MPs to support draft law No. 8265 in the first reading as a basis for further work.
What Draft Law 8265 Will Change:
- It will regulate “pre-threshold” procurement.
The Law of Ukriane “On Public Procurement” does not regulate the so-called “pre-threshold” amounts (up to UAH 200,000 for goods and services and up to UAH 1.5 million for works for regular procuring entities).
The draft law introduces the notion of “simplified” procurement. Procuring entities will handle “simplified” procurement through ProZorro for amounts over UAH 50,000. The procedure is similar to the open bidding procedure, but the timescales are shorter and there is no prerequisite of at least two participants. Pre-threshold procurement will provide small and medium enterprises with an opportunity for development and enable the government to buy goods at a competitive market.
- The participants will be able to fix technical errors within a day.
It is a common situation that participants make technical errors in tender proposals out of carelessness. Such proposals are subsequently rejected, procuring entities are forced to agree to higher prices, and the participants with the best offer lose their chance to conclude an agreement.
The draft law will allow the participants to fix errors within 24 hours of the moment of their identification. The list of documents that can be fixed will be limited to minimize the risk of manipulations.
- Complaints will be submitted through an online system.
Almost 30% of complaints submitted to the Board of the Anti-Monopoly Committee of Ukraine (AMCU) are not paid for. AMCU rejects such complaints, but the preparation of this decision takes time anyway.
The draft law offers to introduce an electronic system through which complaints can be paid for. Unpaid complaints will be automatically rejected by the system. It will reduce the workload of the AMCU Board and increase the number of reviewed complaints.
- There will be increased responsibility for violations
The draft law will amend Article 164 of the Code of Ukraine on Administrative Violations, which sets forth the liability for violations in the sector of public procurement. The current standard is ineffective, since it is not consistent with the Law of Ukraine “On Public Procurement.” For instance, violations that will be added to the list include groundless application of the negotiations procedure for procurement, groundless disqualification of a participant, groundless selection of the winner. The fine for failure to comply with AMCU decisions constitutes UAH 34-51 thousand.
- Electronic catalogs will be introduced
When there is procurement for a pre-threshold amount, procuring entities will be able to choose the respective product from electronic catalogs.
At the same time, the draft law contains provisions which must be improved upon if it is approved in the first reading. For instance, the current fee for submitting a complaint to the AMCU constitutes UAH 5,000 for procurement of goods and services and UAH 15,000 for procurement of works. The draft law proposes a new amount – 1.5% of the expected cost of the tender. Transparency International Ukraine believes that this price may restrict the participants’ right to defend their interests at “large” bidding, which can negatively influence the entire sector.
Passage of the draft law is a step towards reducing corruption, increasing transparency in the public procurement sector, economy of budget funds and effective work of the complaint review agency. We urge MPs to vote for draft law No. 8265. The proposed changes have been supported by all stakeholders and constitute an important, necessary component of public procurement.