In January 2026, the Education, Youth and Sports Department of Devladivka Village Council ordered fruits and vegetables from Ekofudtorg LLC at a contract value of UAH 201,000.

DOZORRO analysts reviewed the contract prices and identified a likely overpayment of UAH 59,000 — almost 30% of the total contract value.

The most glaring discrepancy involved white cabbage priced at UAH 60/kg — five times the market rate. According to Prozorro’s Market Price BI, the price in December stood at UAH 10/kg, rising to UAH 12.50/kg in January. State Statistics Service data confirms the same picture: the average nationwide price for white cabbage in December was UAH 10.07/kg. On this line item alone, the potential overpayment reached UAH 13,000.

Even more prominent was the case of bananas. The village council department planned to purchase them at UAH 200/kg — more than three times the going market rate. By comparison, bananas on Prozorro Market were priced at UAH 70–80/kg during the same period, while State Statistics Service figures for December put the average at UAH 61.61/kg. The potential overpayment on this item alone could have reached UAH 11,000.

In February, we wrote to the contracting authority requesting that prices be brought in line with market rates. That same month, the village council reported that it had conducted a review and contacted the supplier. In March, the parties signed a supplementary agreement reducing the contract amount without changing the delivery volumes. This prevented UAH 60,300 in ineffective spending.

Ekofudtorg LLC was registered in late 2024 in Kryvyi Rih. Its owner and director is Kostiantyn Moskalenko.

Criminal proceedings opened over rehabilitation equipment procurement

One of the most notable cases from March involves the procurement of rehabilitation equipment for the Yampil Territorial Hospital municipal non-commercial enterprise. In September 2025, the hospital signed a UAH 2.1 million contract with Oris Trade LLC, owned by Nataliia Bilokur.

In reviewing the cost estimate, DOZORRO analysts found significant price inflation risks. The total potential overpayment came to UAH 508,000 — approximately 24% of the contract value.

The single largest exposure was on the ZEPU-K2000B hand rehabilitation trainer, with a potential overpayment of UAH 435,000. Oris Trade LLC entered the unit price as UAH 820,050 VAT-inclusive, which included transportation and insurance, yet the same model is available on the market for at least half that amount. Oxydoc sells it for UAH 388,731; Rehamed for UAH 381,900; The Nine for UAH 380,000. Even accounting for additional costs, the gap with market prices is extraordinary.

Since the company had already received payment under the contract, influencing the situation through the contracting authority was not feasible. In March 2026, the DOZORRO team therefore referred the matter to the prosecutor’s office. Law enforcement responded by notifying us of an opened criminal proceeding. The UAH 508,000 figure has been counted as a prevention result in our March summary.

Contract terminated: UAH 4.1 million saved

Another case involves the reconstruction of a veterinary hospital building for use as a dormitory, contracted at UAH 37.6 million. In early 2025, Khotyn City Council’s City Development Agency municipal enterprise awarded the work to Mobile Mechanized Unit-47 LLC.

Analysis of this procurement identified a likely overpayment of UAH 4.1 million, or 11% of the contract value. In February of last year, the DOZORRO project contacted the contracting authority requesting a review of material resource prices. Since the contract price was fixed, this would have required a supplementary agreement. Instead, the City Development Agency responded that our calculations did not reflect market conditions. Notably, this is not the first time we have flagged potential overpayments in this institution’s procurements: back in March 2025, we reported a likely UAH 8.2 million overpayment across three reconstruction projects, including the dormitory conversion.

We returned to this case on multiple occasions — requesting acceptance certificates from the contracting authority and even approaching the prosecutor’s office — but received no response from law enforcement.

Ultimately, in early 2026, Khotyn City Council’s City Development Agency and Mobile Mechanized Unit-47 LLC terminated the contract. No new procurement has been announced to date. The termination prevented UAH 4.1 million in unnecessary expenditure.

Mobile Mechanized Unit-47 LLC was registered in Khotyn in 2020. The company’s owner is Mykhailo Biliaiev. 

Other notable cases from our Q1 2026 monitoring results are available in our February and January reports. 

This material is funded by the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.

How much was contracted 

According to BI Prozorro public analytics module, procurements for warning system modernization announced in 2025 had a total estimated value of UAH 1.4 billion, with one additional procurement worth UAH 66 million still active. Actual contracted amounts total UAH 528 million. The gap is explained by the fact that 42% of competitive procurements by estimated value were unsuccessful or canceled, and another 5% are still ongoing. Of the 54% of procedures that resulted in signed contracts, 15% were subsequently terminated — in part following findings by the State Audit Service. Note that this article concerns contracted amounts, not funds actually disbursed.

By contract value, 90% of procurements were conducted through special open tenders; the remaining 10% were direct award contracts. According to BI Prozorro, successful warning system modernization tenders attracted an average of 1.3 bidders — pointing to a near-total absence of market competition.

The largest contracting volume in 2025 was recorded in Kyiv Region at UAH 139 million, followed by Cherkasy Region at UAH 124 million and Mykolaiv Region at UAH 89 million. Vinnytsia Region came in at UAH 51 million and Chernivtsi Region at UAH 45 million. Zakarpattia Region recorded the lowest procurement volume — approximately UAH 98,00

What the top regions have in common

In four of the five largest procurements, the winner of contracts to upgrade territorial automated warning systems was Ukrzaliznychavtomatyka LLC. The company is modernizing warning systems in Kyiv Region for UAH 133 million, in Cherkasy Region for UAH 120 million, in Mykolaiv Region for UAH 86 million, and in Vinnytsia for UAH 49 million. The only exception among the top five is Chernivtsi Region, where a UAH 44 million contract went to Meteor IT LLC. Notably, for both Kyiv and Cherkasy regions, the project documentation for the modernization was developed by Ukrzaliznychavtomatyka itself.

Project timelines vary: Kyiv Region is due to complete works by August 31, 2026; Cherkasy and Chernivtsi regions by end of 2027; Mykolaiv Region by October 31, 2026; and Vinnytsia by August 2027.

Beyond the notable differences in contract values, Kyiv and Cherkasy regions stand apart in another respect: their approach to contract publication. The Kyiv contracting authority did not publish the contract, citing a determination by the Civil Protection and Defense Department of the Kyiv Regional State Administration that the document constitutes restricted-access information whose disclosure could pose a threat to national security. In Cherkasy Region, the contract was initially withheld without any explanation, though it was eventually published as part of a contract amendment. Mykolaiv and Chernivtsi regions, as well as Vinnytsia, published their contracts promptly, finding no grounds for withholding them.

Ukrzaliznychavtomatyka and its likely ties to a fugitive MP

Ukrzaliznychavtomatyka LLC effectively dominates the centralized warning system modernization market. Total contracted value since 2023 stands at UAH 433 million, of which UAH 7.1 million covers project documentation development and revision. In addition to the contracts mentioned above, the company has been modernizing warning systems in the Kamianka and Lutsk communities since 2024. Its market share speaks for itself: in 2025, Ukrzaliznychavtomatyka accounted for 74% of the total value of all contracts for such services.  

The company is registered in Kyiv and serves as a distributor of Polish Digitex warning systems. It is owned by Oil and Gas Technologies LLC, whose ultimate beneficiary is listed as Oleksii Kolesnyk. Although the company was founded in 2010, its procurement success only began in the summer of 2023. Prior to the full-scale invasion, it held just three public contracts totaling approximately UAH 16,500.

The company’s sharp business growth coincided with a specific political moment. In 2023, MP Serhii Shakhov of the Dovira parliamentary group began publicly pushing the warning system modernization agenda. In late March 2023, the NABU announced Shakhov as a wanted person, charging him with submitting false asset declarations concealing over UAH 60 million. 

Around the same time, hromadske journalists published an investigation alleging that Shakhov had lobbied the government — including in letters to Prime Minister Denys Shmyhal — to advance warning system upgrades in order to benefit his own company, which also had Russian ties.  The journalists suggested that Shakhov was promoting Ukrzaliznychavtomatyka through his adviser Mykola Sambozuk, who had previously run a similar business in Russia and, according to their reporting, obtained Russian citizenship in 2007.

DOZORRO analysts flagged the monopolization risk as early as 2023, noting at the time that the company had not yet gained significant traction with contracting authorities. As we can now see, that has changed — and the forecast proved accurate.

Excessive requirements in every tender 

A common thread running through the tenders won by Ukrzaliznychavtomatyka: not one was completed on the first attempt. Auditor interventions forced contracting authorities to cancel or annul procurements and re-announce them. The State Audit Service found irregularities in both tender documentation and bidders’ proposals. Notably, in nearly every announced procurement, potential participants raised questions about discriminatory requirements — with some submissions specifically mentioning Ukrzaliznychavtomatyka. This prompted DOZORRO analysts to examine the tender documentation across these projects.

The analysis revealed a systemic pattern: tender documentation containing conditions that restrict competition. In most cases, Ukrzaliznychavtomatyka was the only bidder — and the winner. 

Contracting authorities applied a set of requirements that created significant barriers to participation, particularly for small and medium-sized businesses. Tenders in Kyiv, Cherkasy, Chernivtsi, and Mykolaiv regions all required a special permit for working with state secrets.

A separate barrier involved strict conditions on equivalent equipment — applied by contracting authorities in Vinnytsia, Kyiv, and Chernivtsi. Bidders offering alternative equipment had to demonstrate full compliance with the project specifications, leaving virtually no margin for error. In practice, a simple comparison table — which contracting authorities did request — should have sufficed. But they additionally required guarantee letters or other supporting documents, making the conditions excessively burdensome. As a result, companies are effectively pushed to offer the exact equipment specified in the project documentation — often tied to a specific manufacturer — to avoid the risk of disqualification. This substantially narrows competition.

Among the excessive requirements was a mandatory package of seven ISO or DSTU certificates, including highly specific standards such as ISO 50001 (energy management) and ISO 41001 (facility management). This requirement was applied by contracting authorities in Vinnytsia, Kyiv, Cherkasy, and Mykolaiv. Several of these standards have no direct relevance to the installation of technical systems and appear to function as an additional filter that screens out participants without substantial resources.

Similar requirements recurred across the tender documentation of multiple regions — Kyiv, Cherkasy, Mykolaiv, and Chernivtsi, suggesting the use of coordinated approaches to documentation preparation. File metadata may point in the same direction: documents from Kyiv, Cherkasy, and Mykolaiv regions list “ThinkPad” as the file owner, which may indicate the use of a common template or preparation of documentation outside the respective regional organizers.

Other potentially discriminatory conditions also appeared. The Chernivtsi procuring entity required a site visit certificate bearing the contracting authority’s signature — without which submitting a bid was effectively impossible. In Vinnytsia, the contracting authority required authorization letters from equipment manufacturer Digitex, making participation contingent on the goodwill of a third party — the manufacturer or its official representative. The same contracting authority also required proof that measuring instruments — a megohmmeter, ground resistance meter, and multifunction electrical measuring device — were in working order and had been verified, supported by calibration certificates from authorized bodies such as the state enterprise Ukrmetrteststandart.  Companies were further required to demonstrate their right to conduct such measurements through a certificate of recognized measurement capabilities with appendices. While such documentation may indeed be necessary at the work execution stage, demanding it at the proposal submission stage is excessive and narrows the pool of potential participants.

 

Requirement	Vinnytsia	Kyiv Region	Mykolaiv Region	Cherkasy Region	Chernivtsi Region
Set of 7 ISO certificates (9001, 14001, 45001, 50001, 8965, 41001, 22301)	YES	YES	YES	YES	NO
Strict Equivalent requirement (comparison table + guarantee letter or other documents)	YES	YES	NO	NO	YES
Authorization letter from manufacturer (Digitex)	YES	NO	NO	NO	NO
Site visit certificate	NO	NO	NO	NO	YES
Winner	Ukrzaliznychavtomatyka LLC	Ukrzaliznychavtomatyka LLC	Ukrzaliznychavtomatyka LLC	Ukrzaliznychavtomatyka LLC	Meteor IT LLC

Last year, Ukrzaliznychavtomatyka also attempted to enter the Zhytomyr Region market — without success. The contracting authority rejected its bid due to inaccuracies in resource documentation. DOZORRO analysts reviewed that tender and found no overt discriminatory requirements, with the exception of the state secrets permit requirement, which potentially narrows the field of participants.

Another large-scale tender is currently underway: the warning system upgrade in Kremenchuk. The Civil Protection and Defense Department of the Kremenchuk City Council plans to sign a UAH 61 million contract with Compass Engineering LLC, even though another participant offered to do the work at a lower price — a bid that was legitimately rejected for failing to meet the technical requirements of the tender documentation. Our analysis of that tender documentation found no discriminatory conditions.

Conclusion

The overall picture is troubling: the warning system modernization market is effectively consolidating around a single company — Ukrzaliznychavtomatyka LLC. Journalists flagged this risk back in 2023, and it now appears to be materializing. 

One contributing factor is the approach to tender documentation. Procuring entities have consistently written in complex and highly specific requirements — from extensive certificate packages to strict limitations on equivalent equipment and additional supporting documents. And crucially, these approaches recur across multiple regions. The result is competition that is largely formal: alternative suppliers have almost no real chance, and the winner is often predictable. The situation is further complicated by the fact that the same company frequently participates in developing the project documentation against which the works are subsequently tendered.

Taken together, this raises an uncomfortable but logical question: are we looking at a market that has organically consolidated around a strong player — or a system in which the conditions are being tailored to a specific company?

This material was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev.

The material was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

Summary

Over 14 months, contracting authorities concluded 257,000 above-threshold direct award contracts totaling UAH 401.7 billion. This represents approximately 6% of the total number of contracts in the system and nearly 28% of their aggregate value. While the number of such procurements is relatively modest, their financial scale is significant.

At the same time, almost half of the total value (43.3%) of above-threshold direct contracts relates to the procurement of natural gas by a contracting authority on which the government has imposed public service obligations. These are reports on the sale of gas within the Naftogaz group, which became mandatory in 2023. Such procurements may distort the statistics and overstate the problem of direct non-competitive awards in Prozorro, including in the eyes of international partners. 

Overall, the situation regarding non-competitive above-threshold procurement would be improved by reinstating the negotiated procedure. Excluding natural gas procurement within the Naftogaz group, approximately 70% of contract value currently consists of procurement conducted on grounds for which the negotiated procedure was previously required. The negotiated procedure provides for consultations with several suppliers where possible, and for a review mechanism, both of which reduce the risk of infringements and inefficient decisions.

Direct awards can be retained as exceptions for circumstances arising specifically from martial law — for example, where a contracting authority is located in an area of active hostilities. At the same time, a number of grounds should be reconsidered altogether — whether they are in fact necessary.

Volumes and dynamics of procurement

From July 30, 2024, to September 30, 2025, contracting authorities concluded 257,000 above-threshold direct award contracts. Their value at the time of the study stood at UAH 401.7 billion — nearly 28% of the aggregate current value of contracts concluded during that period. While their value share is significant, the number of such procurements is moderate, at 5.87% of the total.

Contracting authority activity is largely governed by the budgetary and planning cycle. A gradual increase in the number of lots and total contract value is observed through to January 2025, followed by a steady decline through March. This pattern mirrors the general trend across all procurement methods and may be explained by a combination of seasonal factors, the desire to use up budget appropriations before the year-end, and procurements for the new year. In the seasonality analysis, we excluded reports on natural gas procurement within the Naftogaz group, as they significantly distorted the statistics.

This means that the planning and management of budgetary resources in the direct award segment of procurement require heightened attention during the peak season, in order to prevent inefficient use of funds and potential procurement risks.

Grounds applied by contracting authorities

Over the 14 months under review, 84.4% of the value of above-threshold direct awards fell within the five most common grounds out of nearly three dozen. These were: 

1. Procurement of natural gas by an entity subject to public service obligations — 43.3%. In four such procurements totaling UAH 82.8 billion, the contracting authority indicated an incorrect ground in the electronic field; these were added manually on the basis of the justification document.
2. Absence of competition on technical grounds — 19.1%.
3. Protection of critical infrastructure and energy facilities — 8.1%.
4. Procurement on grounds of urgent need — 7.6%.
5. Open tendering canceled due to absence of tenders — 6.4%.

By number of lots, four grounds account for 78.1% of procurements:

1. Absence of competition on technical grounds — 29.9%.
2. Open tendering canceled due to the absence of tenders — 18.3%.
3. Procurement on grounds of urgent need — 15.7%.
4. Legal services — 14.2%.

Each of these grounds has its own application characteristics and associated risks.

On the ground of absence of competition on technical grounds, contracting authorities may conduct procurement from natural monopolies (where the absence of competition has been formally recognized by the Antimonopoly Committee) or in other circumstances. To roughly estimate the share of procurements conducted specifically from natural monopolies, we used the AMCU’s consolidated register of natural monopolies as of October 31, 2025. They account for 56.1% of procurements on the ground of absence of competition on technical grounds by number of lots, and 51.8% by value.

In other cases, the absence of competition may arise from vendor lock-in, where changing a contractor is disadvantageous or altogether impossible. In IT service procurement, for example, such dependency may arise from the architecture of the IT product, the absence of comprehensive technical documentation, or the use of niche programming languages. The effective monopolization by developers of the right to further develop solutions they have created can lead to rising service costs and reduced motivation for the contractor to innovate or improve quality in the absence of competition. This issue is examined in greater detail in the study on IT procurement in Prozorro. That said, not every restriction of competition is unambiguously negative or the result of bad faith on the part of the contracting authority or supplier. In a number of situations — in particular those relating to national security, defense capability, or the protection of critical infrastructure — the use of proprietary technical solutions, closed architectures, or a limited pool of contractors may be objectively justified and aimed at minimizing risks to the state. The same applies to other procurement subjects.

In direct contracts on grounds of urgent need, there is a risk that the need is not in fact genuinely urgent — or that it became urgent as a result of the contracting authority’s own actions in failing to procure earlier. The number of procurements on this ground increases toward the end of the budgetary year — between September and December, that number rises by approximately 50%. It is therefore most likely that contracting authorities also invoke this ground simply when they need to use up appropriations within the budgetary year. 

When a contracting authority concludes a direct contract because no one submitted a tender, the terms of that direct award must be identical to those of the original tender. However, whether contracting authorities comply with this in practice — for example, whether they require counterparties to provide all the certificates they requested from bidders in the failed competition — is difficult to verify, since only the contract itself is published in the system. There are instances where contracting authorities conclude several contracts instead of one. 

Among direct contracts for legal services, high-volume procurement of small amounts is combined with a number of large strategic contracts. 65% of total procurement value is concentrated among five contracting authorities: Ukrnafta JSC, National Joint Stock Company Naftogaz of Ukraine, Dnipro Metropolitan Municipal Enterprise, and the Eastern and South-Eastern Interregional Centers for the Provision of Free Legal Aid. By number of lots, however, nearly 97% belong to the last two legal aid centers, which systematically procure legal representation services for the provision of secondary free legal aid. We also investigated how other such inter-regional centers procure legal services. It emerged that they too conclude numerous small direct contracts en masse, but do not indicate the ground in the electronic field. In total, the number of such lots from legal aid centers over the period under review was nearly 73,000, totaling UAH 646 million. 

In the case of legal services, the question arises as to whether direct contracts should in fact be permitted at all for such services. Legal advisory and legal representation services, for example, are procured competitively. Similarly, competitive procedures are used to procure a range of other high-expertise services — such as consulting or audit.

What is being procured

Contracting authorities most frequently used above-threshold non-competitive procurement for the purchase of services. Services account for 57.47% of all such procurements — over 147,000 of the 257,000 lots. In monetary terms, however, services represent only 19.7% of the aggregate contract value. This indicates that the majority of service procurements are small in value but large in volume. 

The situation with goods is quite different. Although fewer in number than services — 40.15% of the total, or over 103,000 lots — goods account for nearly two-thirds of the total value of direct contracts, approximately UAH 255 billion.

Works have the smallest share — only 2.38% by number, or approximately 6,000 lots. In value terms, however, they account for 16.88% of all above-threshold non-competitive procurements (nearly UAH 68 billion). 

If one drills down into CPV codes, the value of direct awards is heavily concentrated in three categories, which together account for over 69% of total contract value. Certain categories generate a substantial share of contract value despite a relatively low number of lots.

Gaseous fuels (09120000-6) is the key category by financial volume. Despite its modest share of the total number of lots, gas accounts for the largest share of contract value. One reason is the obligation on Naftogaz Trading LLC, a gas supply company, to report on its procurement of natural gas from its own parent company and other entities within the group. This subsidiary of NAC Naftogaz of Ukraine conducts wholesale sales of natural gas to industrial consumers, budget institutions, and suppliers.

It is also worth noting that nearly 8,700 gas supply contracts were concluded via direct award following unsuccessful competitive tendering. During the period under review, only 8.3% of competitive procurements of this commodity were successfully completed.

Ukraine has committed to ensuring a free market for electricity and gaseous fuels. At the same time, the government has imposed public service obligations on Naftogaz Trading LLC — the company is required to supply natural gas to budget institutions at a preferential tariff. No separate rules have been established for this situation, so contracting authorities are required to launch open tendering, which no one participates in due to the low estimated value, and then conclude a direct contract with the Naftogaz company at a low price. Occasionally — in summer, for example, when the price of the commodity is lower — competitive tendering does succeed. Overall, however, considerable resources are expended on formal procedures.

Construction works (CPV 45000000-7): For the analysis of this sector, we consolidated all procurements by the second digit of the CPV code, since the procurement item here is defined by reference to the object rather than the classifier. Three grounds account for 75.7% of the total value of above-threshold direct awards in this sector, while together representing only 51.3% of the number of lots. These are: protection of critical infrastructure and energy facilities, urgent need, and the procurement of additional works under the main contract (up to 50%). The need to procure additional works indicates potential issues with the quality of project design and the accuracy of cost estimates at the planning stage, including owing to the complexity of such projects. 

Direct contracts on grounds of absence of any tender submission are high in number but account for a relatively small share of value. Insufficient competition in this sector may point to potential barriers to participation — for example, excessive requirements in tender documentation — or to a limited pool of contractors. 

Steam, hot water, and associated products (09320000-8) are characterized by a high share of procedures conducted on the ground of absence of competition on technical grounds. This is consistent with the nature of the market, where supply is often provided by local monopolies and the possibility of choosing an alternative supplier is limited.

Although the categories Electrical energy (09310000-5) and Distribution of electrical energy (65310000-9) belong to the same sector, they exhibit a different structure of grounds for above-threshold direct awards. In electricity procurement as a commodity, one ground dominates by a wide margin (approximately 70%), both by value and by number of procedures — namely the conclusion of a contract with a supplier of last resort or a universal service provider. A significant share (21%) also relates to absence of competition on technical grounds and cancellation of tendering due to absence of tenders. This structure indicates that in this category the use of direct contracts is substantially dependent on the quality of procurement planning and the level of market activity among suppliers.

By contrast, electrical energy distribution services within a given territory are provided by a single distribution system operator, and tariffs are set by the state regulator. In these circumstances, the predominance of the ground “absence of competition on technical grounds” — 95.5% by number and 97.6% by value of contracts — is objective in nature and results from the natural monopoly position of the relevant operators. 

Thus, despite their sectoral proximity, these two categories exhibit different models of non-competitive procurement and require different approaches to risk assessment.

Since some of the grounds for above-threshold non-competitive procurement are tied to the subject matter of the procurement, the presence of certain categories at the top was expected — for example, natural gas or legal services. Overall, the bulk of above-threshold direct contracts relates to the procurement of various energy carriers. 

In each category, a few principal grounds for direct contracts predominate. The choice of which to invoke may, however, be influenced by a variety of circumstances: technical constraints, absence of competitors, or urgent needs.

Contracting authorities do sometimes indicate incorrect grounds. For example, gaseous fuel was purchased under the ground for the procurement of hematopoietic stem cells. At the same time, among contracts for natural gas with suppliers subject to public service obligations, contracts for the supply of gas to schools do appear. However, such instances were not sufficiently widespread to have a material effect on overall statistics by value.

Helicopters, airplanes, spacecraft, and other motor-powered aircraft (34710000-7): Procurements in this category are primarily directed at meeting the urgent needs of the Armed Forces of Ukraine or are accounted for by contracting authorities located in areas of active hostilities.

Since some of the grounds for above-threshold non-competitive procurement are tied to the subject matter of the procurement, the presence of certain categories at the top was expected — for example, natural gas or legal services. Overall, the bulk of above-threshold direct contracts relates to the procurement of various energy carriers. 

In each category, a few principal grounds for direct contracts predominate. The choice of which to invoke may, however, be influenced by a variety of circumstances: technical constraints, absence of competitors, or urgent needs.

Contracting authorities do sometimes indicate incorrect grounds. For example, gaseous fuel was purchased under the ground for the procurement of hematopoietic stem cells. At the same time, among contracts for natural gas with suppliers subject to public service obligations, contracts for the supply of gas to schools do appear. However, such instances were not sufficiently widespread to have a material effect on overall statistics by value.

Monitoring of direct contracts

The State Audit Service covered 1,062 lots — 0.41% of above-threshold direct awards conducted during the period under review — through monitoring. In competitive procurement, monitoring coverage is nearly seven times higher, at 2.73% of the total number of procurements eligible for monitoring. The same trend is observed in value terms: monitoring covers only 2.3% of the aggregate value of above-threshold direct award contracts, compared with 20.9% in the competitive segment. Even excluding the value of natural gas procurement within the Naftogaz group, as well as procurements from natural monopolies, suppliers of last resort, and universal service providers, coverage reaches only 5% of the value of direct contracts. This gap relative to competitive procurement indicates that direct awards remain largely outside the monitoring focus. Yet they too require oversight, since they do not provide for competition or safeguards such as review before the AMCU. 

The largest monitoring volumes relate to the construction sector (CPV 45) and the energy sector (CPV 09), where contract values run into the billions of hryvnias. Overall, monitoring activity is concentrated in sectors with high financial exposure and an elevated risk of inefficient use of funds. Significant attention is also devoted to industrial machinery (CPV 42) and repair and maintenance services (CPV 50).

At the same time, the top three sectors by number of monitoring instances include accommodation, catering, and retail trade services (CPV 55), with a combined value of over UAH 90 million. In 98% of cases, these involve catering services for educational establishments. Such procurements were monitored primarily by the directorates of the Western Office of the State Audit Service, in particular in Khmelnytskyi and Ternopil regions, where they were examined three times more frequently than construction procurements. Violations found under this CPV related predominantly to the failure to publish, or untimely publication of, the justification for the procurement ground. Accordingly, most monitoring instances resulted in auditors requiring explanatory work and training of authorized persons to be carried out.

Overall, violations in above-threshold direct awards were identified by auditors during monitoring in 67.8% of cases. This figure is slightly higher than in competitive procurement, where it stands at 61.3%. While a gap of 6 percentage points is not critically large, it may indicate that direct non-competitive procurement carries elevated risks of non-compliance with legislation. It is important, however, to understand what types of violations auditors are actually identifying. Doing so comprehensively is difficult, since in the electronic field on Prozorro, the State Audit Service almost invariably classifies the type of violation as “Other violations of procurement legislation,” and details must be sought manually in the text of the audit finding. It would therefore be worthwhile to update the violation categories in the system and apply them consistently, so as to enable analysis of the problems arising in direct procurement.

In summary, above-threshold direct awards warrant greater monitoring coverage. The State Audit Service generally selects sectors for monitoring well — concentrating on construction, energy, and related sectors, where procurement volumes are largest and corruption risks are highest. The Western Office’s excessive focus on catering service procurements for educational establishments is questionable. Such procurements are not particularly widespread, are comparatively small in value, and the violations associated with them largely concern failure to publish or untimely publication of information. The Office would therefore benefit from refining its methodology for selecting above-threshold direct awards for monitoring.

Contract modifications

Modifications were made to contracts in 36,700 lots, representing over 14% of the total number of above-threshold direct award procurements. The aggregate value of modified contracts reached UAH 140 billion, or nearly 35% of the total value of all contracts in this segment. By comparison, in competitive procurement, modifications occurred more frequently: they affected 21.8% of lots and 44.7% of the total value of contracts over the corresponding period. The data indicate that while contract modifications in above-threshold direct awards are recorded less frequently than in competitive procurement, their financial scale remains significant. The majority of modified contracts relate to cases where the ground for using direct awards was absence of competition on technical grounds (41.81% of all modified contracts) or absence of tenders in open tendering (32.53% of all modified contracts). Their shares are high because these are overall the most common grounds for above-threshold direct awards. If one looks at what share of contracts were modified within each direct award ground, the leaders are as follows:

• Procurement of natural gas by an entity subject to public service obligations — modifications in 38.34% of contracts (41.2% for Naftogaz group procurements specifically)
• Procurement of additional works or services from the same economic operator, up to 50% of the price of the previous/existing contract — 28.11% of contracts
• No tender submitted — 25.38%.

In order to assess the justification for these modifications and the potential risk of abuse, it is necessary to conduct further in-depth analysis of their substance.

Comparison with the negotiated procedure 

The negotiated procedure was abandoned in the first year of the full-scale invasion in favor of an even more flexible mechanism. Under Resolution No. 1178, the grounds for the negotiated procedure became the grounds for direct awards. In the early period, such changes may have been justified to meet the needs of contracting authorities, in particular for defense, energy, and critical infrastructure. However, this expansion of contracting authority discretion creates risks of manipulation and circumvention of competitive procedures, whereby a portion of procurements are concluded as direct contracts without adequate scrutiny of the grounds invoked.

Over the comparable period from July 30, 2020, to September 30, 2021 — the years immediately preceding the full-scale invasion — contracting authorities conducted 100,600 negotiated procedures, under which contracts totaling UAH 101.7 billion were concluded. This amounts to an average of 7,200 contracts per month valued at UAH 7.3 billion. This is considerably lower than the current figure — during the period under review, an average of 18,400 above-threshold direct award contracts per month were concluded, valued at UAH 28.7 billion. In other words, the number of such lots has more than doubled overall, and the contract volume has increased nearly fourfold. Two factors should of course be taken into account:

• High inflation over recent years, and
• The increase in the number of grounds for above-threshold direct awards.

In both the negotiated procedure and the direct awards conducted under the wartime special rules, absence of competition on technical grounds remains the leading ground by number and by value of expenditure. Under the negotiated procedure, this ground accounts for nearly 52% of lots and over 50% of contract value. The same ground also ranks first in direct awards under the special rules — nearly 30% of contracts and 19% of total contract value. The list of the most common grounds under the negotiated procedure, which together account for 95.7% of contract value, is as follows: 

1. Absence of competition on technical grounds — UAH 51.8 billion (50.9%) by contract value and 52% by number of lots.
2. No tender submitted — UAH 21.4 billion (21%) and 30% of lots.
3. Need to carry out additional construction works — UAH 15.6 billion (15.3%) and 2.5% of lots.
4. Urgent need (across all sub-paragraphs of this ground in the Law) — UAH 6 billion (5.9%) and 3.9% of lots. 
5. Need to protect intellectual property rights — UAH 2.6 billion (2.6%) and 2.2% of lots.

By type of procurement subject, the distribution in negotiated procedures is similar to that in direct contracts. The only material difference was in the value of goods and services. Previously they accounted for 37% and 48% of contract value respectively, whereas now goods take a larger share — 63% versus 20%. 

The largest expenditure under the negotiated procedure was also concentrated in energy resources and construction. At that time, however, natural gas did not dominate contract values to nearly the same extent. Reporting on natural gas procurement within the Naftogaz group did not yet exist, and procurements from the supplier of last resort were also significantly smaller in volume.

Excluding gas procurement within the Naftogaz group, grounds on which contracting authorities previously conducted the negotiated procedure currently account for 70.2% of the value of above-threshold direct awards. This means that a substantial share of the direct procurement market could potentially have been channeled through a more controlled procedure that ensures transparency and competitiveness.

The application of the negotiated procedure offers significant institutional advantages: it allows for consultations with several potential suppliers prior to contract conclusion and provides a mechanism for the review of decisions. Even where review is rare — occurring in fewer than 1% of cases — the very existence of this instrument has a deterrent effect and reduces the risk of non-competitive procurement, including procurement justified by an alleged absence of competition.

Reinstating the negotiated procedure can thus serve as an effective mechanism for enhancing transparency and minimizing risks in the direct award segment, where oversight and competition are currently limited.

Conclusions

From July 30, 2024 to September 30, 2025, contracting authorities concluded 257,000 above-threshold direct award contracts totaling UAH 401.7 billion. This represents approximately 6% of the total number of contracts in the system and nearly 28% of their aggregate value. While the number of such procurements is relatively modest, their financial scale is significant.

Nearly half of the total value (43.3%) of above-threshold direct awards relates to natural gas procurement by a contracting authority on which the government has imposed public service obligations — that is, to reports on the sale of this commodity within the Naftogaz group. This raises the question of whether such reports on Prozorro are necessary at all: prior to 2023, they were not published.

A large volume of gas procurement — 8,700 contracts — is also concluded as direct awards following unsuccessful tendering. Contracting authorities succeeded in completing only 8.3% of such competitive procurements. A solution must be developed with the involvement of both the Ministry of Economy and the Ministry of Energy, since a quasi-free gas market has now taken shape in public procurement: contracting authorities nominally have the option of purchasing from any supplier, but are in practice compelled to conduct fruitless tendering.

Overall, the situation regarding non-competitive above-threshold procurement would be improved by reinstating the negotiated procedure. Excluding natural gas procurement within the Naftogaz group, approximately 70% of contract value currently consists of procurement conducted on grounds for which the negotiated procedure was previously required. The negotiated procedure provides for consultations with several suppliers where possible, and for a review mechanism, both of which reduce the risk of infringements and inefficient decisions.

Particular attention should also be paid to procurement on grounds of urgent need — the use of this ground increases by approximately 50% toward the end of the budgetary year. It is therefore likely that a portion of such procurements are conducted not so much because of genuinely urgent circumstances as because of budgetary management challenges. This, however, requires further investigation.

In addition, it would be advisable to technically link, within Prozorro, unsuccessful open tendering to the subsequent non-competitive procurement conducted as a result of its cancellation. This would enhance the transparency of such procurement and improve oversight of contracting authorities’ compliance with the terms of the original tender in the context of direct awards.

Direct awards can be retained as exceptions for circumstances arising specifically from martial law — for example, where a contracting authority is located in an area of active hostilities. At the same time, a number of grounds should be reconsidered altogether — whether they are in fact necessary. Some grounds have been indicated in the system in only a handful or a few dozen procurements. It would also be appropriate to explore alternative procurement methods for the purchase of free legal aid services — for example, framework agreements. 

For both the negotiated procedure and direct contracts to function effectively, it is important to train contracting authorities — in particular on how best to determine the value of such contracts and select a supplier.

Finally, above-threshold direct awards are currently subject to monitoring at a rate seven times lower than competitive procurement — only 2.26% of value compared with 20.9%. They require greater oversight, with a focus on higher-value procurements and material violations. 

This research was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev.

The research was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

This research was developed by

Team lead: 

Ivan Lakhtionov, Deputy Executive Director of TI Ukraine for Innovative Projects

Authors of the research:

Pavlo Dehtiariov, researcher of DOZORRO TI Ukraine project

Kateryna Rusina, Project Manager at DOZORRO

SUMMARY

More than half (55%) of the hard coal procurements checked contained unlawful requirements to provide additional documents and set extremely short deadlines for their submission — conditions that are potentially discriminatory. 

Draft contracts frequently also included provisions under which failure to submit documents within the short deadline was automatically treated as a written refusal to conclude a contract, resulting in the rejection of the tender and disqualification of the participant.

In the representative sample, winning tenders in procurements with unlawful requirements and disqualifications were on average nearly 40% more expensive than the lowest-priced tenders that contracting authorities had rejected.

This practice demonstrates that the simplified RFP procedure sometimes fails to function as intended and partially undermines the logic of the electronic catalog as a fast and accessible procurement tool. To enhance transparency in Prozorro Market procurement, the DOZORRO TI Ukraine project recommends the following:

1. Closing the hard coal category in Prozorro Market.
2. Introducing a mechanism for challenging procurement requirements, which would give businesses a means of protecting their interests and could significantly reduce the risk of abuse. 
3. Enabling monitoring of RFPs by the State Audit Service, to bring this procurement under oversight.
4. Granting the Ministry of Economy the authority to approve standard contracts for specific commodity categories, thereby simplifying their preparation and ensuring legislative compliance, and converting them into electronic contracts.
5. As electronic contracting develops, introducing automated pre-screening of draft contracts in the electronic catalog that, upon detecting potentially unlawful language, would generate alerts for supervisory authorities.
6. Developing guidance notes for authorized persons at contracting authorities, with recommendations on preparing and conducting procurement through the e-catalog.

Together, these measures can make Prozorro Market procurement more transparent, predictable, and user-friendly for both contracting authorities and market participants.

What makes Prozorro Market procurement distinctive

The specifics of procurement through the e-catalog (Prozorro Market) are governed by a separate Procedure for the Formation and Use of the Electronic Catalog (the Procedure), approved by Cabinet of Ministers Resolution No. 822 of September 14, 2020. The core idea behind this method is to simplify and expedite procurement. Qualification — that is, the verification of supplier documents — is handled by the catalog administrator. RFPs are not subject to auditor monitoring, and participants have no right to challenge either the terms or the decisions of contracting authorities. 

An RFP is generated by completing electronic forms in which the contracting authority specifies a limited set of details: the name of the procurement item, estimated value, quantity, delivery period and location, payment terms, and the deadline for submitting price proposals. 

When publishing an RFP, a contracting authority may only specify information on the specifications of the goods and their permissible values within the item specification set by the catalog administrator. The government recently amended the Procedure (Cabinet of Ministers Resolution No. 33 of 14 January 2026), further specifying the list of details that may be indicated. It was clarified that, in addition to the information already mentioned, a contracting authority may specify the delivery terms, the amount, type, period, and conditions for providing and returning contract performance security (where it requires such security to be provided), as well as a requirement that the country of origin may not be the Russian Federation, the Republic of Belarus, or the Islamic Republic of Iran.

The draft contract, which forms part of the RFP, must not conflict with the information the contracting authority has entered in the electronic fields, and may contain other conditions that are provided for by law in respect of such a contract and that the contracting authority considers necessary for the performance of the contract during its term. It is prohibited to include in an RFP requirements directed at the procurement participant or the selected winner, or to demand any additional documents not provided for by the Procedure. This is a prerequisite for the transparency of such procurement and allows potential suppliers to properly assess its terms and make an informed decision on whether to participate.

Hard coal procurement through RFPs

This study focuses on CPV class “Solid fuels” (code 09110000-3), with an additional targeted sample specifically of hard coal procurements conducted through RFPs on Prozorro Market. For the analysis, we selected procurements announced between September 1, 2024, and September 30, 2025. 

The total number of lots included in the analysis is 858.

For coal procurement, contracting authorities opt for the RFP method twice as often as for open tendering — Prozorro Market accounts for about 64% of such lots. The estimated value of RFP-based procurements is also twice as high, representing 62% of the value of competitive coal orders. Significantly more participants come forward for Prozorro Market procurements — an average of 6.58, compared with 2.04 in open tendering. However, the number of disqualifications is also much higher. 

Where contracting authorities reject 16.5% of tenders in open tendering, the corresponding figure in RFPs is approximately 55%. It is important to note in this context that in open tendering, approximately 22% of lots are accompanied by complaints, which underscores the significance of the review mechanism as an instrument for overseeing the transparency and openness of procurement.

All profiles in the coal category on Prozorro Market now require goods to comply with the DSTU 7146:2010 standard (the Standard). Under the Standard: 

• When concluding a coal supply contract for household needs, a certificate of genetic, technological, and quality characteristics must be presented (clause 7.10). In practice, however, the application of this provision of the Standard creates a conflict in law enforcement, since the Procedure expressly prohibits the demand for any additional documents under the RFP. 
• A coal consignment is considered accepted for dispatch once a composite commercial sample has been taken from it in accordance with DSTU 4096 and a quality certificate has been issued (clause 7.3). Accordingly, this certificate may be requested at the time of delivery.

The requirement to provide these additional documents occasionally appears in lot notes — in 6% of procurements. These are optional fields in which contracting authorities may include supplementary information about the procurement — for example, drawing potential suppliers’ attention to terms of particular importance to them. However, in addition to established documents, contracting authorities in 1.4% of lots also required additional documents not covered by the Standard. Notes carry no legal force, but this already reveals at this stage that some contracting authorities conducting coal procurement tend to impose excessive requirements on potential bidders that are not provided for by law.

 

Additional requirements in draft contracts 

For the detailed analysis, we randomly selected 270 lots from the full dataset of 858. The sample was calculated using a 95% confidence interval and a 5% margin of error. The sample is therefore representative and reflects the overall picture of coal procurement through Prozorro Market.

Under the legislation in force at the time of the procurements under review, an RFP must not contain requirements directed at the supplier or any documents not provided for by the Procedure. In the draft contract, as elsewhere, a contracting authority may specify only information on the characteristics of the goods and their permissible values within the item specification set by the administrator.

The Standard does not require any documents to be provided in respect of coal other than the certificate of genetic, technological, and quality characteristics at contract signing, and the quality certificate for the coal consignment at delivery. Accordingly, only the certificate of genetic, technological, and quality characteristics and contract performance security in the form of a bank guarantee may lawfully be required at the contract conclusion stage (Article 27(1) of the Law on Public Procurement). The right to require a bank guarantee is now also expressly provided for in the amended Procedure — the contracting authority may specify in the draft contract the amount, type, period, and conditions for providing and returning such security. Any other documents demanded from participants or the selected winner that are not provided for by law are unlawful.

The findings, however, point to systematic non-compliance with these requirements. The documents most frequently demanded by contracting authorities in draft coal supply contracts were as follows.

Overall, 55% of draft contracts (148) in the sample contained requirements to provide additional documents not provided for by either the Procedure or the Standard. In isolated cases, these were manifestly excessive and included documents with no functional connection to the subject matter of the procurement — for example, a certificate of proficiency in the state language, copies of the coal producer’s financial statements for prior years, or an expert market assessment. In the majority of procurements, however, the violations consisted in requirements to provide documents that formally relate to the supplier’s operations but do not affect the physical or quality characteristics of the goods and are not provided for by law, in particular, quality management system certificates, proof of experience in performing similar contracts, or extraction permits. This points to a systemic and uncontrolled expansion of supplier requirements. A full list of documents whose provision was recorded in the study is available via the table at the link.

In practice, contracting authorities are using the draft contract as a tool for introducing additional barriers to participation — contrary to the simplified nature of the RFP procedure and creating disproportionate and discriminatory conditions for suppliers. This eliminates competition, impedes access for bona fide participants, and undermines the logic of the e-catalog as a fast and transparent procurement tool.

 

When additional documents must be submitted

The review of draft contract terms also revealed that in 52% (141) of procurements, contracting authorities set extremely short deadlines — between 1 and 48 hours — for submitting an additional, sometimes excessive, list of documents required for contract conclusion.

Such tight timeframes place suppliers on an unequal footing, functioning as a barrier and a covert mechanism for selecting a predetermined winner while screening out those objectively unable to meet the requirements in time.

In this context, it is important to determine from what moment the clock actually starts running. The analysis shows that contracting authorities use one of two reference points: 

• the opening of proposals, which virtually coincides with the submission deadline;
• the determination of the selected winner (receipt of an automated system notification).

When publishing an RFP, a contracting authority may set the proposal submission deadline at its own discretion, subject to the minimum requirements of clause 57 of the Procedure — the deadline may not be less than two working days from the date of publication. Formally, this requirement may be satisfied even where the deadline falls on late evening, midnight, or a weekend. 

Particular concern is raised by the combination of nighttime proposal openings and extremely short deadlines. In 25% of lots with short deadlines, suppliers are given between 1 and 4 hours to provide additional documents after the opening of proposals or the determination of the winner. In half of those cases, the proposal submission deadline and automatic opening fall between 11:00 p.m. and 01:00 a.m. compelling suppliers to submit documents during nighttime hours when most responsible personnel are unavailable. 

As regards the moment of determining the selected winner, under clauses 61–62 of the Procedure the winner is determined automatically upon expiry of the submission deadline and evaluation by the electronic system. In practice, however, this long remained in a gray area, with two competing interpretations: immediately upon opening of proposals, or upon the contracting authority’s confirmation. This has now been resolved. Under the amended clause 62, the contracting authority determines the winner and records its intention to conclude a contract in a protocol that is automatically generated and published in the system. Notification of intent is sent automatically within one day of publication. The start of the compliance period is therefore now more transparent and clear to all suppliers.

Even so, where contracting authorities indicated that the winner would be determined “upon receipt of a system notification,” the combination of short deadlines and uncertainty about when that notification would arrive created additional pressure. Winners were compelled to await confirmation without being able to predict the precise start of the compliance period, making timely preparation of documents more difficult. In any case, requirements to provide excessive or unlawfully demanded documents remained unlawful regardless of how that moment was defined. 

Imposing additional requirements through the draft contract not only constitutes a procedural violation but also contradicts the fundamental principles of contract law and public procurement. Contract terms apply only to the parties that have actually concluded the contract. 

Equally legally incorrect is the widespread practice of including provisions such as: “In the event that the Contracting Authority is not provided with such documents (as defined in the draft contract), the Contracting Authority shall treat this as a written refusal by the participant to sign the contract, and shall accordingly reject such participant’s proposal pursuant to subclause 2 of clause 64 of Cabinet of Ministers Resolution No. 822 of September 14, 2020.”

Subclause 3 of clause 64 of the Procedure provides as a ground for rejection only the selected winner’s written refusal to sign the contract. Under Article 207 of the Civil Code, a legal transaction is considered to have been effected in writing if its content is recorded in document(s) exchanged by the parties, including through information and communication systems. A refusal to conclude a contract has legal force only if made in writing by a person with authority to sign it — the selected winner, not merely a procurement participant — and communicated to the other party. The failure of a participant or winner to take certain actions or submit documents, even if such actions are provided for in the draft contract, cannot therefore be treated as a written refusal to sign.

Such conditions create fertile ground for abuse. Formal procedural compliance combined with additional barriers at the contract conclusion stage creates the appearance of competitive tendering while in practice restricting participation to a narrow pool of suppliers who, in certain cases, may be connected, resulting in procurement at inflated prices and inefficient use of public funds.

For example, in February 2025, a gymnasium in Kirovohrad Region procured three types of coal. The draft contract required participants to submit over a dozen documents — including an underground mining permit and financial statements — within 24 hours of the opening of proposals. The contracting authority rejected 8 out of 9 proposals and concluded a contract at the highest price of UAH 299,700, while the lowest offer was UAH 182,000. In another case, the Vanchykivtsi Village Council’s coal procurement required a set of documents within 24 hours of the winner being determined. According to suppliers, proposals were rejected even where the documents were submitted. The contracting authority rejected 8 out of 9 proposals and concluded a contract for nearly UAH 2.6 million, against a lowest tender of UAH 1.5 million. 

Overall, in the analyzed sample, the gap between the lowest and winning tenders in procurements with unlawful requirements or short deadlines amounted to UAH 28.5 million — contracts ended up costing nearly 40% more than they could have.

Such violations have already drawn the attention of law enforcement and courts. A number of criminal proceedings have been opened for misappropriation of public funds in RFP procedures (case numbers 42024222140000071, 12025082210000241, 12025160000000217). A court judgment has also been handed down (No. 573/1300/25) finding that the contracting authority’s actions — in particular, setting a 1-hour deadline for an excessive list of documents — resulted in the rejection of the majority of economically advantageous proposals, contract conclusion at an inflated price, and inefficient use of public funds.

As part of the study, we spoke with suppliers about their direct experience practice of applying additional requirements and barriers at different stages of procurement. Some noted that in most procurements with additional requirements, contracting authorities either tailor conditions to a specific supplier or mechanically copy draft contracts from other RFPs. They also noted that contracting authorities sometimes justify excessive requirements by the desire to minimize their own risk in connection with potential post-delivery inspections. One supplier reported instances of pressure from competitors filing complaints with law enforcement, after which contracting authorities are required to justify the price-to-quality ratio of the coal delivered. 

We also approached individual contracting authorities for their perspective. Most said the primary purpose of such measures is to “play it safe” against the risk of receiving low-quality coal mid-heating-season or dealing with unreliable suppliers or fraudsters. They noted that even where contractual penalties exist, they often lack the resources for lengthy court proceedings. Regrettably, some contracting authorities, when their attention was drawn to potential violations, responded dismissively or claimed not to recall the details. It is also worth noting that some contracting authorities interpret certain legislative provisions at their own discretion — for example, taking the view that requiring documents and contract signature within 24 hours does not conflict with the statutory five-calendar-day deadline for concluding a contract.

Conclusions

55% of RFPs for coal procurement contain requirements to provide documents not provided for by law, and 52% set short submission deadlines.In the representative sample, winning tenders in procurements with unlawful requirements and disqualifications were on average nearly 40% more expensive than the rejected lowest-priced tenders.

These statistics relate exclusively to coal category procurements, not to all RFPs on Prozorro Market. The situation may vary by commodity, and there may be categories where this problem is not systemic. The study does, however, identify specific vulnerabilities in the RFP process and illustrates the potential scale of problems in certain categories.

• The most effective remedy would be a review mechanism in Prozorro Market, currently being developed under the draft new Law on Public Procurement. However, that process is lengthy and the new mechanism will not cover all RFP-based procurements. 
• The situation of unlawful rejections on grounds of alleged refusal to sign would improve with e-contracting, which is also yet to come. But these need not be the only solutions. 

It is therefore worth introducing a range of additional instruments to reduce abuse risks, enhance legal certainty, and strengthen contracting authority capacity.

• Enable monitoring of RFPs by the State Audit Service.

The State Audit Service does not currently monitor RFPs. Whether it has the legal authority to do so is disputed due to ambiguous wording in the procurement rules. It would therefore be advisable either to confirm formally that monitoring is permitted or to amend the legislation accordingly. Even selective monitoring and sanctioning of individual violators can deter future violations.

• Develop and introduce standard contracts.

The e-catalog currently has no mandatory contract templates for commodity categories, and the Ministry of Economy lacks the authority to approve them. The Ministry should be granted that authority and standard contracts approved that set out the permissible terms for coal procurement, leaving contracting authorities to fill in only the key parameters — delivery and payment terms and quantity. This would unify procurement terms, ensure legislative compliance, and simplify preparation without restricting contracting authorities from reflecting their specific needs. These should subsequently be introduced as e-contracts.

• Close the hard coal category in Prozorro Market.

Given that over 50% of procurements in this category contained unlawful requirements, coal procurement through RFPs should be restricted. Procurement would then take place through a method under which businesses may challenge discriminatory requirements and auditors may carry out monitoring. 

• Develop and introduce universal guidance notes for procurement through the electronic catalog.

Such notes will help authorized persons conduct RFPs correctly, apply legislative provisions accurately, and avoid excessive or discriminatory conditions — contributing to more transparent, predictable, and high-quality catalog procurement.

• As electronic contracting develops, introduce automated pre-screening of draft contracts in the e-catalog as a risk indicator for supervisory authorities.
  The algorithm could detect keywords and language conflicting with legislation and the Procedure — such as “certificate,” “declaration,” “permit,” “within X hours of the opening of tenders.” Where such indicators are found, the system could generate risk signals or reports for supervisory authorities. This will become technically feasible only once electronic contracting is in place, as the system currently cannot automatically read and analyze file contents.

These recommendations will help eliminate one method of circumventing the rules in coal procurement and more broadly improve the efficiency and transparency of RFP-based procurement. Efforts must also continue to find approaches that allow contracting authorities to minimize the risk of receiving substandard goods, while protecting bona fide participants from artificially created obstacles and bad-faith practices.

This research was made possible with the support of the MATRA program of the Embassy of the Kingdom of the Netherlands in Ukraine. Responsibility for the content lies with the author and does not necessarily reflect the official position of the Embassy.

This research was developed by

Team lead: 

Ivan Lakhtionov, Deputy Executive Director of TI Ukraine for Innovative Projects

Authors of the research:

Viktoriia Hermasheva, Projects Assistant, TI Ukraine

Kateryna Rusina, Project Manager at DOZORRO