The post How to make better public procurement decisions with business intelligence: Insights from Ukraine first appeared on Transparency International Ukraine.

The post DOZORRO Launches Tool to Evaluate Procuring Entities’ Performance first appeared on Transparency International Ukraine.

The post Ways to Process Public Procurement via Free BI Prozorro Module first appeared on Transparency International Ukraine.

Recently, our team has received a request to analyze construction auctions. And using this example, we will show how data can be used to find answers for future decisions.

Brief background: There is an opinion that for some construction works, the auction stage may not make as much sense because these works are estimated. According to the hypothesis, any reduction in price by the winner during the auction is highly likely to be dumping. As a result, the terms of the contract will have to be changed, or the contract will be terminated altogether due to the impossibility of performing it at the proposed cost.

Analysis question:

1. How common is it for the winning bidder to underbid in construction auctions (compared to the procurement system in general)?
2. How does the reduction of the bid amount by the winners of construction auctions affect the progress of the contract?

First you need to select the data itself. The sample was as follows:

1. Year of announcement: 2019. During that year, the procurement system was still operating as usual (there had been no changes to procurement related to COVID-19 yet), and most of the contracts started in 2019 should have been completed by today. Thus, we can consider 2019 to be the most recent “full” year.
2. The status of the contract: completed (that is, both fulfilled and terminated contracts). This filter is needed to have statistics only for contracts with a higher probability that all information about the progress of their execution has been entered into the system.
3. For the selection of construction, we chose:
   1. CPV code — “45000000-7 Construction works and maintenance repairs”
   2. type of procurement item — “works”
4. Types of procurement method — open tenders and open tenders with English language because in 2019, there was an obligation to report on the progress of the contract only under these categories.
5. Expected cost: at least 1 million, as there was a request to consider the behavior of participants in large-scale procurement.
6. Only the initial and final offers of the participant in procurement were taken into account. Bidders who offered lower prices but were disqualified were not taken into account. In those situations, it is often difficult to tell whether the participant was disqualified for formal reasons, whether they prepared incorrect calculations, or they did not confirm they were able to fulfill the contract.

Analysis

In total, 4,561 construction contracts were signed in 2019 which have been completed to date. This is less than 5% of all contracts in 2019.

In 45% of cases in construction contracts, the winner reduced their price during the auction, which is 3% more often than the Prozorro system average. The higher the expected purchase price, the more likely the winner was to lower their price during the auction.

So, the auction does encourage lowering the price. However, it is difficult to predict based on the available data what strategy these same participants would have chosen if Prozorro did not have auction functionality (and they could not adjust their bid):

• would the bidders immediately submit the lowest bid price at which they are willing to perform the contract?
• would the contract amount be lower if the winner was determined by the initial bid?

On the other hand, the auction rule “the lowest price yields has the biggest advantage in the auction” seems to have an effect. In more than 98% of all these contracts for construction (including cases where the participant did not negotiate), the initial offer of the winner was at least one hryvnia less than the expected cost. An alternative explanation is that the bidders wanted to draw less public and regulatory attention to their procurement and simulated a price cut in their initial bid.

If we look at the progress of construction contracts where the winner lowered the price during the auction, in 83% of cases, either changes were made to the contracts (which did not always concern the prices) or these agreements were terminated. The larger the amount of the contract, the higher the percentage of such contracts.

However, if we look at the procurement of construction works where the winner did not change the prices at the auction, more than 85% of the contracts were either terminated or changed.

It appears that the participant’s price reduction during the auction has no effect on the performance of the contract. Further research is needed as to why there is a higher percentage of contract changes in purchases where the winner did not lower the price during the auction. One of the versions is that the technical terms of reference for the works were rather vague, and it was necessary to make changes at the execution stage. And this, in turn, could be one of the reasons why the participant did not lower their price during the auction.

If we look at the system as a whole, the execution of works contracts significantly deviates from the general trend. Change or termination of the contract in general were recorded in 56% of all contracts in the system, which is almost 30% less than this figure in construction.

The most likely explanations for this are as follows:

1. Customers more reliably reflect changes in their construction contracts in Prozorro than in other types of procurement;
2. It is much more difficult to execute construction contracts without making changes to them, which significantly distorts the results of the auction. Accordingly, it is necessary to think of a mechanism to minimize the number of changes/terminations of the contract or to make the process of making changes more understandable and transparent.

Findings

It should be understood that since this analysis is brief, the findings will also be short and raise new questions. We see that the problem with changes in construction contracts and their termination really exists. However, it does not currently appear to depend on the availability of auctions for such purchases. Moreover, almost half of the participants reduce the price at the auction, and this is slightly more than the system average. Here are some new questions to consider:

• what strategies the business would choose if there were no auctions;
• why there is a higher percentage of contract changes and cancellations in purchases where prices were not reduced;
• how to minimize the number of contract changes/terminations or make the process of making changes more clear and transparent.

This publication has been prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.

The post Auctions for Construction: A Short Example of Analysis first appeared on Transparency International Ukraine.

BI Prozorro is a free tool created by the team of Transparency International Ukraine CSO. It was developed with the support of the EBRD and the Ukrainian company RBC Group on the Qlik Sense platform. The tool contains data on all public procurement since 2015. The main source of information is the central Prozorro database, which is open to everyone through API. The module also contains information from open state registers and data transmitted by the OpendataBot monitoring service. All information in the module is automatically updated daily. Therefore, the BI Prozorro module is a tool that combines data not only from the electronic public procurement system, but also the necessary information related to procurement from the state and the public.

TI Ukraine continues to work on improving public procurement, and now has a separate DOZORRO project which works on civic oversight of this sector. The project team has created and administers the dozorro.org monitoring portal and the BI Prozorro module. In addition, DOZORRO is developing the DOZORRO community, a network of civil society organizations which monitor public procurement and report violations to supervisory and law enforcement agencies.

The BI module is a unique tool; it is like a super-engineer for data processing. It helps you analyze information at various stages of public procurement: from the period if ts planning to the very process of procurement and tracking the further situation with concluded agreements. To accomplish this, the module is divided into several sections. Each section has dozens of criteria by which you can sort, group, and analyze data. Based on some information, the module itself builds interactive graphs and charts, as well as calculates the coefficients. The user can record their own sample of criteria for analysis and, if necessary, view its current indicators. In addition, all data and charts can be exported.

It is the versatility that makes the BI Prozorro module universal. It is useful for a wide variety of user groups:

• public procuring entities can evaluate the effectiveness of their purchases, compare them with the procurement conducted by their colleagues, find weaknesses and improve. The module also makes it convenient to look for potential suppliers to invite them for tenders, etc.
• suppliers analyze the market and look for interesting tenders. Based on the data from the BI module, entrepreneurs can build strategies for participation in public procurement, analyze their competitors.
• activists, as well as supervisory public agencies, monitor procurement for violations;
• policymakers;
• researchers, etc.

The BI module is used by researchers who study public procurement. In addition, it helps the DOZORRO team develop analytical reports on the effectiveness of individual elements, rules and tools of the Prozorro ecosystem. These studies help to improve the field of public procurement and provide insights for new ideas and draft laws.

We have listed only a few tasks that can be performed with BI Prozorro—they are many more overall. Each user can use the relevant functions of the module to meet their needs. The module enables to identify isolated cases of violations more effectively, while profound research helps to strengthen the system overall and combat systematic corruption risks.

The DOZORRO team regularly improves the BI module to make it always relevant and effective for the users. BI Prozorro has also been used to create more narrowly specialized tools, such as the school procurement map, the module for medical procurement analysis overall and COVID-19 procurement in particular.

To help users understand the powerful functionality of the module, DOZORRO has developed quite a few guidelines in text and video forms, which are all available on the project website. There is also a Facebook community where users can help each other resolve problems and specific tasks and share lifehacks.

In addition, to scale up the success achieved by Ukraine in public procurement analysis to other countries, the DOZORRO project team, together with Open Contracting Partnership, will develop an add-on to the BI Prozorro module. The add-on will collect data on public procurement of other countries based on the Open Contracting Data Standard and enable comparison of data from different countries. Such functionality will help governments to identify ways to improve the public procurement sector and make it more effective. What is more, the add-on will provide more opportunities to active citizens, journalists, and civil society representatives. It will create additional opportunities for advocacy of open data in public procurement and of the necessary changes which would help to increase public procurement efficiency and fight corruption.

Open data is without a doubt a critical element of an effective public procurement system. However, it is quality analytics that truly makes it possible to benefit from it and make global change happen. The BI Prozorro module allows all stakeholders of the Prozorro system to handle this task.

This article was prepared by Serhii Pavliuk, BI Prozorro Project Manager with TI Ukraine, and Kateryna Rusina, DOZORRO Communications Manager, within the project “Tackling corruption in public procurement in Ukraine and V4 countries with new approaches.”

The project is co-financed by the Governments of Czechia, Hungary, Poland and Slovakia through Visegrad Grants from International Visegrad Fund. The mission of the Fund is to advance ideas for sustainable regional cooperation in Central Europe.

The post Analytics Changing the Public Procurement Sector in Ukraine first appeared on Transparency International Ukraine.

On April 1, the Government of Ukraine has tightened the measures to fight against COVID-19. Among other things, it is now prohibited to attend public places without a mask or a respirator.

There Are Different Masks

There are several types of masks. A single-use medical mask reduces the spread of infections spread through exhaled droplets. It is usually a three-layer mask with a filter between two external layers of non-woven fabric.

There are also respiratory masks of three types depending on the level of protection: FFP1, FFP2 and FFP3. They are usually used by medical staff or the military working in the epicenter of events.

Mask Prices in Prozorro

The nationwide quarantine and the rapid spread of COVID-19 in Ukraine have led to price gouging and deficit of goods which were not in high demand before, as expected. Prices for medical masks have grown several times. So how many medical masks have been purchased in 2020 via Prozorro and for what prices?

According to our calculations, public procuring entities bought almost 2.5 mln medical masks for the total amount of UAH 25 million between January 1 and March 28, 2020. The biggest number was purchased in March — 1.8 million masks. In February, they bought 547,000 masks, and in January — 108,000.

In the middle of February, procuring entities started buying medical masks more actively. For instance, on February 14, there were 8 tenders announced in Prozorro for purchase of 228,000 units total. Almost 90,000 were purchased through direct agreements, the rest — through open bidding.

The second peak of procurement happened on March 26: over 1.1 million masks. Out of them, 1 million items for UAH 14 million was purchased by Kharkiv Municipal Clinical Hospital No. 13. Medical masks with rubber loops Medicare must be supplied by TOV SOFI-MED by April 30.

In January and February 2020, procuring entities mostly purchased medical masks based on competitive bidding (pre-threshold procurement, open bidding). Most of them were successful and ended in the conclusion of agreements. But as soon as March 2020, 55% of competitive tenders were unsuccessful, meaning not a single participant made a bid. This means that there is a deficit of the product and/or that suppliers have raised their prices. Back at the beginning of March, suppliers refused to sell medical masks for UAH 2-3 per unit, and in the middle of March, even UAH 7-12 per unit was not enough anymore.

In January 2020, suppliers bought medical masks for UAH 0.68-UAH 1.5 on average, in February – for UAH 0.7-UAH3.2. The big jump happened in March 2020. Suppliers have been selling medical masks for UAH 10-25 per item.

For instance, ME ODESFARM supplied 1,000 medical masks for UAH 24.5 per item to the Department of Municipal Property of Odesa City Council. SP Zheleznova O.V. supplied 2,000 masks for UAH 25.5 per item to the Territorial Directorate of the State Judicial Administration of Ukraine in Donetsk Oblast. SP Bastiuchenko O.V. supplied 5,000 masks for UAH 23 per item to the Center for Traffic Organization.

The rapid price growth and the big gap between the average price and the maximum price may attest to price gouging.

Back on March 12, Deputy Minister of Healthcare Viktor Liashko said that the Anti-Monopoly Committee of Ukraine would check prices for personal protective equipment. On March 30, 2020, Kyiv Oblast Territorial Division of the AMCU started a case against manufacturers, suppliers and pharmacy chains of Kyiv and Kyiv oblast due to the significant price growth of masks.

Interestingly, one of the suppliers involved in the case sells masks for the same prices as in January and February 2020 to public procuring entities. TOV Firma Tekhnokompleks supplied 5,000 Slavna masks to Okhmatdyt children’s hospital for UAH 2.99 per unit, 3,600 masks for UAH 3 per unit to the Head Directorate of the National Police of Ukraine in Cherkasy oblast, and 1,500 masks for UAH 2.96 per item to Kyiv Municipal Children’s Infectious Hospital.

Top 5 Suppliers of Masks: Who Are They?

In the period of January to March 2020, we can identify 5 leaders that have supplied the masks for the highest amount and in the highest quantity, accounting for 67% of the total spending and 48% of the total quantity. They are TOV SOFI-MED, TOV TRANSPORT COMPANY AUTOLINE, ME ODESFARM, SP Polozhii Yevhen Oleksandrovych and TOV DIMAKS VBK.

The leader is TOV SOFI-MED, which has sold a million of medical masks for the total amount of UAH 14 million to Kharkiv Municipal Clinical Hospital No. 13, that is, for UAH 14 per item. Under the information provided by the analytical system YouControl, the primary activity of TOV SOFI-MED is wholesale trade in pharmaceutical goods.

Even though the company has existed for just over a year (it was registered on December 22, 2018), it actively participates in public procurement. In the period between February 2019 and March 2020, TOV SOFI-MED participated in 147 tenders, winning 61 tenders for a total amount of UAH 22.6 million. In 90% of the tenders, the supplied goods are medical supplies, equipment and pharmaceutical items.

It should be noted that in December 2019, TOV SOFI-MED sold 2,500 medical masks with rubber loops Medicare to L.T. Mala National Institute of Therapy for UAH 0.45 per item and supplied 15,000 masks Medicare to Balaklia Central Clinical Rayon Hospital for UAH 0.48 per item.

The runner-up, with over UAH 1 million made and 60,000 masks sold, is TOV TRANSPORT COMPANY AUTOLINE.

The main activity of the company is technical maintenance and repair of motor vehicles. Unlike the leader, TOV TRANSPORT COMPANY AUTOLINE was created 8 years ago, but hasn’t been a very active participant of public procurement.

Between January 2018 and March 2020, the company participated in 55 tenders, with only 9 of them competitive and the other 46 awarded through direct negotiations.

The main customer of TOV TRANSPORT COMPANY AUTOLINE is ME Odesmiskelektrotrans (Odesa Municipal Electric Transport). The company entered into 38 agreements with this procuring entity. The total amount of agreements concluded by this company is 49.

Interestingly, before March 20 this year, the company specialized exclusively in car parts and car repair services in public procurement.

On March 20, TOV TRANSPORT COMPANY AUTOLINE started supplying medical items, personal protective equipment, gloves and disinfectants. The company entered into 21 direct agreements for supply of these goods, including 11 with the same ME Odesmiskelektrotrans. The company sold masks for UAH 17 and UAH 18 per item.

The third-ranking company is ME ODESFARM, which sold 53,000 masks for UAH 785,000 to procuring entities. ODESFARM is a municipal enterprise of Odesa City Council, which engages in retail of pharmaceutical goods. It is an active player in public procurement. The enterprise has participated in 442 tenders, with 332 concluded agreements.

Between March 16 and March 27, the company was selling masks for UAH 17 to UAH 24.5 per item, i.e. the municipal enterprise sells masks for higher prices than private companies.

The fourth place on the list of top suppliers of masks belongs to SP Polozhii Yevhen Oleksandrovych, who won one tender in Prozorro and sold 40,000 masks to ME Kharkiv Heating Networks for a total amount of UAH 600,000, that is, for UAH 15 per item.

Note that the primary activity of SP Polozhii is wholesale trading in clothes and footwear, as well as production of leather clothes, work uniforms, etc.

Before February 2017, SP Polozhii had engaged in wholesale trading in meat and meat products but had not participated in public procurement.

The last place in the top five belongs to TOV DIMAKS VBK. The company sold 21,500 masks to public procuring entities for a total amount of UAH 366,000.

The company is quite young and has existed for only 1.5 years. It specializes in construction of housing and non-residential buildings, electrical and other construction works.

During its existence, TOV DIMAKS VBK has participated in just four public tenders. In the first two, it supplied channels and pipes, in two others – medical masks for UAH 17 per item.

In conclusion, doing business today means that you have to respond to current challenges. Don’t give up, since you can always end up doing medical trading, even if your whole life you only sold footwear, clothes or car parts.

The post How Much the Government Spends on Masks first appeared on Transparency International Ukraine.

The new tool was presented in the Ukrainian Crisis Media Center on October 31. It was developed by the Ukrainian chapter of the global anti-corruption network Transparency International with the support of the Renaissance foundation.

“The sector of medical procurement is favorable for corruption n any country […], which is why civic control is critical in this case. Only inclusion of people in this process can yield the maximum result. No official can change the system without the support of proactive citizens,” says Yaroslav Yurchyshyn, executive director of TI Ukraine.

“To make procurement efficient, we need to know the situation on the market […] Before, to understand how much paracetamol the entire country had procured and how much it had planned to procure, what the prices had been, what hospitals and manufacturers had been involved, we would have spent months to send and process requests. Now, it will take us a few seconds. It can help us to develop more efficient procurement strategies,” said Viktor Nestulia, acting CEO of SE Medical Procurement of Ukraine at the presentation.

The module displays information on procurement of medical goods: medication and equipment. The data are loaded from the electronic system ProZorro going back to 2015. The procuring entities are hospitals, healthcare departments, schools, military units and any entity that has ever procured medical equipment or medication.

The intelligence module allows anyone to see who has procured medication and in what amounts. You can search by the name of the active substance.

Using the tool, representatives of the Ministry of Healthcare will be able to follow the situation on the medical procurement market. Healthcare departments will be able to identify hospitals with inefficient procurement.

Users will be able to compare the prices for medication with specific active substance and see which ones are purchased more often. They will also be able to see whether the market in a certain area is divided between several companies.

The module can also filter medication based on the type: homeopathy, herbal, whether it is included in the National List of Principal Medication.

To make the use of the tool easier, the developers have created a Facebook group where anyone can ask questions and follow updates.

The post TI Ukraine Presents New Online Tool to Control Medical Procurement first appeared on Transparency International Ukraine.

Goal:

To ensure the efficiency and transparency of the public procurement system.

Actions

Transparency International Ukraine administered the creation of the Prozorro electronic public procurement system. After transferring it to the state-owned enterprise Prozorro, we focused on monitoring compliance with the law and the development of analytical tools. To this end, TI Ukraine founded the DOZORRO project.

We monitor public procurement

We monitor public procurement and risky tenders and check them for violations. If we find problems, we contact procuring entities so that they can fix them. If necessary, we appeal to the relevant supervisory or law enforcement agencies.

We study the operation of the system

DOZORRO analyzes procurement transactions in various areas and the functioning of individual tools of the system. Our research identifies gaps and deficiencies in public procurement and offers options on how to address them.

We analyze legislative initiatives

Based on thorough analytics, we advocate quality changes to improve the field of public procurement and join expert groups to develop solutions. In addition, the DOZORRO team protects the sphere from corruption ideas.

We develop analytical tools

The BI Prozorro public analytics module is a powerful online tool for comprehensive procurement analysis administered by our team. It is free and available to anyone. It is used by both procuring entities and businesses engaged in procurement, as well as journalists, supervisory bodies, and even the State Enterprise Prozorro and the Ministry of Economy.

The professional analytics module is a data analytics module of the Prozorro system with an advanced functionality. Access to this tool is limited; we provide it to government agencies, CSOs, scholars, and analysts.

We are engaged in improving the system and the sphere as a whole

Our team provides proposals to improve data quality and digitalize public procurement, and helps Prozorro implement them. In addition, we help increase the institutional capacity of supervisory bodies and other stakeholders in the field.

The public should work together with the state and jointly develop transparency and efficiency of budget spending.

Ivan Lakhtionov, Deputy Executive Director for Innovation Projects

Opening data simplifies life greatly and even impacts public policy.

Serhii Pavliuk, BI Prozorro Project Manager

The post Public Procurement Oversight first appeared on Transparency International Ukraine.

TOP-5 Tips and Options of the DOZORRO Portal:

1. Feedback

When we created DOZORRO, we knew that the first person who faced violations directly was no one other than the participant. That’s why it was essential to receive his or her opinion. To enable this, the portal has an option to leave feedback, which will then be processed. What can it be used for?

Firstly, feedback will function as the basis for upcoming ratings of procuring entities. Moreover, all participants’ feedback will remain available in the system – in other words, in public space, which enables further analysis by the law enforcement and regulatory authorities.

2. DOZORRO Community

Today, it includes 24 organizations from all over Ukraine. Among them there are representatives of the business environment, public organizations, regulatory authorities – all those who support fair play in procurement. The feedback which bidders leave is processed by our DOZORRO Community. We, for our part, publicly highlight their work.

3. Participant Rankings

Now, we are actively working on rating formation for both procuring entities and suppliers. In the near future, this functionality will come in handy for participants, helping them to collect all up-to-date information about the number of complaints, feedback, competition etc. on the same page. This standardized profile will greatly simplify lives of all procuring entities and suppliers.  Note that by “ratings” we don’t mean “blacklists,” because we are strongly against them.

4. Personal Account

Most of the major customers have personal accounts on the DOZORRO Portal, which allows to see the information across the entire chain. For example, take Ukrposhta. They have post offices in different parts of the country, but all the feedback is available from a single personal account. Also, civil society organizations have their own accounts on the portal. Each of them has an opportunity to see their internal workflow, where letters are sent and forwarded on each procurement. It’s important to add that all letters are in the public access.

5. Search Engine

Another useful tool we offer is the business intelligence module. Thanks to this tool, the participants can find a specific procurement, analyze a certain procuring entity or supplier, region, product, etc. We also plan to launch the tool on its basis in the near future that will help to analyze all those complaints that are under review by the Anti-Monopoly Committee.

The material is prepared by the electronic procurement platform for the commercial and public sectors Zakupki.Prom.ua – https://evo.business/kak-rabotaet-dozorro/.

The post How to Restore Justice in Public Procurement: Possibilities of DOZORRO first appeared on Transparency International Ukraine.