Article: Main reasons for the recent changes to the ProZorro system

Oleksandr Aleksyeyenko, Partner, Antitrust & Competition Marchenko Partners, comments on the Draft Law No.1076 adopted by Ukrainian Parliament, which brings changes to the ProZorro system.

The comment has been published at The Ukrainian Journal of Business Law (October 10, 2019).

Read the whole comment below.

Parliament adopted Draft Law No.1076, which brings some changes to the ProZorro system. What are the main arguments for such changes?

The revolutionary and long-expected approach of the Law provides for new non-price criteria for the assessment of offers. The previous system was heavily criticized for being focused merely on the price, but not the quality. The procuring entity will now have an option to deal with a life cost estimate of the tender allowing, for example, to purchase currently more expensive but energy-efficient equipment or technology instead of currently cheaper ones, but much more expensive in terms of its future service and maintenance.

It will become mandatory for procurements equal or above UAH 50,000 but lower than the standard threshold for procurement procedures to be conducted via ProZorro under a new simplified procedure. This will enable the bringing of a major portion of all public procurements out of the shadow and significantly increase the level of transparency.

The Law introduces a system aimed at protection against dumping, and the procuring entity will be able to request from the supplier the justification behind the anomalously low price. This change looks promising for reducing the number of previously abusive practices by procurement participants.

Now authorized procurement officials, and not tender committees will be responsible for procurement. This, together with other changes, is expected to increase the efficiency of tender procedures both by raising the competence of officials and having a clearer individual responsibility algorithm for them.

It’s an absolutely new opportunity for procurement participants to fix some technical errors in the documentation within 24 hours after disclosure of the tender proposal.

The amount of the challenging fee is expected to increase and will be established by the Cabinet of Ministers of Ukraine. Instead of the current set fee, the Law introduces a differentiated approach depending on the cost of procurement. It is also important that tender participants will be able to recover the fee for challenging a tender if the AMCU confirms an infringement or leaves the complaint without review.

We expect the Law to further cultivate a competitive ecosystem in procurement, reduce the number of abusive practices and facilitate fair competition.