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The confrontation between local and central authorities escalated in connection with the return of public procurement to the Prozorro system. By law, communities are required to finance TROs and help the Armed Forces of Ukraine. However, the return of tenders took place against the backdrop of the absence of a state prepayment mechanism (this is how Western suppliers work), the inclusion of which the local medical authorities have been demanding from the government for the second month.. What together, as the mayors say, blocked the available free resources in local budgets and the ability to quickly make defense purchases.

So what is more important is the speed of direct purchases or transparency with tenders and justifications in the Prozorro system? And what really happened after returning to the Prozorro process? The position of the Association of Ukrainian Cities last week in an interview with ZN. UA voiced by Mayor of Dnipro Boris Filatov. The position of the State Enterprise " [/quote].

On June 24, the Cabinet of Ministers of Ukraine adopted amendments to Resolution No. 169, which returned mandatory purchases through Prozorro. This decision ran into misunderstanding on the part of representatives of local government, in particular the mayor of Dnipro Boris Filatov and Gennady Korban, who publicly expressed their criticism. Allegedly, with such a decision, the government endangers the country's defense capability and the ability to make quick purchases for the needs of our troops..

In fact, all purchases for defense needs can continue to take place outside the Prozorro system.. The same purchases, which are in no way related to the provision of the army, critical infrastructure or the satisfaction of urgent needs, will from now on be carried out in a transparent and efficient way..

Yesterday, representatives of the Office of the President of Ukraine, the Ministry of Economy and State Enterprise " And I am glad that we managed to remove concerns about most of them, and otherwise agree on further cooperation..

How defense purchases are now carried out From the very beginning of a full-scale war, purchases of state customers in the field of defense have been removed from the scope of the Law “On Public Procurement”. These customers are the Armed Forces of Ukraine, the Ministry of Defense, the Ministry of Internal Affairs, the Security Service of Ukraine, the National Guard, the State Border Service, the State Emergency Service and many other structures.. Recent changes to Decree No. 169, which regulates procurement during martial law, did not in any way affect this circumstance.. That is, all defense customers continue to buy everything directly, outside the Prozorro system.. We also hid all their contracts for the past years, “so that the Russians would not peep”. The needs of our troops are a priority. They need to be satisfied as quickly as possible, and information about the details of the contracts should not be seen by the enemy..

In the meantime, ordinary customers, in particular local governments, are sending considerable funds for the purchase of military units or territorial defense deployed in their cities for the needs. Withdrawing all purchases from Prozorro almost simultaneously with a full-scale Russian invasion gave them the opportunity to do this without holding tenders and reporting them in an electronic system.. But will they really have to hold tenders for, say, equipment and medicines for our military or the construction of fortifications Not.

The changes adopted by the government provide them with a number of grounds for drawing up direct contracts outside the Prozorro system - in particular, when information in the purchase announcement may threaten national security. Indeed, after all, even the purchase of shovels mentioned by Boris Filatov - with the publication of data on the volume and place of delivery - can give the enemy important information. Therefore, even in this case, local governments can conclude direct contracts, not to mention the purchase of military uniforms, bulletproof vests, the construction of fortifications, etc.. Any written request from a military unit for the purchase of certain goods and works will already be sufficient justification for a direct purchase outside of Prozorro for CHI. So, the resolution does not apply at all to the activities of local governments aimed at ensuring defense capability.

Another important exception is an urgent need that is objectively impossible to satisfy due to the timing of the procedure.. For example, when it is urgent to strengthen a damaged building. Either provide food or hygiene products to internally displaced persons who have just arrived in the city. Or when you need to have time to prepare educational spaces for the start of offline learning on September 1, allowing internally displaced persons to stay in schools and kindergartens for as long as possible. This issue is now especially relevant for cities and villages that receive a large number of migrants, so the government will provide additional clarifications on it..

In addition, when the customer is in a war zone or does not have the technical ability to use the electronic procurement system, or when it comes to ensuring the functioning of critical infrastructure, direct contracts can also be concluded.. Based on communication with local governments, the Ministry of Economy prepares an official clarification: in what cases it is possible to conclude direct contracts and how this can be justified (in fact, in most cases, internal decisions of the customer are sufficient). This will help to avoid double interpretations of the regulatory framework, including by law enforcement and regulatory authorities..

For everything else, there's Prozorro.

Even in wartime, not all purchases are directly related to the war. Thousands of state customers across the country provide for the activities of their organizations and the needs of communities, buy various goods, carry out scheduled repairs. Despite the fact that the defense industry now undoubtedly has priority in financing from the treasury, this is also billions of hryvnias. Given the shortage of funds, they need to be spent as efficiently as possible.. While the ability to directly conclude contracts for anything and for any amount, lasting four months, left a lot of room for abuse.

Then, at the beginning of a full-scale Russian invasion, it was a justified decision. Prices could change daily, and it was important to find at least one supplier who had the goods and who could deliver them in an environment where all supply chains were rapidly collapsing. But later the situation stabilized, while the lack of control over procurement costs led to unreasonable expenses.. Thus, according to our calculations, about 55% of contracts for the supply of fuel were issued at prices above market prices.. The average price of a product such as eggs in public procurement was higher than the retail price. So for the lack of competition in tenders, we had to pay dearly.

In addition, there were cases when customers spent money on purchases that were unreasonable during wartime.. For example, the city of Bakhmut in the Donetsk region purchased rose seedlings and landscaping services when the enemy army was 15 km from the city, and Bakhmut himself was regularly shelled.

At the same time, the data that we can now analyze in the Prozorro system is incomplete.. The fact is that, by concluding direct contracts, customers have the right to publish these contracts in the system after the end of martial law. So it can be assumed that we will see the most egregious abuses during these four months after the war, because who wants to voluntarily publish them?

With the new decision of the Cabinet of Ministers of June 24, procurement transparency has returned. Like the competition. In the amount of 50 thousand. UAH customers must publish an ad in Prozorro and conduct simplified purchases. This is the simplest and fastest tool for conducting auctions in Prozorro. It does not require the preparation of a large number of documents and lasts from eight working days (two weeks on average) from the moment of announcement to the signing of the contract. Another, faster option is to use the Prozorro Market electronic catalog, where suppliers from all over Ukraine place their goods. It is worth noting that the Cabinet of Ministers has removed any upper limits on the use of these tools: even multi-million dollar equipment can be purchased under a simplified procedure.. As for the mandatory purchases in Prozorro from 50 thousand. hryvnia, then during martial law this restriction is considered not for the annual need of the customer for a specific product, but for each individual purchase. And this relieves customers of the additional burden of bidding.. At the same time, the government is developing changes to the profile Law of Ukraine "

But is it time to return transparency at all

This decision was preceded by numerous appeals to the government from business, which asked to return mandatory purchases to the system. After all, this way entrepreneurs will be able to see the needs of the state in the goods, robots and services that they sell, submit their proposals and win fair auctions.. And at the same time help the state save taxpayers' money. During crises, business always considers public procurement as a very important source of sales. And the return of Prozorro will allow entrepreneurs to more actively restore work and support the economy of Ukraine. And besides, to help the state save money due to competition in the auction.

After all, again, in conditions of a shortage of funds, the efficiency of their spending comes to the fore..

Even before the adoption of this resolution, many customers conducted open purchases. Over these four-plus months, more than five thousand entrepreneurs took part in six thousand auctions and helped the state save UAH 550 million. For example, Ukrposhta returned to purchases at Prozorro a month after the start of a full-scale war. On 40 purchases of Ukrposhta in Prozorro, savings reached UAH 34.2 million, or 22% of the planned cost. And in their individual tenders, 18, 19 and even 24 participants competed.

And, finally, thanks to the publication of all purchases that are not related to the defense industry or critical infrastructure, you and I will be able to keep track of what the state buys and at what prices.. I am sure that the very need to publish purchases will be able to stop a lot of abuse. And the rest will immediately become visible to society and control authorities.

I would also like to answer some of the concerns that I heard from representatives of local governments. For example, that it is allegedly difficult to buy something on Prozorro due to the constant increase in prices for goods. In fact, for contracts concluded under Decree No. 169, the Cabinet of Ministers removed restrictions on price increases in contracts by no more than 10%. So that customers can purchase according to current market conditions, which is especially important for critical goods such as fuel and energy.. This approach is logical in a state of martial law, when prices are unstable, their growth can exceed 10%, and obtaining a document on price fluctuations can be a problem.

Another reproach is that due to tenders, Prozorro will have to buy the cheapest, and therefore the lowest quality goods, works and services.. It’s strange to hear about this, because what you buy through Prozorro directly depends on your requirements in the tender.. I will give a simple example. It is possible to open a tender for turnstiles without any requirements for them, and with a very high probability the supplier of self-made turnstiles with the lowest price will win. But it is possible to hold a tender for turnstiles recommended for use by the Turnstile Testing Center, which have proven effectiveness on the battlefield.. In addition, in simplified purchases, no one forbids you to clearly indicate that you want to buy CAT turnstiles.. Just in case, I note that turnstiles for the military can be purchased outside of Prozorro, but this is really a very significant example..

And finally, it was strange to hear that due to the need to make purchases at Prozorro, local governments are already having to evict internally displaced persons from schools and kindergartens. Unfortunately, this is like trying to find the cause of the problem in something other than what it is.. The accommodation of internally displaced persons and the construction of temporary housing for them is a really big challenge for the state and local self-government. However, this is in no way related to the need to conduct tenders for current repairs before the start of the school year.. Nothing prevents administrations from starting a tender now, but setting a date for completion of work at the end of August. And there is no reason to evict internally displaced people today because of Prozorro purchases.. This is absurd.

Already now you can see the effect of the return of purchases on Prozorro. In the two weeks that have passed since the introduction of the new rules, government customers from all over Ukraine have announced over six thousand purchases. And in the procurement, where the auction took place, they saved UAH 26 million, or 10% of the planned funds. This is also an important contribution to our economy and defense capability..

The restoration of Ukraine has already begun, and where circumstances allow, we must be as effective as possible, and the state must be accountable to society.. By the victory of Ukraine, we will not be able to return the level of procurement transparency that we had before February 24. Procurement for defense needs will remain outside of Prozorro for a long time to come.

But to completely lose this transparency, one of the important achievements of Ukrainian society after the Revolution of Dignity, due to the Russian invasion, would be too expensive a gift to our enemy..

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Read more articles by Vasily Zadvorny at the link.