Date of publication: 26 December 2017
Andriy Lytvyn, Attorney at Law, Head of Kharkiv Office
Source: NV Business
Not so much time has yet elapsed since the beginning of a real reform of the public procurement system in Ukraine.
At the same time, there is a distinct feeling that the rules of the game in this system are changing, and the old schemes are no longer working.
It’s no surprise that the purchases have become more transparent and competitive, since everyone may visit the ProZorro platform and see what products are being bought by the public enterprises, how much a particular product costs and who sells the goods, as well as get a lot of other useful information. Any system should develop to remain effective, otherwise it will collapse. This thesis is also true with regard to the public procurement system.
The strengthening of procurement monitoring, stipulated in the Draft Law of Ukraine on Amendments to the Law of Ukraine on Public Procurement and Certain Laws of Ukraine regarding the Procurement Monitoring No. 4738-d, may become the next round of public procurement development.
How can the procurement monitoring change with the adoption of this Draft Law?
First of all, the very essence of procurement monitoring will change. In fact, the notion of ‘procurement monitoring’ is expanded. From now on the purpose of monitoring will not be limited to the observation and analysis of information, but will involve the prevention of violations of the procurement legislation by the State Audit Service of Ukraine. The clear formalization of this goal at the legislative level is of major importance and eliminates a number of gaps. For example, if during the monitoring process the State Audit Service detects violations of procurement legislation, the Service will be able to respond before the procurement procedure ends, and the customer will have an opportunity to eliminate the violations and avoid the subsequent liability.
In addition, the procedure for public procurement monitoring is being established. The previous version of the Law on Public Procurements contained a provision envisaging that the monitoring procedure should be determined by the central executive authority, but no such procedure was developed and, as a result, the State Audit Service could not properly perform the monitoring functions assigned to it. This gap is filled in by the adopted Draft Law.
The procedure laid down in the Draft Law provides for the following grounds for monitoring:
- data of the automatic risk indicators;
- information received from state and local self-government authorities;
- publications in the mass media;
- signs of violations identified by the State Audit Service in the information published in the electronic procurement system.
The introduction into the procurement monitoring system of the automatic risk indicators, which will include the criteria with specified parameters to automatically identify suspicious purchases, is quite interesting. The introduction of such indicators is a fairly progressive initiative that will help to speed up the process of identifying violators. However, the question about which criteria and parameters will be used to detect suspicious purchases remains open. Unfortunately, the Draft Law does not answer to this absolutely important question.
It should also be noted that, pursuant to the Draft Law, the procurement monitoring is not carried out to monitor the compliance of tender documents with the provisions of the law on prohibition of restriction of competition and non-discrimination of participants. That is, the purchases in violation of Article 22(4) of the Law on Public Procurements will not fall within the scope of the automatic risk indicator and other grounds for monitoring provided for by the procedure.
Therefore, the positive or negative impact of the above-mentioned Draft Law on the public procurement system can only be assessed after some time. After all, despite all positive aspects of the proposed changes, it is difficult to reach a final conclusion about how they will be implemented in practice and whether or not such strengthening of control will have a negative effect on the procurement system as a whole.