ProZorro: “a golden triangle of partnership” in public procurement reform in Ukraine

Let’s define public procurement Public procurement (PP) refers to the process by which public authorities, such as government departments or local authorities, purchase work, goods or services from companies

What PP is in reality

Where is Ukraine on the map?

UA is one of the largest countries in Europe… Population – 44 million (8th in Europe) Area – 603 sq. km (2nd in Europe after Russia) Nominal GDP – 130 billion USD (23rd in Europe)

…with extreme levels of corruption In 2015 Ukraine ranked #130 by Transparency International for corruption perception (in a group with Cameroon, Iran, Nepal, Nicaragua, Paraguay, Nigeria, Guinea, Kenya, Laos, Papua New Guinea, Uganda)

Dissatisfaction led to the Revolution of Dignity…

… but amidst “no” trust toward institutes

Volunteers started working on PP reform Just after the Revolution of Dignity, a group of volunteers decided to start a reform in public procurement eProcurement system ProZorro seen as the key element of the reform At times a team of up to 300 people worked on ProZorro Кристина Гуцалова

In Ukraine PP is a synonym of corruption

Estimation of losses in public procurement (PP) 25B UAH (ca 1.1B USD) – conservative estimation of “corruption tax” 10% 10% 25B UAH (ca 1.1B USD) – losses caused by limited competition 250B UAH (ca 11B USD) At least 50B UAH (ca 2.2B USD) per annum – losses from corruption and limited competition

“Golden triangle of partnership” in the core Government: “the rules”, professionalization and data storage Civil Society: monitoring and control of procurement Commercial platforms Commercial platforms: suppliers acquiring and service

Our principles Transparency (everyone sees everything) Effectiveness (simplicity in solutions) Teamwork (Agile groups)

History of the eProcurement system ProZorro August, 2014 Georgians & concept review April, 2015 Volunteers move into gov’t December, 2015 New Law on eProcurement approval June, 2015 First donor support March 2014 Volunteers’ team setup September, 2014 ePlatforms & final concept; first “seeding” April-May 2014 First search & first concept April, 2016 Law comes into force, system’s scale up February, 2015 MVP development & launch May, 2015 MinDefence & small procurements’ pilot

What pilot eProcurement system ProZorro is ADVANTAGES OF THE SYSTEM Open code, always available for audit, control, & scalability Compulsory auction for effective price reduction Transparent process on bidding and simple appeal process Competition among platforms to improve services

What involvement of private platforms brought The involvement of economic operators allowed to: Secure the initial funding Substantially reduced the cost of the development and maintenance of the system Involve existing pools of suppliers and contractors registered on commercial platforms

ProZorro pilot results 8 commercial platforms & 3 in the process of joining Savings come to 22M USD 1750 + contracting authorities 9200+ suppliers Кристина Гуцалова 46k+ tenders for 284M USD

All information is available for everyone BI modules are owned by Transparency International Ukraine

Reform is following startup phases

Gov’t becomes crucial for reform’s implementation The law of diffusion of innovation Concept & MVP Pilot Scale Up & Implementation Gov’t Low Medium High NGO Business