Johannes S. Schnitzer, EBRD Consultant 27 May 2015, Kiev, Ukraine Status of Ukraine’s accession to the WTO GPA PUBLIC PROCUREMENT REFORM IN UKRAINE: REVIEW SESSION

INTRODUCTION Ukraine is currently in the process of updating its national public procurement legislation to international best practice Ukrainian governments is increasingly aware of the economic costs of inadequate public procurement processes  Public procurement is important tool/instrument for/of economic development & good governance Ukraine concluded an association agreement with the EU Ukraine will, over several years, adopt current and future EU legislation on public procurement

WTO Government Procurement Agreement Arguably most important binding international agreement on public procurement Agreement within the WTO system which provides the framework of the conduct of international trade with governments 43 member states Has proven to be an important driver of legal reforms in the area of public procurement INTRODUCTION

WHY TO JOIN THE GPA NOW? Highest market access opportunities everLikeness that coverage will expanded significantly in near futureGPA was recently revised Many countries do not discriminate against foreign companies but do not get the same treatment in return Joining the GPA is a logical and natural step for countries in the process of reforming domestic public procurement law "Stamp of approval" indicating that domestic law is consisted with international best practice

HOW TO BECOME A PARTY OF THE GPA? Ensure conformity of national public procurement legislation with GPA obligations GPA „only“ lays down common ground rules Procedural provisions of the procurement process (non- discrimination, transparency) Provisions regarding remedies (domestic review) Agree with existing GPA members on coverage offer Which procuring entities are obliged to tender which kinds of procurements in accordance with the GPA?

HOW TO BECOME A PARTY OF THE GPA? Ensure conformity of national public procurement legislation with GPA obligations NOT negotiable Agree with existing GPA members on coverage offer Coverage offer needs to be negotiated in a series of (bilateral) consultations

UKRAINE‘S STEPS IN ITS GPA ACCESSION PROCESS Ukraine is currently in the process of negotiating accession the WTO GPA GPA parties expressed their hope to move Ukraine’s accession to a conclusion in the not too distant future Ukraine is currently very active in its GPA accession process In 2015 Ukraine participated in a round of bilateral negotiations with GPA parties (in Geneva) in February Submitted an updated negotiation offer (3rd Appendix I offer) in April will be participating in a round of bilateral negotiations with GPA parties (in Geneva) in June

UKRAINE‘S STEPS IN ITS GPA ACCESSION PROCESS Application for accession Ukraine submitted its application for GPA accession on 8 February 2011 Information about national procurement legislation Ukraine submitted its replies to the “checklist of issues” on 2 August 2011 Negotiation offers Ukraine circulated its initial offer on 13 December 2012 Ukraine circulated its first revised offer on 7 March 2014 Ukraine circulated its second revised offer on 28 October 2014 Ukraine circulated its third revised offer on 24 April 2015 Negotiations with GPA parties (in Geneva) Ukraine has been participating in a series of negotiations rounds with GPA parties during the last years to discuss its offer (as well as national public procurement legislation)

HOW TO BECOME A PARTY OF THE GPA? Agree with existing GPA members on coverage offer

COVERAGE OFFER – PARTIES’ APPENDIX 1 Entity coverage (Annex 1-3) Central level entities (Annex 1) Sub-Central level entities (Annex 2) Other entities (Annex 3) Coverage of goods and services (Annex 4-7) Goods (Annex 4) Services (Annex 5) Construction services (Annex 6) General notes (Annex 7) !  Subject to relevant thresholds and specific derogations !

COVERAGE OFFER – PARTIES’ APPENDIX 1 Thresholds are negotiable (but parties have expectations regarding general levels) ANNEX 1 ANNEX 2ANNEX 3 GoodsServicesConstruction servicesGoodsServices Construction services GoodsServices Construction services 130,000 5,000,000200,000 5,000,000400,000 5,000,000

COVERAGE OFFER – UKRAINE During the negotiation process a number of issues required discussion and clarification Concerns about (monetary) thresholds Coverage of entities, in particular, state-owned enterprises in the utilities sector Exclusions from coverage Ukraine’s initial offer included more than 30 different exceptions 3 rd revised offer includes only a small number of exceptions

COVERAGE OFFER – UKRAINE (CONT.) Annex 1 Definition of covered entity + indicative list Exception for services procured by the National Bank Annex 2 Definition of covered entity + indicative list Annex 3 Various entities carrying out certain utility activities + indicative list Definition of entities by using language of the EU (in the EU Appendix I offer / EU public procurement directives) Definition of exception for „in-house procurement“ by using language of the EU (in the EU Appendix I offer / EU public procurement directives)

COVERAGE OFFER – UKRAINE (CONT.) Annex 4 All goods Annex 5 In principle all services except for International arbitration courts, financial institutions related to raising of credit resources, R&D services as well certain financial services provided by the National Bank of Ukraine Annex 6 All construction services Annex 7 In principle exception only for procurements of diplomatic representations abroad as well as goods/services for the production of protected papers, coins, citizenship documents (passports) etc

COVERAGE OFFER – UKRAINE (CONT.) Third revised offer seems to be very close to the final offer Final issues to be discussed with GPA parties Next round of negotiations 1-3 June 2015 Highly professional approach Proactive Well prepared (responses to GPA parties requests in written/oral form) Flexible as to requests for improvement Defending its own interest GPA membership is no “one way street”

Ensure conformity of national public procurement legislation with GPA obligations

NATIONAL PROCUREMENT LEGISLATION (CONT.) Non-discrimination & national treatment GPA parties may not treat suppliers from the other GPA party less favorably than national suppliers Basic principles and transparency requirements E.g. publications of contract opportunities (by electronic means, free of charge, etc) Award procedures E.g. limited tendering only in exceptional circumstances

NATIONAL PROCUREMENT LEGISLATION (CONT.) Timelines Principally not less than 40 days but possibility to reduce by 15 days in case of e-procurement Tender specifications Must basically be based on international standards Reference to specific trade mark, patent, copyright, etc principally prohibited

NATIONAL PROCUREMENT LEGISLATION (CONT.) Tender documentation Minimum content Award information Bidders must be informed about the award decision Domestic review systems Timely, effective, transparent and non-discriminatory remedy system before independent body

NATIONAL PROCUREMENT LEGISLATION (CONT.) Electronic procurement Information technology system and software must be generally available and interoperable with other generally available systems/software Electronic auctions Information relating to the conduct of the e- auction must be disclosed E.g. automatic evolution formula

NATIONAL PROCUREMENT LEGISLATION – NEXT STEPS Current version of the law was circulated to GPA parties in April 2015 Compliance of Ukrainian public procurement legislation will be subject to discussion already in the course of the June 2015 meeting in Geneva Ukraine might be asked to amend its legislation to ensure conformity with GPA requirements

NATIONAL PROCUREMENT LEGISLATION – NEXT STEPS Gap analysis (preliminary comparison) Ukraine’s law is basically in line with GPA obligations (open issues remain) Recent amendments bring legislation close to full GPA compliance Gradual harmonization with EU acquis very beneficial ! Selected open issues Timelines for submitting bids Estimation of contract value Technical specifications: functional requirements instead of descriptive characteristics Minimum content of award decision

NATIONAL PROCUREMENT LEGISLATION (CONT.) Benchmark for GPA compliance is GPA GPA „only“ lays down common ground rules Meeting GPA (minimum) obligations does not automatically result in compliance with EU public procurement directives Modernizing public procurement is an ongoing process Work continues after GPA accession

CONCLUSION Ukraine has made considerable progress in its GPA accessionCoverage offer close of being acceptable for GPA parties Compliance of national legislation with GPA obligations currently subject of discussions with GPA parties GAP analysis indicates few outstanding issues GPA parties are supporting Ukraine’s GPA accession“Window of opportunity” should be used

SHORT PAPER ON HOW TO BECOME A PARTY TO THE GPA Schnitzer, The WTO Agreement on Government Procurement in the EBRD region, in EBRD Law in transition 2013 online See

CONTACT Johannes S. Schnitzer EBRD Consultant or Tel.: