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Public procurement in Ukraine using the ProZorro system: a guide for Canadian bidders
Learn how to bid on government procurement opportunities through ProZorro, Ukraine’s transparent government procurement platform. Take advantage of unprecedented access to the Ukrainian procurement market offered through the Canada-Ukraine Free Trade Agreement (CUFTA).
This Guide was commissioned by the Trade Commissioner Service in Ukraine with assistance of Deloitte.
Table of Contents
About Ukraine and ProZorro
Canada and Ukraine are parties to the Agreement on Government Procurement (within the framework of the World Trade Organization). The agreement provides suppliers of the parties a guarantee of non-discrimination regarding procurement.
Key sectors of Ukrainian economy:
- Agriculture
- Energy
- IT
- Manufacturing
- Transportation and infrastructure
Can$15 billion average annual budget for public procurement
1.4 million Ukrainian diaspora in Canada
#1 largest country located entirely within Europe
44 million population
1:20 rounded average rate of Canadian dollar to Ukrainian hryvnia (UAH) in 2018
90 days visa-free stay for Canadian citizens during a 180-day period
Canada-Ukraine Free Trade Agreement
The Canada-Ukraine Free Trade Agreement (CUFTA) simplifies the access of Canadian companies to the Ukrainian market and expands trade opportunities.
CUFTA entered into force on August 1, 2017.
Please see Annex 1 for:
- other topics covered by CUFTA
- links to the full text of CUFTA
- links to a brief CUFTA guide
CUFTA highlights
- Pursuant to the agreement, Ukraine eliminated custom duties for approximately 86% of Canadian goods. Check tariffs for your goods.
- CUFTA eliminated custom duties only for goods originating in Ukraine or Canada.
- Rules of origin do not apply to public procurements. For example, a Canadian company may offer goods that have not been fully produced in Canada.
- Procurements must be conducted in a transparent and impartial manner. Conflicts of interest should be avoided and corrupt practices should be prevented.
- All tenders must be treated on a fair, non-discriminatory and confidential basis.
About ProZorro
What is ProZorro?
ProZorro is a centralized, electronic open-source database enabling public procurement in Ukraine.
At the ProZorro website, you can find:
- information on all tenders held after July 31, 2016 (status, results, winners)
- news and public events
The website does not give you access to participate in tenders posted. To participate, you should register at a private platform.
Think of ProZorro and private platforms as you would of the Web and browsers through which access is provided.
Just like the Web, ProZorro holds data.
To access ProZorro, you can choose from a variety of websites, each having specific features. Regardless of the browser you use, the accessed data will be the same (even though visual representation may vary).
See how to work with platforms further in this guide.
History
ProZorro was developed as a joint effort of the Transparency International organization, the Ministry of Economic Development and Trade of Ukraine, volunteers, NGOs and other participants.
The ProZorro platform is owned and operated by the state enterprise ProZorro.
The following Ukrainian institutions are obliged to carry out procurements through ProZorro:
- central executive state authorities (such as ministries)
- monopolies (such as Ukrainian Railways)
- local authorities (such as municipal administrations)
- communal enterprises (companies owned by local communities)
Other institutions and private legal entities may also use ProZorro for their procurements.
Volume of procurements through ProZorro in 2018
Number of tenders: 1,252,000
Bidders: 148,000
Purchasers: 28,340
Estimate savings for the state budget of Ukraine: equivalent to Can$1.6 billion
Advantages
Transparency
- The name ProZorro comes from the Ukrainian word for “transparent” (“прозоро”).
- The philosophy and objective of the system is to ensure the transparency of public procurements.
Simplicity
- Easy and fast online access to public procurement information.
- Reduced paperwork.
- Possibility of remote participation.
Data security
- The IT infrastructure is located in a cloud.
The State Service of Special Communication and Information Protection of Ukraine confirmed compliance of the integrated information security system with the law.
- Ukraine is working to implement the EU General Data Protection Regulation. This will further enhance data protection for all individuals.
Recognition
- Showcase status as an exceptional example of digitalization of public e-procurement awarded by the European Bank for Reconstruction and Development and the Open Contracting Partnership, 2015.
- Winner of a World Procurement Award, 2016.
- Winner of the Technology of the Future prize from Communication on Top—Davos, 2016.
- In 2017, the World Bank announced that it would use the ProZorro platform for the procurement of goods and services in Ukraine. The first auction was held in 2018.
Participation of foreign bidders in 2018
Agreements with foreign bidders: 850 (0.1% of the total number of agreements) for a total of Can$3 billion (9% of the total cost of executed agreements)
The ProZorro family
The ProZorro family comprises systems with auxiliary or advanced functions compared to ProZorro.
Note: Tenders are posted mostly in Ukrainian
Business Intelligence ProZorro
BI.ProZorro (in Ukrainian only) visualizes data from the ProZorro system to make it useable and understandable
Information is presented in graphs, charts, tables, etc. Users can apply various filters
Use BI.ProZorro to find out about published tenders relating to goods or services you plan to sell, price offers, tender winners, etc
ProZorro Sale
ProZorro.Sale (English and Ukrainian only) is a platform for selling state and local community property
Use ProZorro.Sale to check:
- small-scale privatization
- the purchase of special permits for the use of state subsoil
- the purchase of rights to claim and property of bankrupt banks
- the purchase of rights to lease land plots, and property owned by state and municipal enterprises
- the purchase of rights to lease freight wagons
Do Zorro
DoZorro (in Ukrainian only) is a tool for public monitoring of procurement.
Use DoZorro to:
- provide feedback to a contracting authority
- discuss or better understand procurement terms and conditions
- analyze procurements of a certain contracting authority
- prepare and submit official applications to the controlling authorities
Opportunities for Canadian exporters
Top 10 goods and services purchased through ProZorro in 2018-2019 by cost
- Services related to finished and unfinished construction
- Petroleum products, fuel, electricity and other energy sources
- Services for finishing construction works
- Construction and installation works
- Other goods (largest subcategories: mining equipment, furniture, mining products and metals, agricultural products, clothes and fabrics)
- Construction structures and materials, auxiliary construction products (except for electric equipment)
- Medical equipment, pharmaceutical products and personal hygiene products
- Food, beverages, tobacco and related products
- Ancillary transport services, tourist agency services
- Repair and technical maintenance services
Planned developments in ProZorro
ProZorro continues to undergo enhancement and development to enforce anticipated regulatory changes.
Ability to reject offers with an abnormally low price
This will help counteract predatory pricing. An abnormally low price is a winning price that is more than 40% lower than competitor prices at the initial stage and more than 30% lower at later stages.
Life cycle cost estimates
Procurement price is no longer the only criterion for winning a tender. The life cycle cost concept takes into account other buyer expenses during the course of using a procurement item.
Electronic catalogue
This is a database of up-to-date offers—a tool for purchasing small lots of typical products, similar to an online store.
Appeal procedure
If the Antimonopoly Committee of Ukraine rules in favour of an appeal, the money paid to submit the appeal must be reimbursed to the applicant. Recall of a submitted appeal will not be possible.
Business associations
Business associations, such as consortia, will be able to bid.
ProZorro: the playbook
Players and stakes
Who are the players?
Buyers
Public companies:
- state/municipal authorities and social security authorities
- non-commercial legal entities owned by state/municipal bodies
Specialized companies:
- mostly state/municipal business entities operating in designated areas of the economy (oil and gas, heating, electricity, water, railway infrastructure, postal services, etc.)
Private companies are not required to conduct procurements through ProZorro; however, they may use ProZorro at their own discretion
Bidders
Ukrainian or foreign:
- legal entities
- individuals
The vast majority of goods, services and works* at stake may be purchased through ProZorro, with the following exceptions:
- goods and services related to the design/production of banknotes, coins and state awards of Ukraine, information constituting state secrets, the acquisition/lease of land, buildings
- or specialized companies, goods/ services/works for supporting activities in designated areas of the economy
How to join
Choice of platform
To participate in procurements, bidders must use authorized electronic trading platforms. Regardless of the platform used, the tender data will be identical (even though the visual representation may vary).
Platforms with English interface :
Platforms with no or limited English interface:
- Accept online
- Tenders Allbiz
- Newtend
- Uub
- Ubiz
- All Tenders
- Gov.Auction
- 25h8.Auction
- Public Bid
- Upetem
- Zakupki.com.ua
- Tender Online
- Open Tender
Registration
After selecting a platform, the bidder must complete the registration and authorization process. Please note that in case of a negotiation procedure (explained further in section 4, Scenarios), registration is not required.
Registration and authorization take time, so make sure you register in advance.
Bidder can choose any platform. All platforms are connected to ProZorro and display the same information on procurements.
The following information is usually required:
- company name
- telephone
- codes of goods/services/works according to the Unified Procurement Dictionary
- country of the bidder’s registration
- company ID
Authorization
Authorization procedures for foreign bidders vary on different platforms. Foreign companies may choose from the following procedures available on Zakupki.prom.ua, SmartTender.biz and Opentenders.Online.
1. Signing a contract between the bidder and the platform
Contracts are usually bilingual. Generally, a scanned copy of the signed and sealed contract is enough for the authorization.
2. Bank payment of the invoice
The payment can only be made from the bidder’s current account. After the authorization, funds will either be returned to the bidder or added to the bidder’s account balance on the platform.
3. Electronic digital signature according to Ukrainian legislation
Note: An electronic digital signature issued by an authorized provider from a foreign country in Ukraine may not be used. Only a digital signature issued by a Ukrainian authorized provider may be used for the purposes of authorization.
4. Bank ID
Note: This option is available only for companies with an account at a Ukrainian bank.
5. Mobile operator ID
Note: This option is available only for phone numbers from Ukrainian mobile operators.
Eligibility criteria
Be conscious that buyers may set the following eligibility criteria:
Bidders—criteria may relate to:
- the availability of equipment and material/technical base
- the availability of qualified and experienced employees
- documented experience of similar contracts in the past
Items to be procured—criteria may relate to:
- certain technical specifications Private companies may set additional
- qualification criteria for bidders.
Reasons for rejection of a bidder’s participation
Buyers have the right to reject a bidder’s participation in a procurement for the following reasons:
- The bidder gave a bribe
- The bidder or its officials committed a crime involving corruption
- The bidder and the buyer are affiliated or related companies
- The bidder is bankrupt
- The bidder has not implemented the anticorruption program* (only if the procurement value exceeds UAH 20 million [approximately Can$1 million])
Step-by-step guide
Bidding process at a glance
- Select the opportunity
- Clarify the terms
- Pay the participation fee
- Submit the tender offer
- Auction
- Qualification stage
- Contract execution
- Complaints (if applicable)
1. Select the opportunity
- Go to the platform where you have previously registered.
- Choose a procurement from the list of available tenders or use the search bar.
Each procurement page contains details and tender documents published by the buyer.
These usually include the following:
- all requirements for bidders
- a list of required documents
- technical specifications of items being procured
- draft contract to be executed with the tender winner
- terms of delivery
- language requirements, etc
2. Clarify the terms
- Bidders may contact buyers anonymously through the platform for clarification of tender documents after their publication.
- The period for clarification of above- threshold procurements ends no later than 10 days before the bid deadline.
- As for below-threshold procurements, the period for clarification that covers both asking questions and providing answers is:
- at least one business day, if the procurement value is UAH 3,000 to UAH 50,000 (approximately Can$150 to Can$2,500)
- at least three business days, if the procurement value exceeds UAH 50,000 (approximately Can$2,500)
The buyer must provide clarifications to tender documents within three days of the question being published.
3. Pay the participation fee
- The participation fee depends on the procurement value; it ranges from Can$1 to Can$85
- Platforms usually issue an invoice to be paid by the bidder
Note: Payment has to be made from the bidder’s current account
4. Submit the tender offer
Tender documents may require bidders to provide a tender guarantee—a bank guarantee that is returned to the bidder later (except in certain cases).
A bank guarantee may be issued by your bank in the name of a Ukrainian bank that will re-issue its own guarantee to the buyer.
Follow these steps to submit the tender offer:
- Enter the price offer in the respective field of the platform
- Upload the documents comprising your tender offer
- Confirm compliance with all tender document requirements by clicking the respective confirmation button
- Obtain information from the platform on the date and time of the auction; this is sent to an internal mailbox on the platform or to your personal email
Bidders will be able to see each other’s tender offers from the earliest stage of the procurement.
In the case of below-threshold procurements, the period for tender offer submission is:
- at least one business day if the procurement value is UAH 3,000 to UAH 50,000 (approximately Can$150 to Can$2,500)
- at least two business days if the procurement value exceeds UAH 50,000 (approximately Can$2,500)
If a tender offer does not meet the tender document requirements, or if a bidder does not comply with the qualification criteria or does not provide a tender (bank) guarantee, the bidder’s tender offer will be rejected.
Practical insights
- Name all the documents you upload exactly as they are named in the tender documents to avoid misunderstandings with the buyer.
- It is better to upload the set of documents in advance. As all platforms are interconnected and the information is uploaded to the central database on ProZorro, uploading may take some time.
- Mind the time difference between Ukraine and Canada to make sure you don’t miss the bid deadline.
5. Auction
The auction takes place online on the automatically created auction page. It contains information about the tender and the field for making bids.
The auction platform main page contains the list of all current and anticipated auctions and their status in real time.
Information about the bidders’ tender offers is available to everyone via ProZorro, but the bidders’ prices will be hidden until the start of the auction.
- The auction platform operates in Kyiv time
- The auction is held in three rounds
- During each round, a bidder can reduce the price specified in tender documents by at least one step. Alternately, the bidder can stay with its original price offer.
In addition to the price criterion used for the assessment of tender offers, the buyer may set other non-monetary qualitative criteria such as terms of payment, execution deadline and guarantee services.
If setting non-monetary criteria, the buyer must establish a formula for calculating the bidders’ compliance with these criteria. Based on the formula, ProZorro automatically recalculates the bidders’ price offers and establishes the “corrected price.”
In such a case, the bidders start bidding from the corrected price.
- Use the link from your personal account on the platform to go to the auction platform
- The system displays all bidders’ prices, and only that
- The bidder with the highest price bids first (two minutes per bidder)
- The bidder offering the next highest price bids next
- Names of the bidders are disclosed after the end of the auction
- The bidder with the lowest price is recognized by the system as the winner
- The system discloses the tender offer with the best price to the buyer
6. Qualification stage
The qualification stage may be held after or prior to the auction, depending on the type of procurement.
These steps take place during the qualification stage:
- The buyer reviews the tender offer with the best price, making sure that the bidder’s offer complies with the qualification requirements established in tender documents
- If the tender offer with the best price complies with the tender document requirements, the buyer chooses that bidder as the winner
- The buyer sends a tender offer acceptance letter to the winner via the platform.
7. Contract execution
The contract is executed between the tender winner and the buyer according to Ukrainian legislation.
The contract is executed only after the end of the term for appeal, which, depending on the procurement scenario, is 10 days after:
- the qualification stage in an open tender » the auction in an open tender
- published in English
- the auction in a procurement process known as “competitive dialogue”
8. Complaints
If you suspect that violations took place during your procurement, you can file a complaint to a number of authorities. Templates for the most common types of complaints can be found at the DoZorro website.
Note:
- If a situation is not typical, a legal advisor specializing in local procurement can help prepare a customized complaint
- All communication with local authorities is held in Ukrainian
Please refer to Annex 2 for typical violations, respective authorities you can report to and possible complaint results.
Scenarios
Types and thresholds
There are certain modifications to the standard process depending on the type of procurement and the value in relation to the threshold*
An important factor to know about thresholds is that above-threshold procurements must be published on the ProZorro website. Most worthwhile public opportunities are above threshold.
* For more details on thresholds, please refer to Annex 3.
Type of procurement
- Open tender
- Open tender published in English
- Competitive dialogue
- Negotiation procedure
Value
- Above threshold
- Below threshold
Open tender
What?
The most commonly used procurement procedure
When?
- Buyer is certain about what items it wants to purchase
- There are several companies in the market that might offer the best proposals
Why?
To choose the most appropriate offer in terms of price and compliance with the eligibility criteria
- Selection of procurement
- Clarification of tender document
- Payment of the participation fee
- Submission of the price offer and required documents
- Auction
- Qualification stage
- Contract execution
Open tender published in English
What?
The procedure of open tender published in English is the same as the open tender procedure, except for steps 5 and 6
When?
If the expected value of procurement exceeds:
- €133,000 (Can$200,000) for goods and services
- €5.15 million (Can$7.7 million) for works
- Selection of procurement
- Clarification of tender documents
- Payment of the participation fee
- Submission of tender offer
- Qualification stage
- Auction
- Contract execution
Competitive dialogue
What?
A less commonly used procurement procedure
When?
- Buyer is uncertain about what items it wants to purchase or what technical specifications should be in place
- The procurement aims to buy software, scientific research, information systems development, the construction of buildings
Why?
To optimize the procurement’s goals through a dialogue with bidders
- Selection of procurement
- Clarification of tender documents
- Payment of the participation fee
- Submission of tender offer without the price offer
- Qualification stage
- Negotiations outside ProZorro (requirements to be in tender documents)
- Submission of the final tender offer with the price offer
- Auction
- Contract execution
Negotiation procedure
What?
The only procedure held offline (not via platforms)
When?
Most commonly used when:
- works of art or items involving the protection of intellectual property rights are being purchased
- there is an absence of competition in the market
- a tender has already been cancelled twice due to an insufficient number of bidders
Why?
To optimize the procurement’s goals through negotiations, in order to find eligible bidders.
Note: The buyer will require the bidder(s) to submit compliance-related documents during negotiations.
- The buyer approaches the bidder(s) independently without publishing a tender on ProZorro
- Negotiations and qualification
- The buyer publishes a notice of intention to enter into an agreement on ProZorro
- Contract execution
Challenges and tips
Foreign bidders may face specific issues. Below are the most common ones and how to deal with them.
Language
Most of the information is in Ukrainian.
Different platforms with English interfaces may have different translations of the same term or definition. For example:
- the buyer—customer, procurer, etc
- the bidder—supplier, participant, etc
Usually, tender documents are published in Ukrainian. The buyer may publish tender documents prepared in English at its own discretion.
A foreign bidder may consider engaging a translator.
Registration on platforms
Not all platforms allow registration and authorization of foreign companies. A number of platforms that do are mentioned on page 14.
Authorization on platforms
Authorization on platforms might take longer due to the execution of service contracts with the platform. Some authorization options (foreign digital electronic signature, mobile ID, foreign bank ID) may not be available for foreign companies.
Participation of foreign companies
Tender documents might lack information on foreign companies’ participation in procurement. In such cases, you may ask the buyer for clarification of tender document requirements if needed.
A common issue is when tender documents require bidders to submit documents that only Ukrainian bidders can have (such as confirmation of registration in the Ukrainian Register of Companies). In such a case, foreign bidders should query the buyer. Usually, foreign bidders submit equivalent documents issued in their country of registration.
Currency conversion
The currency for procurements is UAH. The system has no automated currency conversion option. Therefore, bidders will need to make currency conversions themselves.
The National Bank of Ukraine provides the official exchange rate of UAH to foreign currencies. You may also choose from a number of online currency converters.
Please make sure that the authorization is completed in advance of bidding on a tender.
Annex 1 — Opportunities for Canada in Ukraine
- More about Ukraine for investors
- Business report on Ukraine prepared by Die Welt
- Information resources regarding investment in Ukraine
- Ukraine’s Law on Public Procurement
- Links to CUFTA full text and brief guide
Annex 2 — Typical violations, respective authorities and possible complaint results
1. Any act or omission by the contracting authority violating public procurement laws and resulting in the infringement of a right or legitimate interest of the participants
Ruling authority: Antimonopoly Committee of Ukraine (the main compliance review body on public procurements). The state duty for submitting a complaint ranges from Can$350 to Can$750.
Result of a complaint: The committee may obligate the contracting authority to:
- amend tender documentation
- cancel procurements
- cancel a decision on the rejection of participants
- cancel a decision on the determination of a winner
- cancel a decision on the admission of participants
2. Unjustified admission of participants to the auction
Ruling authority:
- Accounting Chamber of Ukraine (only with regard to procurements paid for from the state budget)
- The State Audit Service of Ukraine
- Result of a complaint: A fine of Can$600 to Can$850 is levied on each member of the tender committee and on the contracting authority
3. Unjustified determination of the winner
Ruling authority:
- Accounting Chamber of Ukraine
- The State Audit Service of Ukraine
Result of a complaint: A fine of Can$600 to Can$850 is levied on each member of the tender committee and on the contracting authority
4. Executed procurement contract does not comply with the auction results
Ruling authority:
- Accounting Chamber of Ukraine
- The State Audit Service of Ukraine
- The State Treasury Service of Ukraine
Result of a complaint:
- A fine of Can$600 to Can$850 is levied on each member of the tender committee and on the contracting authority
- Payments from the contracting authority account are prohibited
5. Violation of disclosure terms/ failure to disclose annual procurement plan and its annexes, procurement contract and its amendments, tender documents, contract execution and performance report, tender offer-related documentation and information
Ruling authority:
- Accounting Chamber of Ukraine
- The State Audit Service of Ukraine
Result of a complaint: A fine of Can$600 to Can$850 is levied on each member of the tender committee and on the contracting authority
6. Any of the following:
- Unavailability of the annual procurement plan/amendments to the plan before making payments under the contract
- Inconsistency of the annual procurement plan with legislative requirements
- Absence of the procurement contract
- Procurement results deemed invalid by court decision
- Absence or inconsistency of required documents per legislative requirements
Ruling authority:
- The State Treasury Service of Ukraine
Result of a complaint: Payments from the contracting authority account are prohibited.
Annex 3 — Threshold
Ukraine’s Law on Public Procurement establishes certain procurement thresholds where the use of the ProZorro system becomes mandatory (otherwise, it is optional).
Company status:
- Public company
- Goods and services— UAH 200,000 (approx. Can$10,000)
- Works—UAH 1.5 million (approx. Can$75,000)
- Specialized company
- Goods and services— UAH 1 million (approx. Can$50,000)
- Works—UAH 5 million (approx. Can$250,000)
- Private company
- Optional, according to own bylaws
Disclaimer
About Deloitte
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Cette publication est aussi disponible en français sous le titre : Les marchés publics en Ukraine et le système ProZorro : guide à l’intention des soumissionnaires canadiens.
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Cat. No.: FR5-170/2019E-PDF
ISBN: 978-0-660-32637-5
July 22, 2019