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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:

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:

CUFTA highlights

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:

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:

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
Simplicity
Data security

The State Service of Special Communication and Information Protection of Ukraine confirmed compliance of the integrated information security system with the law.

Recognition

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:

Do Zorro

DoZorro (in Ukrainian only) is a tool for public monitoring of procurement.

Use DoZorro to:

Opportunities for Canadian exporters

Top 10 goods and services purchased through ProZorro in 2018-2019 by cost

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:

Specialized companies:

Private companies are not required to conduct procurements through ProZorro; however, they may use ProZorro at their own discretion

Bidders

Ukrainian or foreign:

The vast majority of goods, services and works* at stake may be purchased through ProZorro, with the following exceptions:

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:

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:

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:

Items to be procured—criteria may relate to:

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:

Step-by-step guide

Bidding process at a glance

1. Select the opportunity

Each procurement page contains details and tender documents published by the buyer.

These usually include the following:

2. Clarify the terms

The buyer must provide clarifications to tender documents within three days of the question being published.

3. Pay the participation fee

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:

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:

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

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.

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.

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:

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:

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:

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

Value

Open tender

What?

The most commonly used procurement procedure

When?

Why?

To choose the most appropriate offer in terms of price and compliance with the eligibility criteria

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:

Competitive dialogue

What?

A less commonly used procurement procedure

When?

Why?

To optimize the procurement’s goals through a dialogue with bidders

Negotiation procedure

What?

The only procedure held offline (not via platforms)

When?

Most commonly used when:

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.

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:

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

  1. More about Ukraine for investors
  2. Ukraine’s Law on Public Procurement
  3. 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:

2. Unjustified admission of participants to the auction

Ruling authority:

3. Unjustified determination of the winner

Ruling authority:

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:

Result of a complaint:

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:

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:

Ruling authority:

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:

Disclaimer

About Deloitte

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This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.

Publication information

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

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