Transparency in Public Procurement (Prozorro) (UA0073)

• Empowering Citizens as Watchdogs in Ukraine (May 29, 2019)

Improving transparency and efficiency of state control in the field of public procurement The launch of mandatory ProZorro electronic public procurement system back in 2016 contributed to the transparency and efficiency of procurement and helped involve new potential bidders. At the same time, a number of issues that negatively affect public procurement system in general still remain, including: • Low professional capacity of persons responsible for procurement procedure that results in poor and biased selection of winning bidders and eventually to nonefficient use of funds; • Violation of procurement law by the customers; • Biased and non-transparent decision-making during oversight activities of the bodies authorized to exercise control in the field of public procurement. Owing to high level of transparency of procurement through ProZorro, the community was enabled to detect the procurement procedures that may entail violation of law, as provided for by Article 9 of the Law of Ukraine “On Public Procurement” that concerns civic oversight. However, the e-procurement system currently does not enable notifying the controlling and law enforcement agencies on such cases. It also lacks consolidated information on how controlling and law enforcement agencies respond to the respective requests by the community. Moreover, public procurement system ProZorro currently lacks information on whether the payments per the procurement agreements were made which prevents from adequate control of efficiency and integrity of implementation of such agreements. Actions Responsible Timeframe Partners Indicator 1. Develop the API for integration of ProZorro epublic procurement system with external resources MoE MoF State Audit Service Treasury National Police of Ukraine State-run enterprise ProZorro January 2019 – August 2020 USAID and UK aid-funded Transparency and Accountability in Public Administration and Services Program/TAPAS, Transparency International Ukraine, other CSOs and international organizations (upon their consent) The mechanism for the CSOs to report detected violations of by the procurement customers to the controlling and law enforcement agencies online identified 2. Developing a statistics public module -//- December 2018 – April 2019 -// Detected violations and the status of addressing them are displayed in ProZorro system 9 3. Providing integration of ProZorro e-public procurement system with the systems of MoF and Treasury -//- December 2018 – December 2019 -//- Joint Order of the MoE and MoF on approving the Procedure of information interaction between eprocurement system, information system of the MoF and system of the Treasury adopted; Data exchange between these systems enabled Expected results of this activity are enabling the CSOs to report detected violations in ProZorro system online to the controlling and law enforcement agencies; enabling transparency of payment for procurement contracts; timely identification and prevention of violations and abuse of procurement procedures through automatic information exchange between the e-public procurement system ProZorro, Unified Portal of Open Data, and Treasury system.

4. Improve transparency and accountability of public procurement

Language of the commitment as it appears in the action plan: [25] Improving transparency and efficiency of state control in the field of public procurement

The launch of mandatory ProZorro electronic public procurement system back in 2016 contributed to the transparency and efficiency of procurement and helped involve new potential bidders. At the same time, a number of issues that negatively affect public procurement system in general still remain, including:

• Low professional capacity of persons responsible for procurement procedure that results in poor and biased selection of winning bidders and eventually to nonefficient use of funds;
• Violation of procurement law by the customers;
• Biased and non-transparent decision-making during oversight activities of the bodies authorized to exercise control in the field of public procurement.

Owing to high level of transparency of procurement through ProZorro, the community was enabled to detect the procurement procedures that may entail violation of law, as provided for by Article 9 of the Law of Ukraine “On Public Procurement” that concerns civic oversight. However, the e-procurement system currently does not enable notifying the controlling and law enforcement agencies on such cases. It also lacks consolidated information on how controlling and law enforcement agencies respond to the respective requests by the community.

Moreover, public procurement system ProZorro currently lacks information on whether the payments per the procurement agreements were made which prevents from adequate control of efficiency and integrity of implementation of such agreements.

Milestones:

1. Develop the API for integration of ProZorro e-public procurement system with external resources
2. Developing a statistics public module
3. Providing integration of ProZorro e-public procurement system with the systems of MoF and Treasury

Start Date: December 2018                                                             End Date: December 2019

Context and objectives

Created in 2016, the ProZorro [26] public e-procurement system has significantly enhanced transparency in procurements. However, according to the government, improvements to the system are still needed, such as integration with oversight and law enforcement functions, [27] a mechanism for citizen requests for investigation, and information on actual payments per procurement agreements. Without these components, audit and law enforcement agencies cannot properly control public procurement, leaving such accountability to civil society monitoring. [28] However, CSOs often face bureaucratic obstacles while monitoring the information on ProZorro. According to one Transparency and Accountability in Public Administration and Services (TAPAS) expert, authorities often treat civil society monitoring and feedback as unofficial. [29] Official appeals must be sent in hard copy via regular mail, which is more difficult and time-consuming. [30] A representative of the Ministry of Economic Development and Trade (MEDT) specified that the exchange of data between public procurement, finance, and treasury agencies was hindered by the lack of a respective interagency normative legal act. [31]

This commitment aims to address these issues by integrating the ProZorro e-public procurement system with the systems of the Ministry of Finance (MoF) and the Treasury, thus enabling official oversight of public procurement. The commitment also calls for a planned public statistical module that would structure and display data on public feedback. These planned improvements are relevant to all four OGP values. According to the government, [32] CSOs will be able to report online any detected violations in ProZorro to oversight and law enforcement agencies, payment for procurement contracts will be transparent, and the automatic information exchange will identify and prevent abuse of procurement procedures in a timely manner. Civil society experts added that e-appeals will have official status and thereby more weight in influencing oversight authorities, [33] thus allowing faster government responses to violations. [34]

Prior to this action plan, the government made substantial progress in open public procurement by activating the public feedback mechanism DoZorro, [35] through which anybody can submit feedback to a state contracting authority, contractor, or law enforcement agency about a particular procurement. Moreover, Transparency International Ukraine introduced DoZorro artificial intelligence (AI) software that allows for automatic searches of public procurement violations using machine learning algorithms. [36] This achievement was an outstanding breakthrough in opening government in Ukraine. [37] However, the government still interpreted civil society feedback on DoZorro as unofficial. Therefore, this commitment could establish a more formal channel for civil society monitoring and increase accountability in public procurement. Given the strong efforts in this area prior to the action plan, this current commitment represents a moderate important improvement to the status quo.

Next steps

The IRM researcher recommends the following to this commitment’s implementing partners.

• Stakeholders implementing the commitment should ensure proper funding of IT development and introduce necessary legislation requiring oversight and law enforcement authorities to respond to public e-appeals. Apart from this, the technical side of developing the API looks feasible.
• The partners need to consult end users about the content and design of the public statistical module. This will make the future statistical module more useful and convenient for its users.
• The Cabinet of Ministers is advised to monitor the negotiation process among MEDT, MoF, and the Treasury to ensure the adoption of necessary legislation and the integration of procurement, financial, and treasury systems.

For the next action plan, the IRM researcher recommends continuing this commitment by integrating digital systems of other government agencies to ensure maximum transparency of financial flows.

4. Improve transparency and accountability of public procurement

Aim of the commitment

The commitment aimed to improve the transparency and accountability of public procurement. It sought to develop a technical solution (via an application programming interface) to enable nongovernment resources to integrate with the Prozorro public online procurement system. It also sought to develop a public statistical module to structure and display data on public feedback. Finally, the commitment aimed to integrate the Prozorro system with the systems of the Ministry of Finance and the Treasury to enhance official oversight of public procurement. ^[20]

Prior to this action plan, ^[21] Prozorro already had an elaborate statistical module. ^[22] That module applied to lay users and professionals alike. The online platform Dozorro, ^[23] which is for civil society and business feedback on public procurement, also existed. However, audit and law enforcement agencies often treated civil society monitoring and feedback as unofficial. They also lacked information on procurement payments. The commitment, therefore, aimed to establish deeper integration of government digital systems and an official digital feedback and tracking mechanism. ^[24]

Did it open government?

Marginal

ProZorro, with Transparency International Ukraine, developed an application programming interface that enables civil society organizations (CSOs) to electronically report detected public procurement violations directly to the State Audit Service (SAS). ^[25] According to a Prozorro official, users had reported 160 violations as of November 2020, ^[26] but this number is expected to rise, since the Dozorro system has had thousands of feedback reports and an active web of trained CSOs. [27]

The status of appeals appears on the respective tender web page, along with the monitoring process from the SAS. ^[28] The official explained that users can submit an e-appeal directly to SAS either via Prozorro itself or through the appeal form on a tender web page. ^[29] Nevertheless, some nongovernment stakeholders expressed concerns that the SAS might not interact with these digital appeals. ^[30] The Ministry for Development of Economy, Trade and Agriculture (MDETA) is in ongoing negotiation with SAS about their capacity to deal with potentially numerous e-appeals. ^[31] The uncertainty about whether SAS will deal effectively with digital appeals limits the change toward open government in practice.

While some open data on appeals is available, the statistical module that displays detected public procurement violations and the status of addressing them in Prozorro is still under development. ^[32]

The government saw significant early results from the integration of the Prozorro public procurement system with the digital systems of the Ministry of Finance and Treasury. The latter systems track payments per procurement contract, enabling the monitoring of the whole procurement process, from tender to implementation. ^[33] This integration will allow the government to better organize contracting at all stages, from initiation to reporting. Also, this integration will facilitate analyzing and monitoring the use of public funds. ^[34] This includes information on the auction, contract, contract amendments, payments, monitoring results, violations, and responses of audit and law enforcement authorities. ^[35] The latest Transparent Public Procurement Rating points to improvements in ProZorro across all areas of analysis from 2016–2017 to 2018–2020, and in particular to “efficiency” and “accountability and integrity” indicators. [36] However, some of the data is not in an open data format and, therefore, is analyzed manually. While data is available only for those public procurement contracts that were published after the integration, a civil society representative noted that public officials now publish more public procurement information in a machine-readable format. ^[37] That update facilitated the automatic monitoring of public procurement. Early results are marginal in demonstrating progress on the reporting of violations, and it is not clear whether reporting the costs throughout the procurement cycle has changed government practice or how the government might respond to public oversight.