Public procurement regulation in Ukraine

July 2021

All public procurement procedures are carried out electronically through Prozorro*, a government e-procurement system. The system is designed to automate all procedural steps to minimise the potential for the contracting authority to sabotage public procurement. All actions of the contracting authorities and bidders are synchronized online. 

The main features of the Ukrainian e-procurement system:

1. Digitalization: all documents filed by contracting authorities and bidders are filed in electronic form only. 
2. Transparency: all actions of the contracting authorities and bidders tenders (excluding confidential information and price offerings before the auction), appealing authority, as well as communications between contracting authority and bidders are visible for everyone who visits Prozorro.
3. Unification: All procedures are standardized and therefore predictable for all parties involved in the procurement process.
4. Prozorro can not only be used by the state contracting authorities but also by private businesses on their initiative.
5. Prozorro can not only be used for managing public procurement but also for privatization and leasing state or municipal property. 

Prozorro accumulates information regarding (i) plans for future procurement procedures scheduled for the current budget year, (ii) announcements regarding conducting all public procurement procedures, (iii) the status of ongoing procedures (including cancellation, appeals etc.), and (iii) history of completed procedures. Prozorro’s search engine allows results to be categorized based on different criteria (value and/or subject of procurement, type of procurement procedure, current status, etc.). 

All information in Prozorro is available in Ukrainian. However, announcements for tenders with a value equal to or exceeding EUR 133,000 are published in Ukrainian and English.   

*The only exception to this rule is made for military public procurement (non-public procurement (negotiations, negotiations on a phased basis and simplified selection without application of e-procurement).

The following thresholds are prescribed by the Ukrainian Public Procurement Law (the “PPL”):

*Fewer documents are filed compared to other procedures. 

Generally, open tender is the standard procedure. 

Open tender exists in two versions, regular and European. 

Regular open tender has the following stages:

• Introducing tender to annual procurement plan.
• Publication of the announcement (call for competition) and tender documentation.
• Tender proposals submission.
• Electronic auction.
• Prequalification.
• Award of the contract.

European open tender reverses some of the stages:

• Introducing tender to annual procurement plan.
• Publication of the bilingual (UA/EN) announcement (call for competition) and tender documentation.
• Tender proposals submission.
• Prequalification.
• Electronic auction.
• Award of the contract.

Restricted tender is used if it is necessary to conduct preliminary qualification of bidders:

Stage No. 1 Qualification selection (at least 4 bidders required)

• Publication of the announcement with terms and conditions of the tender. The contracting authority may invite selected candidates; however, any interested parties may submit their bids without invitation.
• All candidates submit documents or information to confirm compliance with the selection criteria and absence of ground for exclusion from the tender according to the PPL. No pricing bids are be submitted at this stage. 
• Selection of the bidders.

Stage No. 2 Open tender with the selected bidders (at least 3 bidders)

Negotiated procedure is used only in the following exceptional cases:

• if an open tender procedure has been cancelled twice due to insufficient bids;
• if works, goods, or services can be performed, supplied, or provided exclusively by a particular company (lack of competition for technical reasons; subject of tender is a piece of art or is heavily protected by IP rights; conclusion of a contract with a supplier of "last resort" for the supply of electricity or natural gas);
• if it is necessary to purchase goods/services urgently in connection with exceptional circumstances:

1. special economic or social emergence with the need to immediately eliminate their consequences, 
2. providing humanitarian assistance to other states, 
3. termination of a procurement contract due to the fault of the counter party for a period sufficient to conduct a new tender (the value of tender may not exceed 20 percent of terminated procurement contract), 
4. appealing of the ongoing tender (the value of tender may not exceed 20 percent of the value of ongoing tender), and 
5. procurement for defence needs during the legal regime of martial law by contracting authorities defined in the Law of Ukraine "On Defense Procurement".

• it is necessary to supply an additional volume of goods from the same supplier if, in the case of a change of supplier, the contracting authority would be forced to purchase goods with other technical characteristics, which would lead to incompatibilities associated with operation and maintenance;
• if after conclusion of the procurement contract, the contracting authority needs to purchase additional similar works or services from the same participant;
• purchase of goods under the procedure of restoring solvency of a debtor;
• procurement of legal services related to protecting rights and interests of the state of Ukraine (including international arbitration).

The contracting authority must publish substantial explanation for their use of the negotiated procedure. Any candidate may appeal the decision to use the negotiated procedure to the Antimonopoly Committee of Ukraine. To be invited to negotiations, a participant should contact a contracting authority directly within the terms specified in the announcement of the procurement. 

Competitive dialogue is used if a contracting authority is uncertain about necessary technical, qualitative characteristics (specifications) of works or a kind of services to be procured. 

Stage No. 1 Specification of the tender documentation:

• Submission of tender proposals with information regarding compliance with selection criteria and description of the procurement procedure, but without pricing bids.
• Negotiation with the selected bidders (at least 3).
• Finalization of the tender documentation based on the results of negotiations.

Stage No. 2 Open tender with the selected bidders.

Any bidder can appeal unlawful decisions, actions, or omissions of a contracting authority, including tender documentation, other decisions, actions, or omissions taken during the tender procedure, rejection of a bid, award decision, decision to cancel the tender.

The most common claims are the following:

• Unjustifiable requirements in the tender documentation (discriminatory selection criteria, setting requirements to submit unnecessary documents, etc.),
• Unjustified exclusion of a bidder from a tender, and
• Acceptance of a tender from a bidder whose proposal should have been rejected.

The time limit for appeals regarding tender documentation commences with the procurement announcement and elapses 4 (four) days before the deadline for the submission of bids. 

The time limit for appeals regarding decisions, actions, omissions taken after tender proposals assessment* (award decision, rejection of a bid, decision to cancel tender, etc.), is 10 (ten) days from the day a bidder learned or could have learned about the infringement of its rights and legal interests, and elapses on the day of conclusion of the procurement contract. 

*Not applicable in case of European tenders. Appeals on decision, actions, omissions taken after consideration of the tender proposals (award decision, rejection of a bid, decision to cancel tender) must be filed within 5 (five) days after publication of minutes on consideration of the tender proposals.

The Antimonopoly Committee of Ukraine (the “AMCU”) has 10 (ten) business days to consider an appeal (with a possible extension of up to 20 (twenty) business days).

If a deadline for an appeal has expired, Prozorro automatically blocks the possibility of filing an appeal.

6. How long is the standstill period?

The procurement contract is signed within 20 (twenty) days after publishing the notice of intent to award the contract (with possible reasonable extension till 60 (sixty) days).

An award decision* may be appealed within 10 (ten) days from the day a bidder learned or could have learned about the infringement of its rights and legal interest, but no later than the day of conclusion of the procurement contract.    

*In the case of European tenders, the deadline for filing of an appeal is 5 (five) days after publication of minutes on consideration of the tender proposals.

The appeal authority is the AMCU. Decisions of the AMCU can be appealed to the administrative court within 30 (thirty) days after publication of the AMCU`s decision on Prozorro.  

Bidders may also appeal against all actions of contracting authorities to courts in general order.   

An additional measure of appeal is to file a claim to Business Ombudsman Council, a non-profit organization aimed at helping businesses overcome administrative hurdles in Ukraine. Preconditions for the claim:

• An electronic claim should be filed against state authorities or state-owned companies and reflect a problem the applicant has been unable to resolve;
• At least one instance of an administrative appeal has been exhausted. 

Possible outcome: Issuance of the recommendations for state authorities and ensuring implementation draws public attention or attention of the President and the Cabinet of Ministers.

Administrative fee for an appeal:

• 0.3% of the expected value set by a contracting authority in case of appealing tender documentation and decisions, actions, omissions of a contracting authority taken before acceptance of the tender proposals, but not more than UAH 85,000 (ca EUR 2,500).
• 0.6% of the expected value set by a contracting authority in case of appealing decisions, actions, omissions of a contracting authority taken after acceptance of the tender proposals, but not more than UAH 170,000 (ca EUR 5,000).

Application for interim measures is not necessary. In case of appeal, Prozorro automatically blocks a contracting authority from taking any actions during the time assigned for the AMCU to consider the appeal.

This Directive does not apply in Ukraine as Ukraine is not yet a member of the European Union. 

The essential terms of the procurement contract may not be amended after its signing, except in the following cases:

• reduction of procurement volumes, considering the contracting authority's expenses;
• increase of the price per unit of goods up to 10 percent in proportion to the increasing market price, provided that such change does not increase the total value of the procurement contract. Such changes can be implemented not more than once within 90 days from the date of signing the contract (not applicable, if subjects of procurement are gasoline and diesel fuel, gas, and electricity);
• improvement of the quality of the subject of the procurement, but without increase of the total value of the procurement contract;
• extension of the procurement contract and/or term for the fulfillment of obligations in case of documented objective circumstances that caused such extension (force majeure, delay in budget financing), but without increasing the total value of the procurement contract;
• reduction of prices including due to price fluctuations for goods on the market;
• changes in the price in connection with changes in tax rates and changes of conditions for granting tax benefits;
• if the contract prescribes such changes in price, price changes based on changes in the consumer price index, the foreign exchange rate, exchange quotations (Platts, ARGUS), regulated prices (tariffs), and standards (as applicable).

The duration of the procurement contract may be extended for a period sufficient for conducting a new procurement procedure at the beginning of the following year, but in the amount not exceeding 20 percent of the amount specified in the initial procurement contract.

To utilize all opportunities provided by the Prozorro, all contracting authorities and bidders should have e-signatures.