Procurement without competition and incomplete reporting: Accounting Chamber on gaps in the Ministry of Economy's reporting
The Accounting Chamber analyzed the annual report of the Ministry of Economy of Ukraine for 2024 on the functioning of the public procurement system and the summarized results of control in this area. The person responsible for the control measure is Hennadiy Plis, a member of the Accounting Chamber.
The analysis of the Report of the Ministry of Economy revealed a number of reporting shortcomings and systemic problems in public procurement that hinder competition and an objective assessment of the functioning of the procurement system in Ukraine. This is, in particular, due to the regulatory uncertainty of the very concept of "public procurement system", the analysis of the functioning of which is addressed in this Report.
Therefore, the Report does not contain data on all procurements made during this period with public funds, and only data from the electronic procurement system was used in its formation (hereinafter -ESP - does not take into account "pre-threshold" procurements with an expected value of up to 50 thousand UAH, defense and some other procurements).
The auditors noted that the Features (established for the period of martial law) made it possible to carry out the vast majority of procurements by concluding contracts without using the ESP and with a single participant, which reduces competition in procurements.
According to the data from the Report of the Ministry of Economy, out of more than 3.3 million purchases made in 2024, only 340 thousand with an expected value of UAH 637.11 billion (10.3% of the total number of purchases or 67.79% of the total amount of purchases) passed through the Unified State Procurement System. The rest of the purchases – conducted without competition.
At the same time, it is worth considering that of the above 10.3% of competitive procurements - 4.5% are only procedures for requesting supplier proposals (a tool in the Prozorro Market electronic catalog, with which the customer selects a supplier in the case of purchasing goods),and 5.6% are open tenders with Features (differ in a significantly simplified procedure, can take place if only 1 participant submits a proposal). As a result, more than half of the tenders with Features (65%) took place with just one participant.
Therefore, in 2024, only 11 open tenders (as the main competitive procurement procedure within the meaning of the Law on Public Procurement, Art. 20) took place (the total amount is UAH 10 million). This is 0.0003% of the total number of procurements, which is 6 times less than in 2023.
The auditors note in their analysis that the Report of the Ministry of Economy itself, although it meets the specified requirements for its preparation, is predominantly descriptive in content, rather than analytical.
And despite the fact that control activities in the procurement sector are carried out by several state bodies, the Report does not contain a summary of information on the identified violations, the dynamics of indicators and conclusions.
«The reflection in the Annual Report of only the procurements indicated in the electronic system, combined with contradictory information about competition, does not allow us to confirm that the Ministry has fully achieved the goal of compiling this report,» – summed up the member of the Accounting Chamber Hennadiy Plis.
At the same time, he also noted that the recommendations of the Accounting Chamber for the previous reporting period were duly implemented by the Ministry of Economy, and the process of preparing the Report itself was regulated.
Given the identified shortcomings, the Accounting Chamber provided the Ministry of Economy with a number of new recommendations, in particular:
– to make changes to the Methodology for preparing the Annual Report regarding the definition of the term "public procurement system";
– to improve the methodological recommendations for preparing the Annual Report, in particular the requirements for conclusions and structure;
– to work out the possibility of reflecting in the Annual Report complete information about all procurements, including defense and procurements up to 50 thousand UAH, etc.
In turn, the Deputy Minister of Economy of Ukraine, Andriy Telyupa, who was present at the meeting, generally agreed with the recommendations of the Accounting Chamber and noted that the Ministry is ready to further initiate changes to regulatory documents that will allow covering a wider range of procurements and improving the form of relevant reporting.
The report on the results of the Analysis and the corresponding decision of the Accounting Chamber will be sent to the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine and the Ministry of Economy of Ukraine, as well as published on the institution's website.
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