Corruption risks: the government has introduced a new procurement mechanism for the construction sector
20 May 14:47
In an effort to speed up construction procurement, the Ukrainian government has introduced a new mechanism that allows contracts to be awarded to selected contractors. This decision has sparked considerable debate and criticism from civil society organizations.
Transparency International Ukraine (TI Ukraine) reports on this, according to "Komersant Ukrainian".
The Cabinet of Ministers of Ukraine has authorized local governments, regional state administrations, and the centralized procurement organization of the Recovery Agency to enter into special framework agreements instead of traditional construction tenders. This limits businesses’ ability to defend their rights regarding such procurements before the Antimonopoly Committee of Ukraine and reduces the State Audit Service’s capacity to monitor them.
To enter into a framework agreement, participants must pass a qualification selection process. Next, to select a contractor for a specific procurement contract, two options are available: open bidding or a request for proposals.
TI Ukraine has identified a number of risks and conflicts in the new regulations:
- An overly broad range of contracting authorities participating in the pilot program.
- The deadlines for submitting proposals are too short.
- The possibility of setting an unlimited financial capacity criterion.
Analysts also point out the lack of a requirement to disclose information on payment terms and the ambiguous regulation of the content of reports on the conclusion and amendment of contracts in the Prozorro system.
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TI Ukraine calls on the Cabinet of Ministers
“to repeal as soon as possible the two resolutions by which it introduced this dangerous experiment.”
According to the organization, these changes contradict relevant legislation and European directives (Directive 2014/24/EU).
“In fact, they wanted to speed up and improve the efficiency of construction procurement, but in practice, they created a new mechanism for awarding construction contracts to selected contractors,” the publication states.
What TI Ukraine Recommends
TI Ukraine recommends repealing Resolutions No. 520 and No. 521. If necessary, the organization proposes improving the efficiency of the Central Procurement Office of the Recovery Agency by using framework agreements, but only with the possibility of appeal to the AMCU, monitoring by the State Audit Service, and conditions to mitigate other risks.
As a reminder, the government previously announced the implementation of a new approach to procurement in publicly funded construction projects. The pricing approach was changed to bring cost estimates closer to real market conditions. The government also changed the approach to calculating wages in the construction sector to reduce opportunities for manipulation in cost estimates.
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