On 19 February 2016 the new Law on Public Procurement (the “Public Procurement Law”), adopted by the Ukrainian Parliament on 25 December 2015, entered into legal force.

The Public Procurement Law provides for the creation of an e-procurement system for all public procurements of goods and services priced at UAH 200,000 (approx. EUR 6,800) or above and for works value equivalent to or more than UAH 1.5 million (approx. EUR 51,000).

The e-procurement system will be introduced in two phases: from 1 April 2016 central executive authorities and customers in certain sectors (such as oil and gas, post services, and telecoms sectors) will begin using this system; starting from 1 August 2016 the system will be extended to all other customers.

Prior to the start date, all public procurements bids initiated within the existing public procurements legislation will be conducted based on the existing rules. The new e-procurement system provides the following new progressive instruments: public electronic auction, electronic exchange of tender information and documents, electronic platforms, etc.

All public procurement tenders will be produced through the web-platform, ProZorro, which currently exists as a pilot project. Unlike the current five various public procurement procedures, the Public Procurement Law consolidates them into only three: (i) open bids; (ii) a competitive dialogue; and (iii) a negotiable procurement procedure.

Additionally, the Public Procurement Law establishes definitions of new legal terms, including: electronic platform, electronic auction, cloud computing system, tender documentation, tender proposal, etc.

In general, the e-procurement system is a key future of the government’s anti-corruption efforts and will bring much needed transparency and fairness to the process of government tenders, thereby improving the overall business and investment climate.

Author:

Daniel Bilak, Managing Partner, Daniel.Bilak@cms-cmck.com