Why procurement of works is not always successful and how to solve it – Policy Brief

7 March 2023

The topic of procurement in Prozorro, in particular works, is always a hot topic for discussion. Not surprisingly, works are more difficult to buy than goods or services due to their complexity and regulatory nature. Therefore, our team decided to investigate the issue of procurement of works in more detail.

The purpose of the research is to investigate the procedures for procurement of works, as well as the execution of concluded contracts. The research aims to find out the reasons why some procurements cannot be successful and to solve the problems that arise with procurement procedures and the execution of contracts.

The analysis of data from the Prozorro BI analytics module showed that from 2019 to 2021, procurement of works by cost occupies a significant place and the cost of such procurement increases every year, in particular thanks to the “Big Construction” program. We have found that the percentage of successful procurement procedures for works is higher than in the case of goods and services.

After analyzing the data, we found that in the period from 2019 to 2021, there was a decrease in the share of termination of work contracts (relative to the quantity and value). However, in 2022 this trend was disrupted by the introduction of martial law. Since the quantity of broken contracts decreases every year, it can be said that the contracts concluded as a result of procurement through Prozorro are fulfilled in most cases.

Based on the results of the research, we made the following conclusions:

1. Works should continue to be procured through Prozorro, with no need to define separate procedures/features/create new tools or procure outside of the e-procurement system. However, current procurement procedures can be improved both at the legislative level and technically;

2. By developing appropriate regulation and methodological support for customers regarding the procurement of works and services for minor repairs, including “Design and Build” contracts, it is possible to reduce the quantity of unsuccessful procurements through Prozorro;

3. Expanding at the legislative level the list of cases when it is possible to make changes to the essential terms of the purchase contract will allow to reduce the quantity of suspended and terminated contracts. To improve the service and convenience of customers, we suggest considering the possibility of introducing a drop-down list of possible reasons for terminating contracts in the Prozorro electronic system.

You can read the full version of the Policy Brief Why procurement of works is not always successful and how to solve it”

This research is made possible by the support of the Eurasia Foundation with funding from the United States Agency for International Development (USAID) and Government of the United Kingdom.The contents are the sole responsibility of the Kyiv School of Economics and do not necessarily reflect the views of USAID, the United States Government, the UK Government, or Eurasia Foundation.

The topic of this research was proposed by the team of the Center of excellence in procurement at Kyiv School of Economics to the Ministry of Economy of Ukraine. The analysis and conclusions of the report reflect the point of view of the CEP team and do not represent the official position of the Government, the Ministry of Economy or its Department of Public Procurement and Competition Policy.