In 2008, the public procurement system of Ukraine had been subjected to a number of institutional and procedural modifications. Inter alia, on 20.03.2008, the Verkhovna Rada of Ukraine has adopted the Law of Ukraine No. 150–VI “On invalidity of the Law of Ukraine “On public procurement of the goods, work and services” (that had become effective since 02.04.2008).

Since that time public procurement domain had been governed by Temporary Provision on public procurement of the goods, work and services, validated by the Order of the Cabinet of Ukraine No. 274, dated 28.03.2008. According to Section 2 thereof, the Ministry of Economic Affairs had been entrusted with duties of specially authorized central executive agency, responsible for coordination of public procurement of the goods, work and services.

For the purposes of successful discharge of its functions, the Ministry of Economic Affairs had formulated a number of regulations required for public procurement system operation and effected certain organizational arrangements. Inter alia:

Public procurement department had been established in the Ministry of Economic Affairs as its separate structural subdivision;

In order to comply with the principles of transparency and openness of public procurements, the Authorized Agency had resumed publication of “Public procurement courier” news-bulletin, where the ordering customers could place their procurement advertisements free of charge. In addition, “Public procurement” Web-portal (http://www.tender.me.gov.ua) had been brought into being by the editorial staff of “Public procurement courier”. Users are able to access the information published on “Public procurement” Web-portal, free of charge;

Consulting and methodological council on public procurement had been established pursuant to the Temporary Provision. That council is authorized to give consideration to the claims, lodged by tender participant prior to entering the contract on procurement. Furthermore, the council is entitled to adjust the procedure of tender with limited participation and procedure of procurement from a single participant.

Moreover, the Ministry of Economic Affairs had developed the draft Law of Ukraine “On public procurement of the goods, work and services”. Abovementioned draft Law had been approved by the Government and submitted to the Verkhovna Rada of Ukraine. On 20.05.2008, the Verkhovna Rada of Ukraine had adopted the draft law in the first reading (Reg. No. 2263-1).

On October 9, 2008, the Constitutional Court of Ukraine had delivered a judgment No. 22-рп/2008 (made public on October 16, 2008), pursuant to which the second paragraph of Section 2 of the Final provisions of the Law of Ukraine “On invalidity of the Law of Ukraine “On public procurement of the goods, work and services” and the Order of the Cabinet of Ukraine No. 274, dated 28.03.2008 “On public procurement of the goods, work and services” had been found inconsistent with the Constitution of Ukraine.

In order to settle legal relationship in public procurement domain, the Cabinet of Ukraine had adopted the Provision on public procurement of the goods, work and services (hereinafter referred to as the Provision), approved by the Order of the Cabinet No. 921, dated 17.10.2008.

On 19.11.2008, the Cabinet of Ukraine had adopted the Order No. 1017 “On amendment of the Provision on public procurement of the goods, work and services” (that had become effective since 25.11.2008), which had validated a restated version of the Provision.

During the period of harmonization of regulations, issued by the Ministry of Economic Affairs, with the Order of the Cabinet of Ukraine, No. 1017, dated 19.11.2008, those regulations may be used to the extent, being not in conflict with abovementioned Order.

At present, the Ministry of Economic Affairs is engaged in harmonization of regulations regarding public procurement domain with restated version of the Provision.

At the same time, the Ministry of Economic Affairs continues to improve regulatory and legal framework, applicable to public procurement domain. The Ministry had formulated a draft order “On validation of procedure of amendment of essential conditions of the contract”, which, at present, is to be approved by Derzhpidpryyemnytstvo.

In addition, the Ministry of Economic Affairs, with the participation of international experts, had formulated and completed its propositions on improvement of the Law of Ukraine “On public procurement of the goods, work and services” (Reg. No. 2263-1), adopted in the first reading.

It should me mentioned that both the amendment of the laws on public procurement and the activity of the Ministry of Economic Affairs in its capacity of authorized agency, had resulted in positive developments in that domain.

For example, in contradistinction from the previous system, when all costs related to creation and publication of printed matters, electronic information systems and verification systems, generally, had been borne by private business entities at the expense of monies of ordering customers and tender participants, the law in effect provides free of charge publication of advertisements in “Public procurement courier” news-bulletin and on “Public procurement” Web-portal. That grants an opportunity to save the monies of ordering customers and participants, as well as enables observance of the principles of openness and transparency in public procurement domain.

According to the information, provided by State Statistical Committee (dated 31.10.2008), gross annual amount of state funds, expected to be used by the ordering customers in 2008 for public procurement of the goods, work and services, had made UAH 213.104 million, or, in other words, had grown by 16.3% YoY. That amount includes the funds of: state, federal budget-supported and municipal enterprises – UAH 37 925 million (17.8%); business entities with state-owned share exceeding 50% - UAH 112 293 million (52.7%); State Budget, the budget of the AR of Crimea, local budgets, Pension Fund, Social Insurance Funds, State Purpose-Oriented Funds, funds of the NBU and state purpose-oriented credits – UAH 62 886 million (29.5%).

In January to September, 2008, following the results of public procurement tenders, the ordering customers had entered contracts to the gross amount of UAH 138 409 million, including the contracts, executed by: the Ministry of Fuel and Energy and lower organizations – UAH 7,658.5 million (55%); Ministry of Transport and Communications – UAH 14,373.1 million (10.4%); State Service of Motor Roads – UAH 8,444 million (6.4%); Ministry of Coal Industry – UAH 5,228.8 million (3.8%); Kyiv Municipal State Administration – UAH 4,889.2 million (3.5%).

According to the analysis made, amendment of the laws on public procurement had a positive effect on improvement of competitive environment in that domain. Simplification of tender participation procedures, such as de-commercialization of public procurements domain, had resulted in an increase in average number of public procurement participants from 2.7 up to 3.3 participants per one announced tender (during open tenders – from 3 up to 4 participants).

Furthermore, one of the most important indices of competition in public procurement system is the share of procurement from a single participant in gross volume of public procurements effected. In II to III quarter, 2008, the share of contracts, executed as a result of non-competitive procedures application (procurement from a single participant), in gross volume of contracts entered, according to official statistical data, provided by State Statistical Committee (pursuant to ordering customers’ reports made under the form No. 1-tenders), had made 17.55%. In I quarter, 2008, prior to the decision, made by Interdepartmental commission on public procurement of the goods, work and services with regard to validation of the procedure of procurement from a single participant, abovementioned share had made 77%. The information about considerable diminution of the share of non-competitive procedures is confirmed by the data, provided by the Ministry of Economic Affairs, on gross volume of procurements from a single participant.

So, actual level of competition had been improved, as against the previous year. Growing number of advertisements about open tenders is indicative of intensive application of competitive procedures of public procurement, as well. During 9 months, 2008, the number of open tenders had grown by 30% YoY.

In summary, the Ministry of Economic Affairs, in its capacity of the agency, authorized for public procurement coordination, successfully discharges the duties, entrusted to it, arranges conditions favorable for creation of competitive environment in that domain and promotes observance of the principles of openness and transparency in public procurements system.