Advancing Ukraine’s EU Integration through Public Procurement Reform

The opening of EU accession negotiations brings new obligations for Ukraine. Compliance of the national procurement system with European standards is one of them. In this article, Eriks Mezalis, Team Leader of EU4PFM Component 2 on Public Procurement, sheds light on the progress made within Ukraine’s ongoing public procurement reform, the pivotal role of the EU’s Project in driving these changes, and the future trajectory of EU assistance in the years ahead.

In a significant development earlier this year, the EU Public Finance Management Support Programme for Ukraine (EU4PFM Project) announced its expansion. As a result, the EU Project “Support to Public Procurement Reform in Ukraine” was restructured and joined EU4PFM on January 1st as Component 2 “Public Procurement”. Over the past three months, the newly formed Component 2 team has been proactively scaling up its initiatives, priming itself to unveil its plans and priorities for the forthcoming years as well as introduce itself. The best way to present any work is to refer to its results. So let’s start with them.

Achievements in 2023

In 2023, the Project team continued to provide effective expert and advisory support to Ukrainian partners. The main objectives of the past year were to strengthen the public procurement system in Ukraine and ensure its effective functioning based on the principles of transparency, accessibility, sustainability and competitiveness. During this period, the Project’s work was focused on completing the tasks started in 2022 and implementing new tasks planned for 2023. In particular, the Project experts:

• Completed a comparative analysis of the national legislation on public procurement, defence procurement and concessions with the relevant EU legislation.
• Prepared a review of Ukrainian case law and case law of the Court of Justice of the EU on public procurement.
• Analysed more than 20 draft legislative acts in the areas of public procurement, concessions, public-private partnerships and defence procurement and provided expert input to the drafting of the new version of the Law on Public Procurement.
• Prepared analytical reports on the assessment and further development of the capacity of public procurement oversight bodies, as well as on the problems of developing centralised procurement and centralised procurement organisations at the central and local levels.
• Prepared recommendations for the preparation of an annual report on the functioning of the public procurement sector and the definition of procurement performance indicators at the macro and micro levels.
• Supported the Ministry of Economy of Ukraine in the area of international public procurement activities through close cooperation with international institutions and promoting the idea of cooperation between Ukrainian and EU companies in procurement in the EU and Ukraine on international platforms.
• Organised study visits for representatives of Ukrainian government authorities.

The Project also presented its proposals and recommendations for the new Public Procurement Development Strategy for 2024-2026 and the Action Plan for its implementation. These documents were approved by the CMU Resolution No. 76-p of 2 February 2024. Most of the measures proposed by the experts of the Draft Strategy for Professionalisation of the Public Procurement Sector in Ukraine were included in these strategic documents.

Professionalisation of Public Procurement Specialists

A separate, but no less important task for building the public procurement sector is to strengthen the capacity for professionalisation of public procurement specialists from an institutional and organisational point of view. The Project actively contributed to this in 2023, focusing on the development and adoption of a Strategy and Action Plan for the professionalisation of public procurement, as well as on the promotion of the procurement profession. Among these initiatives was the updating of the professional standard for “Public Procurement Specialist”. The development of such a standard, which defines the competencies and responsibilities of procurement specialists and thus promotes their professional growth, was a major achievement of the joint work with the Ministry of Economy.

In addition, the previous Project completed all planned activities to improve the professionalism of procurement specialists, including a series of educational events on the necessary competencies and knowledge of specialists. In particular, professionalisation experts, in cooperation with the Ministry of Economy, the National Agency of Ukraine on Civil Service and “Prometheus” platform created a free online course on procurement. The course’s comprehensive programme is divided into basic and advanced levels to cover all the necessary competencies to successfully perform job duties in this area.

The course includes video lectures, tutorials, presentations and tests for mid-term and final exams. Students receive a certificate upon successful completion of the course, which requires at least 70% correct answers.

At the beginning of 2024, 9693 participants successfully completed the online basic course, for which 3528 certificates were generated (36.4% of participants). The total number of users of the advanced course was 7192. They received 2798 certificates (38.9% of the participants).

In addition, Project experts conducted training webinars to meet the capacity building needs of various stakeholders. In total, more than 15 training webinars and 3 offline training sessions were organised and conducted. The webinars were held in close cooperation with the Ministry of Economy, the Ministry of Infrastructure, the State Agency for Infrastructure Reconstruction and Development, Transparency International, the Central Support Unit of the SE “Medical Procurement”, and the EU Delegation. The total number of registered participants was 2,710, and the Ministry of Economy and Prozorro’s Facebook pages received 1,300 views.

The Project also provided recommendations to the Ministry of Economy for the development of the Code of Ethics for Public Procurement. This document plays an important role in regulating fair and transparent actions of participants in the procurement process.

An important area of work that was successfully completed last year was the cooperation with the National School of Judges of Ukraine. As a result of this cooperation, a public procurement training programme for judges was developed. The programme has already been implemented in pilot courses at the National School of Judges and is being considered for inclusion in the mandatory curriculum for judges.

International Cooperation

In the context of strengthening international cooperation and facilitating the participation of Ukrainian economic operators in international public procurement markets, the Project actively supported the Ministry of Economy in representing Ukraine as a Party to the WTO Government Procurement Agreement. In particular, assistance was provided in submitting notifications to the WTO Committee on Government Procurement, based on analysis and consultations provided on the conditions of Free Trade Agreements and the WTO GPA.

As a result, our experts prepared draft replies to the WTO Secretariat’s questionnaires, provided analysis of the final market access offers from countries seeking to accede to the WTO GPA, and ensured Ukraine’s participation in the accession procedure. The assistance also included eight workshops on managing international obligations under the WTO GPA procedures.

In addition, the Project supported the development of guidelines to facilitate the participation of Ukrainian companies in tenders operated under the GPA and EU framework, including guides on the features of public procurement systems in various countries. These guidelines were published on the Ministry of Economy’s website, which was particularly valuable in the difficult market conditions currently prevailing in Ukraine.

Such a significant achievement of the EU Project team was made possible thanks to the comprehensive support of the EU Delegation to Ukraine and effective cooperation with Ukrainian partner institutions, primarily the Ministry of Economy as the main beneficiary.

Priorities for Component 2 on Public Procurement in 2024

Despite the successful implementation of the planned EU support measures, a significant number of ambitious tasks remain to be accomplished, related to the opening of EU accession negotiations in the end of 2023 and to maintaining the progress and resilience of the national procurement system in the context of martial law and reconstruction needs. Over the next two years, the EU will implement these tasks in the framework of the EU’s comprehensive Public Finance Management Support Programme (EU4PFM) and in close cooperation with Ukrainian partners from the public and civil society sectors.

Therefore, in 2024, the EU4PFM team of experts under Component 2 “Public Procurement” will continue to support Ukrainian partners in implementing various aspects of public procurement reform.

A very important direction of work will be assisting in ensuring that Ukrainian procurement legislation complies with the EU acquis. This relates to the new draft Public Procurement Law as well as changes in the legislation governing Concessions and Public-Private Partnerships. It will also be crucial to ensure that Defense procurement legislation is compliant with the respective EU regulatory context and, at the same time, guarantee efficient use of taxpayers’ money and is feasible for wartime conditions.

Support for the capacity-building efforts of central procurement agencies, in particular the Ministry of Economy, will remain a priority. As the central procurement institution, the Ministry carries out a wide range of functions and does so diligently despite the challenges it faces. The Project will focus on transferring EU best practices in the area of professionalisation of public procurement and providing methodological support. The Project will also consider supporting Ukraine’s central procurement bodies to streamline the efficiency of their work.

Cooperation is planned with the public procurement oversight bodies – the Antimonopoly Committee of Ukraine, the Accounting Chamber of Ukraine, the State Audit Service, and courts (represented, in capacity-building efforts, by the National School of Judges of Ukraine). Similar to any EU country, it is important for Ukraine’s procurement oversight bodies to be well-versed in the legal, regulatory, and policy aspects of public procurement and approach public procurement transactions from both the point of view of compliance and also from the aspect of economic logic and value for money.

Last but not least, the Project experts will continue contributing to the professionalisation reform aimed at increasing the knowledge and skills of Ukrainian public purchasers. As procurement in Ukraine is carried out by authorised persons rather than by collective bodies – tender committees – the capacity of these persons is a crucial factor for successful procurement outcome. Moreover, the EU Procurement Directives require that contracting authorities have access to sophisticated public procurement procedures and tools, such as innovative partnerships, electronic catalogues, and dynamic procurement systems. This, in turn, requires qualified professionals to use them in the most efficient way.

The decision to grant Ukraine the status of an EU candidate country was both an acknowledgment of the reforms already undertaken and a stimulus for further reforms to achieve full compliance with the EU acquis and implement the best EU purchasing practices. The Project stands ready to assist Ukrainian colleagues in further developing Ukraine’s public procurement system. And, perhaps most importantly, it is necessary to express huge admiration for our Ukrainian colleagues for their inspiration and resilience in undertaking and continuing public procurement reforms in the present challenging conditions.