ProZorro is an online e-public procurement system in Ukraine that saves billions of dollars annually. The idea came from a private business, which funded the initial development with its own resources. Now the service provides acceptance, placement and service to offer from state and other public organizations on commercial platforms. In December of 2015, the developers handed over the copyright of the system to “the people of Ukraine”. The ProZorro system became fully operational in April 2016.
Valery Omelchenko Founder of HUB 4.0 — an innovative space for entrepreneu
idea of creating a service for state electronic commerce was born before Prozorro, in the distant 2012. I remember the resistance, which the draft law on the system of online public procurement faced in the committees of the Verkhovna Rada. I can clearly imagine what resistance the Prozorro implementation had overrun later in 2014-15.
Newtend, along with five other platforms (dz.prom.ua, SmartTender, e-tender, PublicBid and Derzhsakupivli.Online), became a pioneer and its expertise supported the creation of Prozorro from the early days. Each of the 6 platforms not only financed the creation of a central database code (it was legally drawn up for a non-governmental organization Transparency International, and subsequently transferred to the state), but also developed the code of its platform, in order to connect to the CDB. Financially and resourcefully, the most expensive investment, of course, is the development of the platform. And at the start of the project, everyone had an understanding that these investments were a social initiative and did not guarantee the return of investment.
Today the user registers at one of the platforms and immediately goes to ProZorro. Any actions — organization of procurement, participation in the announced tender, filing in a proposal, etc. is immediately displayed in the central database and transmitted to all other platforms. Whatever you do, in ProZorro “everyone sees everyone” and can work right away with all the platforms.
The effectiveness of the system is quite easy to evaluate. Saved budget funds are tracked automatically. When bidding, the tenderer sets the starting amount of the purchase. When trading, suppliers reduce the price, and the most advantageous offer wins. The difference between the starting price and the final price is the benefit that the government and the budget receive. Analytical module BI ProZorro reveals that during the system operation (2 years) about $2.6B of public funds were saved.
O. Novokhatsky emphasizes that the most difficult task for the development and implementation of the new platform was to prove to people, especially businessmen, who lost their trust in traditional offline tenders, that the system was not another corrupt scam. This trend reversed only after ProZorro was launched and its results were publicly announced. “We were so charged with the result and motivated by an overall bright goal that every single obstacle was perceived simply as a task: it was discussed, solved and we moved on. And in this non-stop mode, we achieved the adoption of the law “On Public Procurement”, which launched the system “, — says Oleksandr.
All public and private developers and administrators involved in ProZorro unofficially call themselves “procurement community”, that is, they are all are members of the same team. The work of this team has received public recognition and high international praise.
On May 18, 2016, ProZorro received the most prestigious international award in the field of procurement — World procurement awards, for creation and implementation of an electronic system with a unique architecture.
It is worth mentioning, that ProZorro.Sales has been highly recognized by the experts as well. Like its “parent platform”, ProZorro.Sales has received numerous international awards. The last of them was The Shield in the Cloud Innovation Challenge from C5 Accelerate and the US Institute of Peace in February 2018.
All team members are unanimous in their opinion that the result of the system exceeded their expectations. At the same time, the development of the system continues: plans for further legislative amendments and functional development are made.
Oleksandr Novohatsky Managing Partner of E-Tender.ua
The idea itself appeared as a “cure” for corruption in public procurement. In government tenders, prices of purchases were regularly inflated, the same companies won, the content of the tender documentation was inaccessible to “mere mortals”. There weren’t any statistics available in electronic form. The Revolution of Dignity in 2014 gave us hope to believe in our strengths and the fact that changes in Ukraine are possible. Teamwork on the project began with the “Open University”, which worked directly at Maidan, the central square of the Revolution. The idea was promoted by one of the organizers of the University — Oleksandr Starodubtsev, who responded to the proposal of Pavlo Sheremet — the Minister of Economic Development and Trade at that time.
Oleksiy Shcherbatenko Partner of the software company IT-Enterprise
The goals that we set to ourselves were ambitious.
Firstly, it was necessary to eradicate corruption in public procurement. Tenders should have become absolutely transparent for all — journalists, citizens, foreign partners, officials, law enforcement officers.
Secondly, the system had to be effective and convenient. To make competitive bidding, it was necessary to attract as many suppliers from the private sector as possible. To this end, the system had to be as easy to understand and accessible as possible. We had to figure out how to make a nationwide service focused on the client and give it an opportunity to be personalized for each bidder.
We really wanted to enable state organizations to use a modern, convenient, high-tech resource with the ability to influence its change and improvement.
The essence of the procurement system is best explained by the “golden triangle of partnership” — a metaphor that was coined by developers. The first partner is the state represented by the Ministry of Economic Development and Enterprise ProZorro. The enterprise is nominated by the Ministry an authorized body for the operation of the ProZorro Web Portal. They run a central database, in which all information about bidding and participants is stored. The information appears in the database through private electronic platforms, and all database updates are displayed on each one of the platforms. The public authorities do not have direct access to the system and are engaged solely in its administration.
The second partner is a number of private electronic trading platforms, which are officially accredited by the state company ProZorro. Through them, users register in the system, announce tenders, participate in auctions, etc. Today, the system has 25 platforms and is open to new partners. It was designed to ensure that platforms can compete with each other. By competing for the customer, the platforms constantly improve their interface, service and functions. For example, through a separate new ProZorro.Sales module the “little privatization” of state-owned enterprises evaluated up to $900 thousand is currently under way, as well as the sale of assets of bankrupt banks.
The third partner is the civil society. The activists, journalists, and public organizations monitor purchases, searching for violations. Here you can add a separate service DoZorro, where users can complain on violations if they believe they occurred. These complaints are reviewed and transmitted to the Antimonopoly Committee and law enforcement agencies. Unfair deals are revised. Business is the driving force of the changes. The system should provide reasonable prices, fair deals and competition. If this is not the case, the business simply will not accept the system, because it has the right to choose whether to work with the state or not.