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ProZorro (Ukrainian: Прозоро – transparent, clear) is a public e-procurement system and a symbol of dramatic reform of government procurement in Ukraine. ProZorro is a result of collaboration between Ukrainian government, business sector, and civil society, but was started by volunteers at the Euromaidan Revolution (Also known as the Revolution of Dignity or simply the Ukrainian revolution of 2014). This system was developed with the aid of reputable international anti-corruption organization Transparency International Ukraine, volunteers, NGOs, business community and state bodies of Ukraine, the Western NIS Enterprise Fund (WNISEF fund), the European Bank for Reconstruction and Development (EBRD), and other partners. During the pilot stage of the project Transparency International Ukraine was administering the development of the system: ProZorro central database and a number of additional modules. Innovative technologies help to ensure the system’s transparency and monitoring, which are currently in the analytics modules Qlik, public (bi.prozorro.org) and professional (bipro.prozorro.org). The system is completely open, meaning that anyone can access and monitor the activities going on within the system.

In December 2015 all ownership and relevant intellectual property rights for ProZorro system have been transferred to the state enterprise designated by Ministry of Economic Development and Trade (Ukraine).^[1] Ukraine, similarly to most other developing countries, has a problem of ineffectiveness and corruption in the public services sphere. In particular, public procurement sector's inefficiency brings multi-billion losses each year. ProZorro aims to minimize the loses that are seen every year by allowing access for the public to the deals being made, every step is controlled and transparent, therefore minimizing the possibility of bribery and other corrupt practices during these proceedings. For example, nearly 250 billion Hryvnias (more than 10 billion dollars) were spent in Ukraine in 2014 for procurement of goods, services and works for public needs. According to international research, usage of e-Procurement system saves at least 10% of the procurement budget. Applying simple math - 10B*10%/365 days, 2.7 million dollars can be saved each day.

The Ministry of Economic Development and Trade of Ukraine (MEDT) received support from European Bank for Reconstruction and Development (EBRD) with drafting of the new e-Procurement policies and legislation as well as implementing the e-Procurement solution country-wide.

Background

Starting with Ukraine’s integration to the Soviet Union in 1922 , also known as the USSR. Ukraine suffered under Soviet rule, between 1932 and 1933 western Ukraine faced a brutal artificial famine created by the ruler of the Soviet Union, Joseph Stalin. Following the collapse of the Soviet Union and Ukraine’s independence in 1991, Ukraine’s political system was extremely corrupt. After its independence, Ukraine suffered an economic slow down which, partnered with excessive crime and corruption, caused further dissatisfaction among its citizens. In 1996, a new currency the Hryvnia was introduced and the Ukrainian economy steadied, this same year the then president, Leonid Kuchma, was criticized for creating a concentration of power in his office and many other criticisms which included being corrupt and discouraging free speech. In 2004 Ukraine had an election following the end of president Kuchma’s second term as president. The two main presidential candidates were Viktor Yushchenko and Viktor Yanukovych, who became the declared winner. His win however was followed by a public outcry and the launch of a peaceful protest known as the Orange Revolution which challenged the results. The election was claimed to have been corrupt, using tactics such as voter intimidation resulting in electoral fraud. International and domestic election monitors reported a rigged election and a re-vote was called. The re-vote confirmed Yanukovych was not the elected president and Viktor Yushchenko the opposition, took the presidency this same year.

In 2010, President Yanukovych won the presidency. He was president for three years before he was exiled from his post as president and Petro Poroshenko was elected president in 2014.

During the 2013 EuroMaidan revolution activists called for more transparency within the government and its surrounding platforms. This gave rise to many changes being made since then in attempt to make Ukraine less corrupt and more transparent. This gave rise to Prozorro, the e-procurement system initiated by anti corruption activist in May 2014. Their idea was to create a place where public agencies could exchange and sell, while the public was able to have access to this information and see who and what deals were being made.

The system was then co-developed with Transparency International Ukraine, government representatives, private actors and anti-corruption activists. Prozorro was finally launched in 2015.

Prozorro will allow adherence of Ukrainian legislature with European standards, giving Ukraine a fair procurement procedure including transparency and effectiveness, bringing Ukraine closer to a European and Worldwide standard.

Principles

Corporate philosophy of ProZorro is based on three key principles:

1. Hybrid electronic system based on an open-source model. As opposed to the single and multi-platform systems, ProZorro’s hybrid model allows collaboration between the central database and infinite number of commercial marketplaces that provide front-end access. Such hybrid model enables efficient transmission of information from central databases to marketplaces responsible for attracting and serving clients. Marketplaces compete with each other which motivates them to provide best service in order to attract both contracting entities and suppliers.
2. “Everyone can see everything” – is the official motto of ProZorro. After a tender procedure is complete absolutely all data is disclosed, including the list of all participants, their bids, decisions of the tender committee and all qualification documents, etc. This information is publicly accessible through ProZorro’s online analytics module.
3. Golden triangle of partnership – a unique form of collaboration between business, state and civil society where functions are split between different stakeholders to ensure independence and mutual control. Such partnership aims at promoting change, while maintaining high level of trust between principal stakeholders throughout the course of this reform.

Implementation

Reform and e-Procurement implementation had to start with preparation of legislative base. The Law “On public procurement” was designed to facilitate and streamline the public procurement procedure in Ukraine, as well as to incorporate certain elements of the relevant EU law.

The law introduced mandatory electronic public procurement procedures. The transition was accomplished through two phases. Beginning with Phase 1 (April 1, 2016), electronic public procurement became mandatory for central executive bodies and those offices carrying out monopolist activities for “below-threshold” contracts. During Phase 2 (August 1, 2016), public e-procurement became mandatory for all procuring entities.

Prozorro system has used the Open Contracting Data Standard (OCDS) as a key instrument for data modeling, since the information that is available in open data and OCDS formats allows its easy analysis and processing.

Due to the success seen in the public procurement sector in lowering corruption by 25%, Prozorro has been expanded as of February 1, 2016 to include other sectors including sales. This includes the sale of state property, municiple property, small privatized objects, buildings and also involves sales of materials such as scrap metal, raw wood, and so on.

Advantages

Prozorro has had positive impact on decreasing corruption in Ukraine's public procurement system. Some advantages include:

-An initially low cost of implementation.

-A low maintenance cost.

-Higher competition among suppliers, all registered suppliers now have an opportunity to make bids.

-Less corruption, due to the public access and transparency of the system.

-In line with European and International Standards allowing access to a larger pool of suppliers and buyers.

World Recognition

ProZorro has been considered by EBRD as a possible model for eProcurement reform.

ProZorro was shortlisted during two nominations for the World Procurement Award.

Prozorro became a learning project and a showcase for the Open Contracting Partnership (OCP), a collaborative effort by the World Bank attempting to promote and enhance openness and participation by all in public contracting.

The reform was awarded the World Procurement Award (WPA) 2016 at Public Sector Awards in London, on May,18 for creating and implementing an e-procurement system with a unique architecture and philosophy. This victory was the first evidence of international recognition of Ukrainian approach and solution.

Prozorro also won prestigious international award - the annual prize of the Open Government Awards 2016. This was announced at the Global Summit in Paris, France on December 7. Ukraine also received special recognition for the involvement of youth in the project.

References

 "Prozorro- the best system in the world in the sphere of Public Procurement". ti-ukraine.org.

"ProZorro: Open Contracting in Ukraine: a collaborative effort for procurement reform". open-contracting.org.

"ProZorro: Policy advice and legislative drafting for eProcurement reforms". ukraine.ppl.ebrd.com.

Jump up^ Magocsi, Paul Robert (2015-02-01). Ukraine: An Illustrated History. University of Toronto Press. ISBN 9781442621909.

Transparency International. "TI Publication - Co-creation of ProZorro: An account of the process and actors". www.transparency.org. Retrieved 2017-04-05.

"Головна | ProZorro" (in Russian). Retrieved 2017-04-05.

"ProZorro: How a volunteer project led to nation-wide procurement reform in Ukraine". open-contracting.org.

"Public Procurement Roadmap - Ukraine" (PDF). ukraine.nlembassy.org/.

"Ukrainian Reform Success: ProZorro public procurement system is landmark victory for anti-corruption crusaders". bunews.com.ua.

"Open Contracting in Ukraine: a collaborative effort for procurement reform". open-contracting.org.

"The success of public procurement service ProZorro is to expand to sales of state property | UACRISIS.ORG". [:en]Ukraine crisis media center[:ua]Український кризовий медіа-центр[:fr]Ukraine crisis media center[:de]Ukrainisches Krisen-Medienzentrum[:ru]Украинский кризисный медиа-центр[:es]Ukraine crisis media center[:it]Ukraine crisis media center[:pt]Ukraine crisis media center[:]. 2017-03-03. Retrieved 2017-04-05.

"Server Error". pubdocs.worldbank.org. Retrieved 2017-04-05.

"Prozorro- the best system in the world in the sphere of Public Procurement". ti-ukraine.org.

"Making Transparency Count: The Open Government Awards". Open Government Partnership. Retrieved 2016-12-08.