Competitive procurement in PROZORRO: current state and prospects of development

Medzhybovska Nataliia
Dr. of Sc. (Economics), Professor, Professor of the Economic Cybernetics and Information Technologies Department, Odessa National University of Economics, Odesa, E-mail:nmedzh@yahoo.com, ORCID ID: https://orcid.org/0000-0002-2525-8361

Cite this article:

Medzhybovska N. (2022) Competitive procurement in PROZORRO: current state and prospects of development. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Konkurentni zakupivli v PROZORRO: suchasnyi stan i perspektyvy rozvytku; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 3-4 (292-293), pp. 22-29.

Abstract

This paper considers the impact of competition on the efficiency of public procurement in Ukraine and identifies its general trends. We analyzed the level of competition in public procurement by various indicators and this way confirmed the hypothesis concerning the government savings’ increasing with the growth of number of participants in public procurement’ procedures due to the intensification of competition between them. Also we discovered the effectiveness of public procurement in various procurement procedures. The dynamics of public procurement’ indicators in Ukraine points out that (1) the level of competition in the field of public procurement fluctuates around two bids and have trend to decreasing; (2) the greatest savings are achieved in procurement procedures with six or more participants, but such procedures are gradually losing their share; (3) competitive purchases for relatively small volume (sub-threshold and simplified procurements) bring the government a larger share of savings than open tenders procedures (by its expected value), although their savings are significantly lower than savings obtained from open tenders procedures (by absolute terms). Resulting, this study identified the problem of low competition in public procurement in Ukraine and outlined the possible cause of this situation – possibility of corrupt agreements between bidders and / or the procurement authority. In order to improve the assessment of public procurement effectiveness, we propose to measure the average price of similar goods / services / works offered in ProZorro at a period in time instead of the indictor of expected value of the procurement procedures, which is more subjective indicator.

Keywords

competitive procurement, ProZorro public procurement system, competition, budget savings, procurement procedures.

JEL classification: H570; DOI: 10.32680/2409-9260-2022-3-4-292-293-22-29

UD classification: 004.9:338.48

References

1. Ostrovnaya, M. , Podkolzina, Ya. (2022). Restrictions on Competition on the Example of Russian Public Procurement. Ekonomicheskiy portal. Retried from https://institutiones.com/ general/3111-ogranicheniya-konkurencii-na-primere-rossiiskih-gosudarstvennyh-zakupok.html (accessed March 31, 2022). [in Russian].
2. Balsevich, A., Podkolzina, E. (2014). Causes and Consequences of Low Competition in Russian Public Procurement. Ekonomicheskii zhurnal VSE, 4, 563-585 [in Russian].
3. Ostrovnaya, M., Podkolzina, E. (2015). Favoritism in public procurement auctions: model of endogenous entry. ResearchGate. Retried from https://www.researchgate.net/ publication/290157652_Favoritism_in_public_procurement_auctions_model_of_endogenous_ entry (accessed March 31, 2022).
4. Economic Phoenix (2021).Competition policy in Eastern Europe and Central Asia. Attention to bid-rigging in public procurement. OECD-GVH Regional Competition Center in Budapest (Hungary). Newsletter, 17, July 2021. Retried from https://www.oecd.org/daf/competition/oecdgvh-newsletter17-july2021-ru.pdf (accessed March 31, 2022). [in Russian].
5. Savran, O. , Khavanska, T., Onisko, O. (2021). Corruption, Public Procurement and Competition in Eastern Europe and Central Asia Ukraine Energy Sector Case Study //Competition policy in Eastern Europe and Central Asia. Attention to bid-rigging in public procurement. OECDGVH Regional Competition Center in Budapest (Hungary). Newsletter, 17, July 2021. Retried from https://www.oecd.org/daf/competition/oecd-gvh-newsletter17-july2021-ru. (accessed March 31, 2022). [in Russian].
6. Maligania, Е. (2015). The Next Age of Public Procurement Reforms in Tanzania: Looking for the Best Value for Money. Academia. 2015. Retried from https://www.academia. edu/20541376/The_Next_Age_of_Public_Procurement_Reforms_in_Tanzania_Looking_for_ the_Best_Value_for_Money?email_work_card=view-paper. (accessed March 31, 2022).
7. Achua, J. K. 92011). Anti-corruption in public procurement in Nigeria: challenges and com¬petency strategies. Journal of Public Procurement, 11(3), 323–333. https://doi.org/10.1108/ JOPP-11-03-2011-B002.
8. Detkova, P., Podkolzina, E., Tkachenko, A. (2018). Corruption, centralization and competition: data on government procurement in Russia. International Journal of Public Administration, 41(5-6), 414–434. https://doi.org/10.1080 /01900692.2018.1426014.
9. The Law on Public Procurement. Law 922-VIII. Kyiv: Verkhovna Rada (HVR), 2016, No. 9, p. 89. Retried from http://zakon3.rada.gov.ua/laws/show/922-19/page?lang=e (accessed March 31, 2022). [in Ukrainian].
10. Parasiy-Vergunenko, S. (2021). Public procurement analysis: methodological and practical aspects. Naukovi zapysky. Natsionalʹnyy universytet «Ostrozʹka akademiya», seriya «Ekonomika», 7(35), 65-71. [in Ukrainian].
11. ProZorro (2022). Professional analytics module : [Internet-portal]. Retried from http:// bipro.prozorro.org/ (accessed March 31, 2022). [in Ukrainian].