Rehabilitating Ukraine’s Economy with Technology

16 Oct, 2019

ProZorro is a public e-procurement system that has become a catalyzer in Ukraine’s fight for transparency. Driven by activists, sponsor-backed, and widely acknowledged ProZorro has indeed become something like a magic pill for the previously corrupt, shaken by a few revolutions Ukraine’s economy. We tried to find out why public procurement is important and learned how a Ukrainian software solutions provider is helping to reshape the old system of buying supplies.

Transforming public e-procurement 

It all started back in 2013 when Ukraine’s wish for closer ties with Europe and the need for vital national reforms lead to Euromaidan revolution. Among thousands of activists, there was Oleksandr Starodubtsev who was particularly concerned about the Ukrainian government systems being corrupt the core. A few months later, Starodubtsev’s call for transparency brought about ProZorro an online public procurement system, meant to become a place where public agencies could secure see-through tenders and fair deals.

Since becoming an obligatory tool for every public procurement taking place within the country in 2016, ProZorro united more than 25 000 clients, 150 000 vendors, and helped to settle 2 million contracts. The obvious advantage of ProZorro is very simple it is saving lots of money. For example, in the past two years, Ukraine’s Ministry of Economic Development and Trade saved over 55 billion, Naftogaz (national oil and gas company of Ukraine) ₴ 15 billion, and Ukrpost (national postal service) spent 500 million less than it initially planned.

The system’s ambitious motto “Everyone sees everything” is, in fact, true. Once a tender is registered online, the system allows you to see information on submitted proposals, documents, decisions of the tender commission, etc. In addition, ProZorro has introduced a special risk management system, allowing the State Audit Service to monitor tenders that appear to be suspicious.

In August 2017, the World Bank completed verifying whether ProZorro meets the requirements of multilateral development banks. Followed by the positive results, ProZorro launched the first tender for a project funded by the World Bank in April 2018.

What makes ProZorro really stand out is a unique combination of partners involved, also known as the “golden triangle of partnership”. Driven by the urgent need for reforms in the country, the representatives of business, government, and civil society got together and took the lead to develop a project that has now become a trademark for Ukraine’s public procurement transparency. One of the key players in this process was Quintagroup.

Quintagroup comes on board

Quintagroup, a Ukrainian software solutions company based in Lviv, has a long history of working with Open Procurement both for commercial and public projects. In 2014, Quintagroup joined ProZorro. We approached Ihor Berehulyak, Quintagroup’s CEO, to talk about the launch of the project. “We already had expertise in developing a spectrum auction for a client from the UK and were looking for similar projects. On September 5, 2014, the “founding father” of ProZorro Oleksandr Starodubtsev organized a big meeting of the stakeholders to start working on the transformation of public procurement in Ukraine,” tells Berehulyak. “From the very beginning, our CTO Myroslav Opyr took an active part in what was then just a voluntary project and supported the idea of open source software for public procurement. By the end of September, it was agreed that Quintagroup will develop and launch the pilot version of the system that will unite seven different marketplaces”.

When Transparency International supported the project in late November, a big part of the pilot system had already been developed and further development was possible thanks to contributions from various international organizations.

According to Ihor Berehulyak, the main task of ProZorro is to make data public and establish fair rules in the system of public procurement: if any action is improper, the information will remain public forever, available for analysis to public organizations, journalists, and controlling entities.

Quintagroup’s contribution to ProZorro turned out to be an extensive one the company has developed the central database, the auction module (including 6 types of auctions for systems similar to ProZorro) and the API through which marketplaces connect to the system. For the last 4 years, Quintagroup has also been responsible for system administration, monitoring, and automated testing of websites.

Ihor Berehulyak admits that there were certain challenges on the way. “According to Ukrainian legislation, we had to transfer the project from Amazon to Ukraine, it was a rather complex process. Sometimes we had to develop new services for the system in a very short time after the law was passed. Still, in my opinion, it’s a successful project. I don’t know any other well-known digital transformation project in Ukraine that would make such a contribution from the point of view of open data and the fight against corruption.” prozorro-02Foreign acknowledgment

After being frowned upon by many, ProZorro has proved to be a success, another system was put in the works – Prozorro Sale. Similar in its principles, ProZorro Sale is seeking transparency in everything that is sold by the state’s public enterprises. In 4 years, Quintagroup developed many services for both systems. At the end of last year, the company finished developing framework agreements for ProZorro and land lease and small privatization systems for ProzorroSale.

Thanks to Quintagroup’s cooperation with EBRD and Transparency International a public procurement system was launched in Moldova a project called MTender. Since the core of ProZorro is made up of the platform, a variety of projects in other countries could be launched. According to Ihor Berehulyak, the company is now negotiating with different organizations, but the nature of government projects is slow everywhere. “It takes a lot of time and effort, but we hope to contribute to launching similar systems abroad”.

Thanks to cooperation with Open Contracting Partnership (supported by the World Bank Group), Quintagroup has made Prozorro one of the first systems in the world where procurement data became available in Open Contracting Data Standard for analytical systems.

In a short span of time, ProZorro has not only managed to considerably reduce the amount of money spent on public procurement but also received wide recognition. In 2016, ProZorro was awarded the World Procurement Award, having outrun the UK Ministry of Justice, Australian NSW Department of Education and even the Administration of the US President. A year later, Prozorro.Sale won in the demo-days of the Citi Tech for Integrity Challenge (CitiT4IChallenge) anti-corruption startups finals held in Hyderabad, India. In 2018, the project won “The Shield in the Cloud Innovation Challenge” anti-corruption award from C5 Accelerate and USA Institute of Peace and received worldwide recognition as the best anti-corruption startup in public administration. These awards are an important acknowledgment that Ukrainian IT products can compete with other markets, and while it’s still a long way towards complete transparency in Ukraine, reforms like this one, indeed, bring hope.

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