B2B Payments

Ukraine Defends Cost Of eProcurement Project ProZorro

Ukrainian government officials are defending payments made to their digital procurement platform provider, following claims of wasted funds as detailed in the nation's 2017 budget. According to Interfax-Ukraine reports on Friday (Oct. 19), the nation's First Deputy Economic Development and Trade Minister Maksym Nefyodov defended the more than $2.3 million spent on the operator of the government's eProcurement portal, ProZorro.

"Only people who think that they don't need to pay for hosting, internet, power and other utilities can say that the money received by SOE [state-owned enterprise] ProZorro is a loss for the national budget," he said in a press conference, according to reports. "I hope this is the result of the fact that, after the reshuffling in the Accounting Chamber, they have not had time to understand how different economic sectors work, including public procurement."

Nefyodov did acknowledge the challenges related to Ukraine's efforts stemming from the ProZorro project.

"Since 2015, we have not received budget financing," he stated, adding that participants in the eProcurement portal should pay for it to make up for a lack of funding. He also cited lower interest in the government bidding process that allows vendors to secure contracts in the eProcurement process.

The official was responding to previous criticism from the Accounting Chamber of Ukraine, which reportedly said the nation's annual national budget losses can be traced back to ProZorro.

In 2016, Ukraine touted cost savings and heightened transparency in government spending through the development of ProZorro. At the time, Nefyodov said the eProcurement system could help he government save up to 9 percent of gross domestic product (GDP) on procurement.

The Wall Street Journal reported that an estimated 10 percent of the nation's $11 billion budget in 2014 was linked to some type of corruption. An additional 10 percent was spent on expensive contracts, resulting from a lack of bidding competition in the public procurement space.

Pilot testing of ProZorro yielded 12 percent in savings, which government officials said was a result of more supplier bidders  including western suppliers  vying for government contracts.



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