The procedure of Ukraine joining the World Trade Organization Agreement on Government Procurement (Agreement on Government Procurement, GPA) ended on May 18, 2016. AND

Since 2016, Ukrainian companies have received the right to participate in public procurement of 46 countries participating in the GPA agreement, including: the USA, EU countries, Korea, Taiwan, Singapore, Canada and others.

Directive 2014/24/EU (hereinafter – the Directive) of February 26, 2014 is the main one and has been in effect throughout the EU since 2016

For SRA member countries in accordance with Art. 25 of the Directive, customers agree to apply a regime no less favorable than the regime provided for works, goods, services of economic entities of the European Union.

Economic entities which, under the law of the Member State in which they are established, are entitled to provide the relevant services may not be rejected solely on the ground that, under the law of the Member State in which the contract is awarded, they are require the status of either a natural person or a legal entity.

In the case of state contracts for the provision of services and performance of works, as well as state contracts for the supply of goods, which include additional services or accommodation and installation work, legal entities are obliged to indicate in the tender offer or in the request for participation the names and relevant professional qualifications of the personnel, who will be responsible for the execution of this contract

Groups of business entities, including temporary associations, may participate in procurement procedures. Customers will not be required to have a specific legal form in order to send proposals or requests for participation.

In addition to any central government procurement regime please address the following: regulated utilities procurement regime  (e.g. water, gas, electricity, coal, oil, postal services, telecoms, ports, airports), military procurements, non-central government (local, state or prefectures) and any other relevant regime. Please provide the titles of the statutes/regulations that regulate such procurements.

According to the law on public procurement, the version of which came into effect on April 19, there are the following types of procurement:

• simplified purchases; (This procedure is temporarily not applied during the period of martial law)
• report on the concluded contract;
• open tenders;
• Open auctions with publication in English (This procedure is temporarily not applicable during the period of martial law)
• negotiated procurement procedure (This procedure is temporarily not applicable during the period of martial law)
• competitive dialogue; (This procedure is temporarily not applied during the period of martial law)
• bidding with limited participation. (This procedure is temporarily not applied during the period of martial law)

The Law of Ukraine “On Public Procurement” defines the legal and economic basis for procurement of goods, works and services to meet the needs of the state, territorial communities and united territorial communities.

In addition to the Law, there are subordinate legal acts – resolutions of the Cabinet of Ministers of Ukraine and orders of the Ministry of Economy as the central body of executive power, which ensures the formation and implementation of state policy in the field of public procurement. Sub-legal regulatory acts are adopted by authorized regulatory entities on the basis of and for the implementation of laws.

The Law of Ukraine “On Public Procurement” establishes the scope of its application; general conditions of procurement; conditions of application of open bidding, competitive dialogue, bidding procedure with limited participation, negotiated procurement procedure; basic requirements for the purchase contract, making changes to it and reporting on its implementation; responsibility in the field of public procurement.

The Law also establishes requirements for the electronic procurement system.

Resolution of the Cabinet of Ministers of Ukraine “On approval of the Procedure for the functioning of the electronic procurement system and authorization of electronic platforms” dated February 24, 2016. No. 166 defines the requirements for the functioning of the electronic procurement system, the procedure for authorization of electronic platforms, conditions for connecting and disconnecting electronic platforms from the electronic procurement system, requirements for electronic platforms and the responsibility of operators of authorized electronic platforms. In order to create prerequisites for sustainable development and modernization of domestic industry.

Resolution of the Cabinet of Ministers of Ukraine dated August 2, 2022. No. 861 approves the Procedure for confirming the degree of localization of production of goods and the Procedure for monitoring compliance with the requirements regarding the degree of localization of production of procurement items included in the list of goods that are the subject of procurement with a confirmed degree of localization of production. Localization of production in public procurement involves a legal requirement for customers to purchase a product from a specified list only on the condition that it is fully or partially produced in Ukraine. The degree of localization is determined independently by the product manufacturer and confirmed by the Ministry of Economy according to a special formula. It reflects the percentage of the cost of Ukrainian components in the total cost of the product.

By the resolution of the CMU dated October 12, 2022 No. 1178 approved the specifics of public procurement for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation. This Decree is the main applicable act during martial law. By Resolution No. 1495 of December 30, 2022, the Cabinet of Ministers of Ukraine made changes to the specifics of public procurement, approved by Resolution No. 1178. Resolution No. 157 of the CMU of February 17, 2023 amended the Resolution of the CMU of October 12, 2022. No. 1178 “On approval of the specifics of public procurement of goods, works and services for customers provided for by the Law of Ukraine “On Public Procurement” for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation”).

For the purchase of medicinal products and medical products, we are guided by Resolutions of the CMU No. 1012 of September 22, 2021; No. 216 dated 07.03.2022; No. 185 dated 02.03.2022. According to the order of the CMU of December 29, 2021 No. 1805-r ”

The main orders of the Ministry of Economy of Ukraine in the field of public procurement: “On the approval of the Model Regulation on the authorized person”, “On the approval of the Procedure for organizing the testing of authorized persons”, “On the approval of the List of formal errors”, “On the approval of the Procedure for determining the subject of procurement”, “On the approval of an exemplary methodology for determining the expected value of the purchase item”, “About an exemplary methodology for determining the life cycle cost”

In order for the state customer to carry out defense procurements that belong to the spheres of national security and defense, it is necessary to follow, in addition to the Law of Ukraine “On Public Procurement”, the Law of Ukraine “On Defense Procurement”, CMU Resolution No. 363 “Issues of Defense Procurement”, CMU Resolution No. 1275 “On the approval of the specifics of defense procurement during the period of the legal regime of martial law”, by other resolutions of the CMU.

According to the Law on Defense Procurement, government customers can make the following types of procurement: 1) closed procurement is negotiations or staged negotiations; 2) auctions with limited participation; 3) simplified bidding using the electronic procurement system. Defense purchases, which constitute a state secret, are carried out in a closed manner.

Electric power purchases, like any other types of public procurement, are regulated by the Law of Ukraine “On Public Procurement” and Resolution of the Cabinet of Ministers No. 1178. However, in order to increase the efficiency of this type of electronic bidding on May 7, 2024. The Ministry of Economy adopted order No. 11712 “On the approval of Methodological recommendations regarding the specifics of public procurement in the field of electricity”, which will be in effect during the period of martial law in Ukraine and within 90 days after its termination.

For the period of martial law in Ukraine and for another 90 days from the date of its termination or cancellation, the value limits for conducting open bidding are set as follows:

Therefore, customers must conduct a tender in the Prozorro system if the expected cost of the procurement item:

1) is or exceeds UAH 100 thousand for goods and services (except for current repair services);

2) is or exceeds UAH 200,000 for current repair services ;

3) is or exceeds UAH 1.5 million for works.

In these cases, tenders will be conducted either through open bidding with specifics or using an e-catalog (Prozorro Market) or framework agreements (for complex specialized purchases with a long term ) .

Resolution of the Cabinet of Ministers No. 1275 approved the features of defense procurement, consisting of three parts: General Provisions, Conclusion of a Framework Agreement and Selection for the Conclusion of a State Contract (Agreement), and the Appendix to the Features, which provides a List of Goods Purchased by Conclusion of Framework Agreements for Defense Needs. According to Resolution No. 1275, the procurement of goods (except for those specified in the Appendix to the Resolution of the Cabinet of Ministers (Fig. 1), works and services for defense needs is carried out without using the types and procedures of procurement specified in the Law of Ukraine “On Defense Procurement” and the Law of Ukraine “On Public Procurement”. The procurement of goods specified in the Appendix, with a value of UAH 200 thousand or more, is carried out under framework agreements.

Features of the Framework Agreement :

The state contracting authority publishes an announcement regarding the conclusion of a framework agreement in the electronic procurement system.

At stage 1 of the tender, the contracting authority analyzes whether the supplier’s offer meets the requirements in the procurement notice.

At the 2nd stage of the tender, a selection is made among the suppliers admitted to the bidding.

Next, the state customer signs a contract for the supply of goods with the winners.

During the validity period (no more than one year) of the framework agreement or the period determined by the customer, any supplier that meets the criteria may join the agreement.

Framework agreements for the purchase of goods from the Appendix worth UAH 200 thousand or more may not be applied:

• when it is urgently necessary to carry out procurement due to objective circumstances that prevent the state customer from meeting the deadlines stipulated by the framework agreement;
• when there is no technical possibility to use the electronic system for procurement.

The qualification process is an important stage in the procurement system.

At the prequalification stage, the customer carefully analyzes the suppliers’ tender offers to verify their compliance with the technical requirements and qualification criteria, as well as to determine the absence of grounds for refusal to participate in accordance with Article 17 of the Law of Ukraine “On Public Procurement”.

Taking into account the provisions of paragraph 44 of Resolution No. 1178, for the period of martial law, there are the following grounds when the customer rejects a tender offer with an indication of the reasoning in the electronic procurement system, namely when:

The participant falls under the grounds established by paragraph 47 of Resolution No. 1178.	When a participant (or his authorized person) has committed an offense, including: corruption; for selfish motives. In addition, proposals from a participant who is bankrupt or in respect of whom a liquidation procedure has been opened, etc. are rejected.
The participant indicated in the tender offer unreliable information that is essential for determining the results of the open tender, which the customer received upon its request for confirmation of the information provided by the participant/winner of the procurement procedure to state authorities, enterprises, institutions, organizations in accordance with their competence.	For example, the customer has identified discrepancies between the information provided by the participant and data from tax reporting or a publicly available register. The customer has the right to reject the participant’s proposal if the data provided by him does not meet the requirements of the tender documentation or if there are reasons to believe that the information provided is unreliable or outdated. This may apply to various parameters, such as the number of employees in the staff, the availability of vehicles, or any other information that is determined by the tender documentation as mandatory to provide. Data from registers and reports can be used to verify the reliability and relevance of the information provided by the participant.
The participant has not provided a tender offer security if required by the customer, or such security does not meet the requirements of the tender documentation.	Thus, the participant must ensure that its security document has all the necessary details specified in the tender documentation, and not be limited to referring only to NBU Resolution No. 639. This will help avoid possible deviations or misunderstandings when evaluating and considering tender proposals by the customer.
The participant did not correct the inconsistencies that were discovered by the customer after the opening of his tender offer in the information and/or documents submitted by him within 24 hours from the moment the customer placed a notice with a requirement to eliminate such inconsistencies in the Prozorro system.	Providing 24 hours for corrections can help avoid a dispute with regulatory authorities, as well as allow the lowest bidder to still participate in the procurement. Read our article to learn how the 24-hour mechanism works.
The participant did not provide justification for the abnormally low price of its offer within one working day from the date of determination of the most economically advantageous tender offer.
When a participant has identified information as confidential that cannot be so in accordance with the requirements of paragraph 40 of Resolution No. 1178.	Namely, information on the proposed price, other evaluation criteria, technical conditions, technical specifications and documents confirming compliance with the qualification criteria in accordance with Article 16 of the Law, and documents confirming the absence of the grounds specified in paragraph 47 of Resolution No. 1178, cannot be designated as confidential.
The participant is a citizen of the Russian Federation/the Republic of Belarus (except for those who legally reside in Ukraine).	The following participants also fall into this category: ·        a legal entity established and registered in accordance with the legislation of the Russian Federation/the Republic of Belarus; ·        a legal entity established and registered in accordance with the legislation of Ukraine, the ultimate beneficial owner, member or participant (shareholder) of which has a share in the authorized capital of 10% or more, of which is a Russian/Russian citizen, a Russian/Russian citizen (except for those residing in the territory of Ukraine on legal grounds), or a legal entity established and registered in accordance with the legislation of the Russian Federation and the Russian Federation, except for cases when the assets are transferred to the management of the National Agency for the Detection, Search and Management of Assets Obtained from Corruption and Other Crimes in accordance with the procedure established by law; or offers in the tender offer goods originating in the Russian Federation and the Russian Federation (except for goods necessary for the repair and maintenance of goods purchased before the entry into force of Resolution No. 1178 for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation.

Also, the customer rejects the tender offer if its validity period has expired , or its price exceeds the expected cost of the subject of procurement specified in the announcement. Also, if it does not meet the requirements established in the tender documentation in accordance with paragraph one of part three of Article 22 of the Procurement Law, as well as the conditions of the technical specification and other requirements regarding the subject of procurement of the tender documentation.

Within 90 days from the date of termination or cancellation of martial law, paragraph 45 of Resolution No. 1178 is in effect. According to this provision, the customer may, not necessarily, but as an option, reject the tender offer with justification in the electronic procurement system in the event that the participant in the procurement procedure:

• provided an unacceptable justification for the price or cost of the relevant goods, works or services in the tender offer, which is abnormally low;
• failed to fulfill its obligations under a previously concluded procurement contract with the same customer, which resulted in the application of sanctions in the form of fines and/or compensation for losses within three years from the date of their application, with the provision of documentary confirmation of the application of sanctions to such participant (court decision or the fact of voluntary payment of a fine or compensation for losses).

Yes, they do fall under this regulation.

Specifically, the entire procedure is well described in the Procedure for the Formation and Use of the Electronic Catalogue, approved by the Resolution of the Cabinet of Ministers of Ukraine No. 822 dated September 14, 2020.

The Electronic Catalogue is a systematized database of current offers. It is formed and maintained by a centralized purchasing organization in the electronic procurement system and is used by the procuring entity to select a supplier of goods.

Electronic catalogues can only be used to purchase goods that are listed in the catalogue.

According to the Law, catalogues can be used if the value of the goods does not exceed UAH 200,000 (and up to UAH 1 million for customers in certain sectors of the economy).

The first stage of the tender process on the part of the procuring entity is the announcement of the public procurement.

The procuring entity independently and free of charge, through authorized electronic platforms, publishes information about the procurement in the electronic procurement system.

The tender announcement is published on electronic platforms authorized by the Prozorro system. The announcement contains the conditions for participation in the tender and a list of documents requested from potential 1 participants. Mandatory components of the announcement include:

• requirements for the goods/services/works being procured (technical, qualitative, and quantitative characteristics);
• qualification requirements for participants;
• criteria and methodology for evaluating bids.

According to Article 10 of the Law “On Public Procurement”, the following deadlines are set for the publication of information:

• Publication of the procurement announcement and tender documentation takes place no later than 15 (fifteen) days before the date of opening of tenders. If the procurement value exceeds EUR 133,000 for goods and services; EUR 5,150,000 for works – no later than 30 (thirty) days.
• Amendments to the tender documentation and clarifications thereto must be published within 1 (one) day from the date of the decision to make them or provide clarifications;
• An announcement with information about the concluded framework agreement (in the case of procurement under framework agreements) is published no later than 7 (seven) days from the date of conclusion of the framework agreement;
• Publication of the protocol on the consideration of tenders must take place within 1 (one) day from the date of its approval.

The state customer chooses one or more of the following evaluation criteria for bids of participants in procurement procedures:

1) price;

2) the price together with other evaluation criteria (the specific weight of the price in the criterion cannot be lower than 60 percent), in particular:

terms of payment;

term of execution;

the level of life cycle support (warranty and service maintenance, disposal, etc.);

localization of production (the specific weight of this criterion cannot be lower than 25 percent);

3) life cycle cost.

The state customer may additionally apply the following criteria:

1) the level of operating costs;

2) passing state and other tests by the state customer or the fact of adoption by the state customer;

3) availability of a certified quality management system (if this is not a requirement of the tender documentation and if no relevant qualification criteria have been established);

4) availability of certificates of compliance with the requirements of NATO standards (AQAP) according to government contracts (agreements) previously executed by the selection participant during the previous calendar year;

5) quality of execution of previously concluded similar contracts and agreements;

6) quality plan;

7) efficiency ratio;

8) delivery schedule (indicating risks).

During the period of martial law in Ukraine, procurement is carried out in accordance with Resolution No. 1178 On approval of the specifics of public procurement of goods, works and services for customers, provided for by the Law of Ukraine “On Public Procurement”, for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation.

In the event that the Customer conducts open tenders with special features, as before in regular Open tenders, the Customer makes a decision to refuse the participant of the procurement procedure to participate in open tenders and is obliged to reject the tender offer of the participant of the procurement procedure in cases where there are grounds specified in Item 47 of Resolution 1178, in particular

The customer makes a decision to refuse the participant of the procurement procedure to participate in open tenders and is obliged to reject the tender offer of the participant of the procurement procedure in the event that:

1) the customer has indisputable evidence that the participant of the procurement procedure offers, gives or agrees to give, directly or indirectly, any official (official) person of the customer, other state body, remuneration in any form (an offer for employment, a valuable item, service, etc.) in order to influence the decision-making regarding the determination of the winner of the procurement procedure;

2) information about a legal entity that is a participant in the procurement procedure is entered in the Unified State Register of persons who have committed corruption or corruption-related offenses;

3) the manager of a participant in the procurement procedure, a natural person who is a participant in the procurement procedure, was held liable in accordance with the law for committing a corruption offense or an offense related to corruption;

4) the business entity (participant in the procurement procedure) during the last three years was prosecuted for the violation provided for in Clause 4 of the second part of Article 6, Clause 1 of Article 50 of the Law of Ukraine “On the Protection of Economic Competition”, in the form of anti-competitive concerted actions, which relate to the distortion of tender results;

5) an individual who is a participant in the procurement procedure has been convicted of a criminal offense committed for selfish reasons (in particular, related to bribery and money laundering), the criminal record of which has not been expunged or not repaid in accordance with the procedure established by law;

6) the head of a participant in the procurement procedure was convicted of a criminal offense committed for selfish reasons (in particular, related to bribery, fraud and money laundering), the conviction of which was not removed or not repaid in accordance with the procedure established by law;

7) the tender offer was submitted by a participant in the procurement procedure who is a related person to other participants in the procurement procedure and/or to an authorized person(s), and/or to the manager of the customer;

8) a participant in the procurement procedure is recognized as bankrupt in accordance with the procedure established by law and a liquidation procedure has been opened in relation to him;

9) the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations does not contain the information provided for in Clause 9 of Part Two of Article 9 of the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations” (except for non-residents);

10) a legal entity that is a participant in the procurement procedure (except for non-residents) does not have an anti-corruption program or a person authorized to implement the anti-corruption program, if the cost of the purchase of goods (goods), service (services) or works is equal to or exceeds 20 million. UAH (including by lot);

11) a participant in the procurement procedure or the ultimate beneficial owner, member or participant (shareholder) of a legal entity – a participant in the procurement procedure is a person to whom a sanction has been applied in the form of a ban on public procurement of goods, works and services from him in accordance with the Law of Ukraine “On Sanctions” ”, except for the case when the assets of such a person are transferred to the management of ARMA in accordance with the procedure established by law;

12) the manager of a participant in the procurement procedure, a natural person who is a participant in the procurement procedure, has been prosecuted in accordance with the law for committing an offense related to the use of child labor or any forms of human trafficking.

You can find out information about persons from the AMCU “black lists” on the State Open Data Portal, the Unified State Register of Persons Who Committed Corruption or Corruption-Related Offenses, the Unified State Register of Court Decisions, and the State Register of Sanctions

Please summarise the rules that are applicable in such procedures.

Please include a timeline that includes the key stages of the process, including an estimation for the total length of the procedure.

At least two tenders must be submitted for open bidding.

Open tenders are used by customers (state authorities (legislative, executive, judicial authorities), and state law enforcement agencies, authorities of the Autonomous Republic of Crimea, local self-government bodies, associations of territorial communities; Pension Fund of Ukraine, Fund of mandatory state social unemployment insurance of Ukraine, their territorial bodies, legal entities that are enterprises, institutions, organizations (except those specified in clauses 1 and 2 of this part) and their association, which provide the needs of the state or territorial community, if such activity is not carried out on an industrial or commercial basis, provided that the value of the subject of purchase of goods, services is equal to or exceeds 200 thousand hryvnias, and works – 1.5 million hryvnias.

Also, open tenders are used by customers in certain areas of business (on the condition that the value of the subject of purchase of goods or services equals or exceeds 1 million hryvnias, and the value of works – 5 million hryvnias.

The main stages of open bidding:

1. publication of the annual plan in the electronic procurement system;
2. submission of an announcement, tender documentation and a draft procurement contract to the web portal of the Authorized Body;
3. submission of tender proposals by participants within the time limits set by the customer, but not less than 15 calendar days from the date of publication of the announcement;
4. evaluation in the form of an automatic electronic auction and disclosure of tender offers and determination of the most economically advantageous tender offer by the system;
5. consideration of tender offers (within 5 working days from the date of determination of the most economically advantageous offer. The customer can extend this period up to 20 working days with reasons);
6. making a decision regarding the intention to enter into a purchase contract – on the day of determining the winner and announcing the decision regarding the intention to enter into a purchase contract (within 1 working day from the date of making the decision);
7. conclusion of the contract within the terms specified by the Law and publication (within three working days from the date of its conclusion)
8. automatic drawing up by the system of a report on the results of the procurement and its publication (within one day after the procurement contract is published by the customer on the web portal of the Authorized Body);

The open bidding procedure is the most transparent procedure that allows any participant to participate in the bidding. By using this procedure, the customer encourages competition. The open bidding procedure can be used for almost any procurement subject, except for those whose market is objectively limited – due to the lack of competition, as well as due to the presence of other reasons for applying the negotiation procedure. The most common and basic procurement procedure is the procurement of open tenders. Separately, I draw your attention to the fact that during the period of martial law, the procedure is applied taking into account the specifics, according to Resolution of the Cabinet of Ministers of Ukraine (CMU) #1178

In the case of procurement of goods, works and services – the value of which is ≤50 thousand hryvnias, the customer must adhere to the principles of public procurement and may use the electronic procurement system, in particular electronic catalogs for the procurement of goods Resolution of the Cabinet of Ministers of Ukraine dated 12.10.2022 No. 1178 “On approval features of public procurement of goods, works and services for customers provided for by the Law of Ukraine “On Public Procurement” for the period of validity of the legal regime martial law in Ukraine and within 90 days from the date of its termination or cancellation”.

As already mentioned, according to the Law, catalogs can be used if the value of the goods does not exceed 200,000 hryvnias (and up to 1 million hryvnias for customers in certain areas of business).

But there are certain differences in procurement algorithms – for purchases with a value of up to UAH 50,000, the customer freely and independently chooses the product and supplier in the e-catalogue.

If the value of the goods exceeds UAH 50,000. – the selection of a supplier for the desired product is carried out through an electronic request for price offers submitted by willing suppliers in response to a special announcement in the e-catalogue.

The offer with the lowest price is chosen to conclude the contract.

I would also like to separately note that during martial law, catalogs can be used by all customers according to Decree 1178 from 1 kopeck.

No limit has been set. But again, there are certain differences in procurement algorithms – for purchases worth up to 100,000 hryvnias, the customer freely and independently chooses the product and supplier in the e-catalogue.

If the price of the product is 100,000 hryvnias or more, the supplier for the desired product is selected through an automated procedure for requesting price offers. Inquiries are submitted by suppliers in response to a special ad in the catalog.

The offer with the lowest price is chosen to conclude the contract.

The use of e-catalogs is free for all customers, but each winner of the selection, with whom the customer concludes a contract, pays a certain percentage (from 1%) The main possibilities of using catalogs.

According to the Law of Ukraine “On Public Procurement”, the best practice in the field of procurement, in addition to ensuring compliance with its norms, is the application of the principles defined in Article 5 of the Law:

1) fair competition among participants;

2) maximum savings, efficiency and proportionality;

3) openness and transparency at all stages of procurement;

4) non-discrimination of participants and equal treatment of them;

5) objective and impartial determination of the winner of the procurement procedure/simplified procurement;

6) prevention of corruption and abuse.

Additionally, best practices include:

• effective procurement planning: development of an annual procurement plan, marketing research, needs analysis;
• clear formulation of technical requirements and assessment criteria: ensuring competitive conditions and objective selection of the winner;
• ensuring the transparency of the proposal evaluation process: documenting the evaluation process, justifying the selection of the winner
• effective contract management: monitoring of contract execution, risk management

Implementation of best practices allows customers to make purchases efficiently, transparently and with maximum cost savings.

Taking into account the requirements of paragraph 31 of the first part of Article 1 of the Law, the tender documentation is developed and approved by the customer and must contain a list of the components defined by the second part of Article 22 of the Law, in particular the instructions for the preparation of tender offers, a list of evaluation criteria and the methodology for evaluating tender offers with an indication of the specific weight of each criterion .

In turn, in accordance with the first part of Article 29 of the Law, the evaluation of tender offers is carried out automatically by the electronic procurement system based on the criteria and evaluation methodology specified by the customer in the tender documentation, by using an electronic auction.

The list of evaluation criteria is determined by the third part of Article 29 of the Law.So, in addition to the price and/or life cycle cost, other evaluation criteria can be: payment terms, performance period, warranty service, transfer of technology and training of managerial, scientific and production personnel, application of environmental protection and/or social protection measures, which associated with the subject of purchase. At the same time, please note that this list of non-price criteria is not exhaustive.

Thus, in addition to price or life cycle cost, customers can also use other evaluation criteria. In such a case, the customers in the tender documentation/announcement on conducting simplified procurement determine their value equivalent or specific weight of these criteria in the overall evaluation of the tenders/offers. At the same time, we note that the specific weight of the price criterion/life cycle cost cannot be lower than 70 percent, except in cases of application of the competitive dialogue procedure. The specific weight of each non-price criterion and their number is determined by the customer independently.

For the use of other evaluation criteria together with price, the Law provides for the concept of reduced price. Yes, the given price is the price specified by the participant in the tender offer/proposal and calculated according to a mathematical formula taking into account the indicators of other evaluation criteria specified by the customer in the tender documentation/announcement of simplified procurement.

In accordance with part 6 of Article 29 of the Law, if, in addition to the price, other evaluation criteria are established by the customer in accordance with the evaluation methodology, before the start of the electronic auction, the indicators of other evaluation criteria and the quoted price are automatically determined in the electronic procurement system, after which information about the quoted price and a list of all quoted prices are disclosed of the prices of the tenders/offers, arranged in order from the lowest to the highest price without indicating the names and information about the bidders.

When creating a non-price criterion in the electronic procurement system, the customer indicates the name of such criterion, a list of possible options and the specific weight of each option. Based on this information, the customer determines the quoted price of each participant’s tender offer.

The definition of an abnormally low price is given in Clause 3 of Part 1 of Article 1 of the Law “On Public Procurement”

An abnormally low price is the price of the most economically advantageous tender according to the results of the auction, which is less than 40 percent or more of the arithmetic mean value of the price/reduced price of the tender offers of other participants at the initial stage of the auction, and/or is less than 30 percent or more of of the following price/quoted price of the tender offer based on the results of the conducted electronic auction.

An abnormally low price is determined by the electronic procurement system (hereinafter referred to as the electronic procurement system) automatically, provided that there are at least two participants who have submitted their bids for the procurement item or its part (lot). Thus, the customer cannot be prejudiced in this regard. to speak

At the same time, during the period of martial law in Ukraine, according to clause 37 of Special Features No. 1178, the Participant of the procurement procedure who submitted the most economically advantageous tender offer, which is abnormally low (in this paragraph, the term “abnormally low price of the tender offer” means the price/ the quoted price of the most economically advantageous tender offer, which is less than 40 percent or more of the average value of the price/quoted price of the tender offers of other participants in the procurement procedure, and/or is lower by 30 percent or more of the next price/quoted price of the tender offer; the abnormally low price is determined automatically by the electronic procurement system, provided that there are at least two participants who have submitted their tender offers for the procurement item or its part; (lot), must provide, within one working day from the date of determination of the most economically advantageous tender offer, justification in an arbitrary form regarding the prices or cost of the relevant goods, works or services of the tender offer.

Bidders who did not win the tender may apply, in particular, taking into account the Peculiarities of public procurement of goods, works and services for customers, provided for by the Law of Ukraine “On Public Procurement”, for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation, approved by the Cabinet of Ministers Resolution No. 1178 dated 12.10.2022 (hereinafter – Particulars), namely:

• Clause 54 of the Specifications specifies that a natural person/legal entity has the right no later than three days before the deadline for submitting a tender offer to contact the customer through the electronic procurement system for clarifications regarding the tender documentation and/or to contact the customer with a requirement to eliminate the violation during the tender. All appeals for clarifications and appeals for the elimination of violations are automatically published in the electronic procurement system without identification of the person who addressed the customer. The customer must, within three days from the date of their publication, provide an explanation for the appeal by publishing it in the electronic procurement system;
• Paragraph 2 of Clause 46 of the Specifics provides that in the event that a participant in the procurement procedure whose tender offer is rejected considers the reasoning specified in the notice to be insufficient, such a participant may request the customer to provide additional information about the reasons for the non-compliance of his offer with the terms of the tender documentation. in particular, the technical specification, and/or its non-compliance with the qualification criteria, and the customer is obliged to provide him with an answer with such information no later than four days from the date receipt of such an application through the electronic procurement system, but before the procurement contract is published in the electronic procurement system in accordance with Article 10 of the Law;
• Part 4 of Article 33 of the Law stipulates that a participant who is not recognized as the winner of the procurement/simplified procurement procedure based on the results of the evaluation and review of his tender offer/proposal may apply to the customer through the electronic procurement system with a request to provide information about the winning tender/proposal procurement/simplified procurement procedures, including the indication of its advantages compared to the tender offer/offer of the participant who sent appeal, and the customer is obliged to provide him with an answer no later than five days after the date of receipt of such an appeal.

Thus, the customers are obliged to provide answers and explain the selection of the winner within the deadlines established by law.

As already mentioned, the Participants who did not win the auction can file appeals and complaints or even file a lawsuit in court.

At the same time, protection in court may not always be effective, since the proceedings in court do not prohibit the customer from entering into and performing the contract concluded as a result of the purchase.

There are cases when the customer announced the participant as the winner of the procurement, but for certain reasons refuses to conclude a contract with him.

The Law “On Public Procurement” stipulates the duty of the customer to conclude such an agreement within 60 days. In the case of the customer’s refusal to conclude the contract, the participant may demand that such a contract be recognized as concluded in a court of law. At the same time, according to judicial practice, a contract concluded by a court decision will not be considered null and void even if its conclusion violates the deadline for its conclusion provided by law for the customer.

No, the appeal does not affect the member’s reputation. Moreover, the complaints and appeals that are submitted.

In public procurement, there is an opportunity to challenge the results of the tender in order to assert one’s rights and ensure justice in the field.

As is known, the appeals body in public procurement is the Antimonopoly Committee of Ukraine, which, in order to impartially and effectively protect the rights and legitimate interests of persons involved in procurement procedures, forms a permanent administrative board (boards) that considers complaints and makes decisions decision on them.

Any legal entity or individual who believes that the Customer has violated their rights and interests in the procurement process and is registered on the electronic Marketplace can file a complaint with the Antimonopoly Committee of Ukraine.

Appeals through the AMCU take place only during cross-threshold procurement procedures, which are: open tenders, open tenders with publication in English; competitive dialogue, competitive dialogue with publication in English; negotiated procurement procedure, negotiated procurement procedure (abbreviated); open tenders for the purchase of energy services; negotiated procurement procedure for defense needs.

The procedure for appealing the procurement procedure is regulated by Art. 18 of the Law of Ukraine “On Public Procurement”.

The amount of the fee for filing a complaint is automatically calculated by the electronic procurement system, rounded up to the next 10 hryvnias and is:

• 0.3% of the expected cost of the purchase – contesting the terms of the tender documentation (at the same time, the minimum cost will be UAH 2,000, and the maximum – UAH 85,000);
• 0.6% of the expected cost of the purchase – appeal of the customer’s decisions (at the same time, the minimum cost of the complaint will be UAH 3,000, and the maximum – UAH 170,000).

It is important to know that the funds paid for the complaint can be returned in cases if:

• AMCU, based on the results of the review of the complaint, makes a decision on satisfaction or partial satisfaction of the complaint;
• AMCU leaves the complaint without consideration if the customer eliminates the violations specified in the complaint;
• AMCU makes a decision to terminate consideration of the complaint if the customer, in accordance with the law, eliminates the violations specified in the complaint.

The cost of legal services for the preparation of a complaint and support may vary

Punishments in the form of fines are provided for the customer for violation of the principles or procedures of open procurement, which are regulated by Article 164-14 of the Code of Ukraine on Administrative Offenses (KuPA). Officials of the Customer are most often prosecuted for:

• Violations in the preparation of tender documentation, the terms of information disclosure or consideration of proposals from participants. A fine of UAH 1,700 is also imposed on the customer who did not provide explanations to the participants regarding the requirements of the tender documentation, or did so late.
• If a person repeatedly commits one of the above violations within a year, the amount of the fine increases to UAH 3,400.
• Fines from UAH 25,500 to UAH 51,000 are imposed on officials who purchased goods or services without announcing the purchase, or who violated the terms of competitive dialogue or bidding with limited participation. A similar punishment also awaits for the illegal rejection of the tender offer of the participants, or for the conclusion of a purchase contract, the terms of which contradict the requirements of the tender documentation.
• A fine from UAH 51,000 to UAH 85,000 is imposed for repeated offenses within a year.

The deadlines for submitting and considering complaints are clearly defined in the law.

All complaints filed through the platform are made public for any user and are public.

After placing a complaint through the platform, the complaint is automatically entered into the complaint register, its registration card is created and sent to the AMCU and the Customer.

AMCU must publish within 3 working days one of the decisions regarding acceptance of the complaint for consideration, namely:

1. The decision to accept the complaint for consideration.

In this case, the tender procedure is suspended while the appeal is considered on the merits of the appeal and until the final decision is made.

Reference

• Stopping the tender at the Bid Submission stage blocks the start of the next stage, but in no case does it prevent other participants from submitting bids before the Bid Submission stage ends;
• The review of the complaint suspends the terms set by the Legislation for the conclusion of the Contract with the winning bidder (10 days for the negotiation procedure and 20 days for other procedures). The course of these terms resumes from the day following the day of adoption of the AMCU decision to terminate the consideration of the complaint, or the decision to leave the complaint without consideration.

2. The decision to leave the complaint without consideration.

The reason for such a decision may be:

• the complainant filed a complaint regarding the same violation that was already the subject of AMCU consideration in this tender;
• the complaint does not contain information regulated by the Law, or the time limits for appeals were violated;
• the complainant did not pay the fee for the complaint;
• the customer has eliminated the violations specified in the complaint.

3. Decision on termination of consideration of the complaint.

The reason for such a decision may be:

• the reasons specified in point 2 above, which arose after the complaint was accepted for consideration;
• the complaint was withdrawn by the Complainant;
• the customer has made a decision to cancel the auctions or recognize them as having not taken place, cancellation of the negotiation procedure, except in case of appeal of any of these decisions.

The decision of AMCU to accept or not accept a complaint is published on the site in the Complaints section of the tender page.

#Consideration of the AMCU complaint

If the complaint is accepted for consideration, the AMCU must, within 10 working days, consider the complaint and make a decision regarding its satisfaction, partial satisfaction, or non-satisfaction. The review of the complaint may be extended by the appeal body for up to 20 working days.

During the appeal, the Customer is prohibited from making changes to the tender, except for those that eliminate the violations specified in the complaint. It is also prohibited to enter into a purchase contract during the appeal.

The customer has the right to independently eliminate the violations indicated in the complaint, but in any case, the tender will be resumed only after AMCU has completed the review of the complaint.

The review of the complaint is open, everyone can be present at the review, including the Complainant and the Customer.

AMCU has the right to engage third-party specialists, experts with the knowledge necessary for professional and impartial consideration of the complaint for consultations and expert opinions. The Complainant and the Customer can also provide the opinions of experts and specialists who have special knowledge. The conclusions of the specialists involved are made public on the site and are attached to the complaint case file.

Based on the results of the review of the complaint, the AMCU makes a decision stating:

• a conclusion on the presence or absence of a violation of the procurement procedure;
• conclusion on satisfaction of the complaint in full or in part, or on refusal to satisfy it;
• grounds and justification for decision-making;
• in case the complaint is fully or partially satisfied – the customer’s obligation to eliminate the violation and/or restore the procurement procedure.

Decisions of the AMCU take effect from the day of their adoption and are binding for the Customer.

The decision of the appeal body can be appealed by the subject of the appeal, the customer, to the district administrative court, whose territorial jurisdiction extends to the city of Kyiv, within 30 days from the day of its publication in the electronic procurement system.

The right to appeal does not limit the right of the subject of the appeal to appeal to the court without prior appeal to the appeal body, however, as already noted, judicial protection and consideration of the case may not be completely effective.

The Law of Ukraine “On Public Procurement” establishes equal conditions for participation in public procurement by residents and non-residents of Ukraine. Membership in international organizations does not affect the rights of a procurement participant, unless such membership is specified in the qualification criteria for a specific procurement. When formulating the qualification criteria and waiting for the opportunity to participate in the procurement, the Customer must carefully approach the formulation of such criteria to ensure equal conditions for all procurement participants.

One of the effective methods of protecting the interests of participants in procurement and which is designed to ensure compliance with the principles of procurement is the appeal institute. Therefore, if the participant believes that his rights are violated during the purchase, the first thing that is usually done in such a case is to contact the customer through the electronic system with a request to eliminate the violations. In the future, it is possible to turn to the Antimonopoly Committee of Ukraine, as an appeals body, with the aim of impartial and effective protection of the rights and legitimate interests of persons involved in the procurement procedures. The antimonopoly committee is a commission to review complaints about violations of legislation in the field of public procurement and which exercises other powers specified by this Law and the Law of Ukraine “On the Antimonopoly Committee of Ukraine”. Decisions of the Commission for consideration of complaints about violations of legislation in the field of public procurement are adopted on behalf of the Antimonopoly Committee of Ukraine. In the future, the decisions of the commission can be challenged in court.

It should also be remembered that according to paragraph 3 of the Features of public procurement of goods, works and services for customers provided for by the Law of Ukraine “On Public Procurement”, for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellations approved by the resolution of the Cabinet of Ministers of Ukraine dated 12.10.2022 No. 1178 (hereinafter – Features), customers who are obliged to carry out public procurement of goods, works and services in accordance with the Law of Ukraine “On Public Procurement”, conduct procurement taking into account these features and in compliance with the principles implementation of public procurement, defined by the Law.

The Law of Ukraine “On Public Procurement” provides for the following principles of procurement.

1. Purchases are carried out according to the following principles:

1) fair competition among participants;

2) maximum savings, efficiency and proportionality;

3) openness and transparency at all stages of procurement;

4) non-discrimination of participants and equal treatment of them;

5) objective and impartial determination of the winner of the procurement procedure/simplified procurement;

6) prevention of corruption and abuse.

Participants (residents and non-residents) of all forms of ownership and organizational legal forms participate in procurement procedures/simplified procurement on equal terms. Customers ensure free access of all participants to information about the purchase provided for by this Law. Customers have no right to impose any discriminatory requirements on participants.

Thus, the participation in the procurement for any potential participant is determined by the qualification criteria of the connected procurement. In the event that a potential participant believes that the criteria are discriminatory, such a participant has the right to protect his rights by filing an appropriate complaint.

The Antimonopoly Committee of Ukraine, as an appeals body for the purpose of impartial and effective protection of the rights and legitimate interests of persons involved in procurement procedures, forms a Commission (commissions) for reviewing complaints about violations of legislation in the field of public procurement and exercises other powers specified by this Law and the Law of Ukraine “On the Antimonopoly Committee of Ukraine”. Decisions of the Commission for consideration of complaints about violations of legislation in the field of public procurement are adopted on behalf of the Antimonopoly Committee of Ukraine. The powers, order of formation and functioning of the Commission for consideration of complaints about violations of legislation in the field of public procurement are established in accordance with this Law and the Law of Ukraine “On the Antimonopoly Committee of Ukraine”.

A judicial appeal against the Decisions of the Antimonopoly Committee of Ukraine takes place by submitting a corresponding claim to a court of economic jurisdiction.

Thus, in Ukraine, changes to public procurement contracts concluded after the award of the order are subject to regulation. The main legal act regulating this issue is the Law of Ukraine “On Public Procurement” (hereinafter – the Law).

Article 41 of the Law defines the conditions for making changes to procurement contracts. In particular, Part 1 of Article 41 establishes the general rule:

“Essential terms of the purchase agreement cannot be changed after it is signed until the parties fulfill their obligations in full, except for the cases provided1 by this Law.”

Part 6 of Article 41 of the Law provides for the possibility of changing the essential terms of the purchase contract in cases determined by the Cabinet of Ministers of Ukraine.

Currently, in accordance with the Resolution of the Cabinet of Ministers of Ukraine dated 12.10.2022 No. 1178 “On approval of the specifics of public procurement of goods, works and services for customers provided for2 by the Law of Ukraine “On Public Procurement”, for the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation”3 (hereinafter – Features), the essential terms of the purchase agreement cannot be changed after its signing until execution obligations of the parties in full, except for the case4 of a change of conditions in connection with the application of the provisions5 of part 6 of Article 41 of the Law.

Regarding the question, are changes in supplier composition allowed in your jurisdiction (for example, by selling a business unit to a new owner or selling assets in bankruptcy)?

The Law of Ukraine “On Public Procurement” does not directly regulate the issue of changes in the composition of the supplier. However, Part 8 of Article 41 of the Law provides for the possibility of making changes to the purchase contract in the event of:

“changes of the party to the purchase agreement in cases of legal succession, reorganization (merger, merger, division, transformation) of a legal entity, change of the type of joint-stock company.”

Thus, a change in the composition of the supplier is possible only in cases of legal succession, reorganization of a legal entity or a change in the type of joint-stock company.

Selling a business unit to a new owner or selling assets in bankruptcy does not fall under the definition of succession or reorganization. In such cases, the purchase contract can be terminated by agreement of the parties or by court order.

Thus, in Ukraine, changes to public procurement contracts concluded after the award of the order are subject to regulation by the Law of Ukraine “On Public Procurement”. A change in the composition of the supplier is possible only in cases of legal succession, reorganization of a legal entity or a change in the type of joint-stock company. The sale of a business unit or assets does not constitute a change of party to the contract.

Direct conclusion of complex contracts, i.e. without conducting a procurement procedure, is not a common practice in the field of public procurement in Ukraine. As a general rule, purchases are made through the use of open bidding (tenders) or other competitive procedures, which ensures transparency and efficiency in the use of budget funds.

On what grounds can the customer seek to conclude a direct contract?

The Law of Ukraine “On Public Procurement” (hereinafter – the Law) provides for a limited list of cases when the customer can enter into a procurement contract without conducting competitive procedures. The main ones are:

• Lack of competition (single supplier). These are cases when:

– goods, works or services can be supplied only by a certain supplier, in the absence of an alternative (Part 2 of Article 35 of the Law);

– the purchase contract is concluded with the winner of the architectural or art competition (Part 3 of Article 35 of the Law).

• Urgent need. The contract can be concluded according to the negotiation procedure if there is an urgent need to carry out procurement due to the occurrence of special economic or social circumstances that make it impossible to observe the general1 deadlines for carrying out procurement procedures (Part 1 of Article 36 of the Law).
• Additional supplies. The customer may enter into a purchase agreement with the supplier with whom the purchase agreement has been concluded, without conducting the procurement procedure, if additional supplies of goods, works or services are required (Part 7 of Article 36 of the Law).
• Defense purchases. The law provides for certain cases when direct conclusion of contracts is possible in the field of defense (Article 38 of the Law).

On what grounds can such a decision be appealed?

The customer’s decision to enter into a direct contract may be appealed by interested parties (potential participants) to the Antimonopoly Committee of Ukraine (AMCU) in cases where:

• The customer improperly chose the procedure of direct conclusion of the contract. For example, if there were grounds for conducting a competitive procedure, but the customer unjustifiably chose to conclude a contract directly.
• The customer violated the procedure of direct conclusion of the contract. For example, did not publish a notice of intention to enter into a contract or did not provide justification for the choice of procurement procedure.
• The conclusion of the contract violates the principles of public procurement. Such principles include the principles of non-discrimination, objective and impartial evaluation of tender proposals, maximum economy, efficiency, transparency and openness (Article 5 of the Law).

It is important to note:

• The list of grounds for direct conclusion of contracts is exhaustive, and the customer has no right to go beyond it.
• The customer is obliged to justify the choice of the direct contract conclusion procedure and publish the relevant information on the Prozorro public procurement web portal.
• AMCU has the right to invalidate a purchase contract concluded in violation of the requirements of the Law.
• Thus, the direct conclusion of complex contracts is an exception to the general rule of conducting competitive procurement procedures. The customer has the right to conclude a direct contract only if there are grounds provided for by the Law and in compliance with the established procedure. The customer’s decision on direct conclusion of the contract can be appealed to AMKU.

Thus, the legislation of Ukraine in the field of public procurement demonstrates a certain flexibility and adaptability to events affecting the global supply chain, in particular to the war in Ukraine. This is achieved due to:

1. Special procurement regime during martial law. According to the Law of Ukraine “On Public Procurement” dated 12/25/2015 No. 922-VIII (hereinafter – the Law), during the period of the legal regime of martial law in Ukraine and within 90 days from the date of its termination or cancellation, the Peculiarities of public procurement, approved by the Cabinet resolution, apply of Ministers of Ukraine dated 12.10.2022 No. 1178 (hereinafter – Features).
2. Simplified procurement procedures. Features include simplified procurement procedures, in particular:

• it is allowed to carry out procurement without using the electronic procurement system, if the value of the procurement subject does not exceed 50,000 hryvnias for goods and services and 200,000 hryvnias for works (clause 9 of the Features);
• the terms of procurement procedures have been shortened;
• the list of reasons for rejecting tender offers has been reduced.

3. Possibilities to change the essential conditions of the purchase contract. The law (Part 5, Article 36) allows changes to the essential terms of the purchase contract in the cases stipulated by the contract, in particular, in the event of force majeure. The war in Ukraine can be qualified as a force majeure circumstance.
4. Expanding the grounds for applying the negotiated procurement procedure. According to Clause 13 of the Features, the negotiated procurement procedure can be used in cases where the procurement of goods, works and services is necessary to prevent the occurrence or liquidation of the consequences of emergency situations.
5. A flexible approach to determining the subject of procurement. The law (Article 3) allows customers to independently determine the name of the subject of procurement, taking into account their needs. This enables procurement to be adapted to changes in supply chains.

In general, Ukrainian legislation in the field of public procurement seeks to find a balance between the need to ensure the efficient use of budget funds and flexibility in responding to extraordinary circumstances, such as war.