In 2005, the Government of Ukraine (GOU) spent US$4.1 billion equivalent (5% of GDP) on public procurement of goods, works and services. The World Bank, in common with other international organizations and donors, believes that the establishment and maintenance of an efficient and effective public procurement system is essential to accountability in the use of public funds and can help achieve substantial savings in public expenditure, the World Bank reported.

The World Bank believes that there is scope for substantial improvement in public procurement in Ukraine. However, drawing on its experience in more than 100 countries, the Bank believes that the new law “On introduction of changes to the Law of Ukraine 'On procurement of Goods, Works and Services for Public Funds'” is likely to weaken it further.

Our major concerns are:

The law appears to create a fundamental conflict by granting to parliament responsibilities that are normally those of the executive branch.

The new legislative framework for public procurement is at variance with international practice and with Ukraine’s stated objectives of harmonization with European norms.

The involvement of the Antimonopoly Committee in supervision, monitoring and coordination of public procurement goes well beyond the usual role and competence of such an entity, which is normally responsible for oversight of competition policy in the enterprise sector.

The proposed role of the Chamber of Accounts in procurement is inconsistent with international practice in which a supreme audit institution provides independent oversight on the state budget, and is not involved in its execution.

The application of the law to all commercial enterprises that are more than 50 percent owned by the state is inconsistent with the objective that they operate in line with normal commercial practice. The introduction of both implicit and explicit additional domestic preferences may affect discussions concerning WTO accession.

Granting a private, non-governmental organization (the Tender Chamber of Ukraine) the authority to make binding decision in the area of public procurement is inconsistent with international practice. Introducing potential charges for publication of information on public procurement through mandatory use of a non-state journal is likely to raise the cost of procurement.

The World Bank has provided technical and financial assistance since 1997 to improve public procurement in Ukraine. It believes that the new changes are likely to weaken the institutional framework of public procurement system in Ukraine, as well as the confidence of donors and international financial institutions in Ukraine’s public procurement system.


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