The state procurement procedures are coordinated by the Ministry of Economy of Ukraine.
A special Consultation-Methodological Council on State Procurement operates as an advisory body of the Ministry of Economy. The Council consists of the Deputy Ministers of Economy, Finance, Justice, the Heads of Main Control and Revision Office of Ukraine, State Treasury, Antimonopoly Committee, State Price Control Inspection, and other agreed members (officials only).
The advertisements of the planned purchases or preliminary assessment are posted for free in the information bulletin “Bulletin of Public Procurement”, published by the Ministry of Economy, and at the web-portal for public procurement, created by the Ministry of Economy (https://tender.me.gov.ua/). The advertisement of the planned purchase can be also posted at the client’s (buyer’s) web-site, in printed media and other sources. The web-portal for public procurement is access-free.
The advertisements of the planned purchases or preliminary assessment are posted in the relevant international media and/or international electronic communication network in case the expected cost of the procurement item exceeds the equivalent amount of:
- For goods – 200 ths. EUR;
- For services – 300 ths. EUR;
- For works – 500 ths. EUR.
For organization and carrying out procedures, the client creates a tender committee, which consists of at least 5 employees of the client enterprise. The head of the tender committee, appointed by the client, is in charge of the committee activities and has the right of signing a contract. The decisions of the committee are made by the simple majority of the votes (no less than 2/3 of members should be present). In case of the equal distribution, the head of the tender committee has the casting vote.
The classic direct purchasing relationships between sellers and buyers in the delivery contract correspond to the western pattern and so must not be regarded additionally.
Much more expensive and complicated are direct purchases on tenders. Unfortunately, western tenderers often come away with empty-handed because of lack of knowledge or minor formal mistakes. That is why in the next paragraphs the tender practice is analysed in more details.
Types of tenders/purchase:
- The purchase can be executed by several procedures:
- Open tender (main procedure);
- Limited participation tender;
- Two-stage tender;
- Request for quotation;
- Reduction;
- Single-participant purchase.
– Open tender
During open tender all interested parties can file their bids. The advertisement of open tender should include:
- name and address of the client (buyer);
- kind, quantity of the goods, place of delivery, kind and place of delivery of works or services;
- terms and deliverables;
- requirements to the participants;
- ways and place of getting tender documents;
- place and period of filing bids;
- place and data of opening the bids;
- conditions of providing bid security (if demanded by the client);
- contact details.
The filing period is 30 days after advertisement publishing; in some cases the period can be shortened to 15 days.
– Limited participation tender
During limited participation tender only participants invited by the client can file the bids. The limited participation tender procedure is used when goods, works or services due to their complex or specialized nature can be offered by a limited number of participants (no less than 2).
The invitation for limited participation tender should include the same information as the advertisement of open tender.
The filing period is 30 days after sending an invitation; in some cases the period can be shortened to 10 days.
Tender documents should include:
- instructions for bids preparation;
- list of criteria used by tender committee to evaluate whether participants meet the qualification requirements;
- information on the documents needed to confirm that participants meet the requirements;
- information on the nature, quality and technical characteristics of the procurement item;
- list of criteria and methods of their evaluation to define the best bid;
- main terms and conditions to be included into the contract or project contract;
- description of separate part(s) of the procurement item, if the client accepts bids only for a part of goods, works or services to be purchased;
- the way of evaluation and comparison of alternative bids;
- the method of tender price calculation;
- information on the currency(-ies) in which the tender price is calculated and indicated;
- information on the language(s) in which the bids are presented;
- the client’s requirements for providing bid security and ensuring the purchase contract implementation;
- conditions of return / non-return of bid security;
- the way, place and deadline for bids filing;
- the procedures of providing tender clarifications, and notification of the client’s intention to hold the participants meeting;
- validity of bids;
- place, data and time of opening the bids;
- contact details (surname, position, address) of the client’s employee(s) responsible for communication with the participants;
- information on additional endorsements needed for bid acceptance.
The tender bid is filled in written form, signed by the authorized official, in the sealed envelope or in other form, mentioned in the tender documentation. Per participant’s request, the client confirms the obtainment of tender bid and informs on the date and time of obtainment. The bid must be supplemented by the document which confirms the bid security, in case the demand for bid security was indicated in the tender documents.
The client defines the preferred bidder among the participants whose tender bids were not declined, on the basis of criteria and method of bids evaluation, indicated in the tender documents (price, deliverables, quality, ecological safety, etc.). Herewith, the share of price criteria should not be less than 70%.
The overall period of evaluation, comparison and awarding of the contract should not exceed 30 working days after opening the tender bids.
The tender is called off in the following cases:
- less than 2 tender bids were filled;
- all tender bids were declined.
The tender can be declared void by the client in the following cases:
- the best price exceeds the client’s provision for purchase financing;
- the purchase is no more consistent with the state needs due to unforeseen cause or insuperable force.
– Two-stage tender
Two-stage tender procedure is used in the following cases:
- the client cannot make a list of goods/services or define a kind of services, and/or making the decision on purchase requires preliminary negotiations with the participants;
- all open tender bids were declined by the client because of collusive tendering, and/or all open tender participants did not meet the qualification requirements;
- the procurement item is construction works, which are repetition of the similar construction works, corresponding to standard plan, if the primary contract was awarded according to the Temporary Regulations;
- the procurement item is scientific research, experiments or development, consultative and/or other special services.
The tender procedure includes two stages:
- at the first stage all participants are offered to fill in preliminary tender bids without price indication;
- at the second stage the client offers to the participants whose preliminary bids were not declined at the first stage to fill in the final tender bids with the price indication.
– Reduction
Reduction procedure is used when the procurement item is goods or services for which the permanent market exists and which are produced or supplied not by separately developed specification, in case the expected cost of the procurement item exceeds 200 thousand UAH.
The reduction involves two stages (similar to two-stage tender). At opening the tender bids during the second stage the client announces the name and address of each participant and the price of each tender bid and offers the participants’ representatives to reduce their price by reduction step (bid decrement), mentioned in the tender documentation. The initial reduction price is the minimal price out of the tender bids.
– Request for quotation
The client can conduct purchase through request for quotation procedure for the goods and services for which the permanent market exists, in case the procurement cost does not exceed 200 thousand UAH.
The client requests the quotation from at least 3 participants and awards a contract to the participant whose bid meets the client’s requirements and sets the lowest price.
– Single-participant purchase
According to single-participant purchase procedure, the client awards a contract to the only participant after negotiations.
The procedure is used, if properly agreed with the authorized party (the Ministry of Economy), in the following cases:
- purchase of artworks or purchase related to copyright protection;
- absence of the competition for goods, works or services which can be supplied, produced or provided by the only participant, if there is no alternative;
- need for additional supplies (used for partial replacement, etc.) by the primary participant, when change of participant can cause the purchase of goods or services which cannot substitute the present goods or services;
- need for additional construction works, not included to the initial project, which become necessary for project implementation due to unforeseen cause; herewith, the total cost of the contract for additional works should not exceed 50% of the master contract;
- awarding a contract to the winner of architectural competition;
- urgent need for purchase due to special economic or social circumstances which could not have been foreseen by the client, including the purchase related to emergency relief operations.
State supervision and control in the area of public procurement is carried out by the Ministry of Economy, State Control and Revision Office, State Treasury, State Statistics Committee, Antimonopoly Committee, and law-enforcement authorities.
Tender security
In some cases tender security may be needed, mostly it concerns state enterprises. This security must prevent non-compliance of contract commitments by successive tenderer, so that neither provider nor the other participants of the tender would suffer disadvantages. It can be represented in the form of:
- Bank guarantees;
- Enterprise contract;
This tender security is returned after 10 calendar days since signing the contract with the successive tenderer or after finishing of purchasing procedure without signing a contract with any of the participants.
