eProcurement system ProZorro
This innovation has won an award, as described in the case study text. Call for Innovations
This case was submitted as part of the Call for Innovations, an annual partnership initiative between OPSI and the UAE Mohammed Bin Rashid Center for Government Innovation (MBRCGI) Strong Evidence
ProZorro is a hybrid electronic government e-procurement system created as the result of a partnership between business, government and the civil society in Ukraine. Innovative public procurement system delivering government services in a stakeholder-focused, transparent, fair and low-cost way. In two years of operation of ProZorro saved $1.9 billion of budget funds and became a leader in openess of goverment data on public procurement.
Before reform on public procurement sphere, Ukraine worked in a regulatory and institutional framework that regulated the "paper" procedure. This system made possible numerous abuses by government customers was difficult and inconvenient for suppliers did not provide the opportunity to the public and professional control. Due to corruption and limited competition country lose $2 billion from public procurement budget of $11 billion per year.
In March 2014, soon after the Revolution of Dignity began, a team of volunteer civil society advocates and experts began working on the design of a new and more robust procurement system for Ukraine. The first step was to change the special law ‘On Government Procurement’ that contained 43 exceptions and many corrupt provisions. The team worked for over a month together with the EU and Ukrainian experts, as well as employees of Ministry of economic development and trade of Ukraine.
Even though the new law was substantially different from the previous one and aimed to comply with the best international standards, the reformers realized it was not a “breakthrough changes.” It had to be something significantly larger. The team quickly realized that a comprehensive electronic procurement system for all tenders could significantly improve both access to and the integrity of public contracting, as well as improve the transparency of procurements. After a long round of discussions, the group decided to work towards digitization. The volunteers believed that implementation of an e-procurement system would streamline and improve public procurements.
The ProZorro team created a hybrid electronic system that is built on open source. The hybrid system is an interaction between of a state-owned central database and commercial areas, where all the information in the CDB is duplicated to the platforms. The code system is completely open and freely available for download and use.
The main principle of eProcurement system: “Everyone can see everything”. After the auction end in the electronic system, everyone can see all the information about the submitted proposals from all participants, decisions of the tender commission, all qualification documents etc. Moreover, developed monitoring tools – intelligence modules of bi.prozorro.org and bipro.prozorro.org. These modules have a wide range of functions and enable deep analysis and monitoring of public procurement. In particular, the module displays information about each announced tender; buyer and government authority.
Public procurement reform developed in the "Golden Partnership Triangle" (between government, business and society). We unite and take into account the interests of business, government and civil society, allowing to maintain a high level of trust between the key stakeholders in the implementation of reforms.
ProZorro remains one of the most successful reforms in Ukraine. In two years of operation of ProZorro saved $1.9 billion of budget funds. ProZorro is able to control procurement and track whether public agencies are using taxpayer money efficiently and transparently: the more processes take place online, the more transparent they are.
For Ukrainian government in a face of ProZorro team is important to develop further success of reform and innovations in the government. That’s why ProZorro using artificial intelligence and machine learning in its work. In February 2018 was organized first Data science hackathon in Ukraine based on government data. With a help of artificial intelligence participants were working on development of a model that would predict the number of bidders.
Fully implemented in 2016 Prozorro has since been globally recognized as one of the most innovative public procurement systems delivering government services.
- Rated #1 by World Procurement Awards 2016 in the Public sector nomination
- Rated #1 by Open Government Awards 2016
- ProZorro considered by EBRD as a recommended model for e-Procurement reform
- ProZorro is a showcase & learning project of the Open Contracting Partnership
- National Council of Ukraine recognized ProZorro reform as the most successful one
- ProZorro is posted on the World’s Procurement Think Tank
- World Bank is going to implement the base of Prozorro system for its procurement procedures
Next steps on innovative public procurement reform is further development of IT system; to match the requirements of the law and market needs; maximum of digitalization, integration with registries of other key stakeholders; ecosystem development - increasing the efficiency of procurement and to share philosophy and core values of ProZorro with other countries.
What Makes Your Project Innovative?
eProcurement system ProZorro is innovation in public sector:
- is first fully online public procurement system that fights with corruption
- a leader in openness of government data about public procurement
- in two years of operation of ProZorro saved $1.9 billion of budget funds
- using artificial intelligence in its work to predict number of bidders
- first experience in the world of migrating ProZorro data (50 terabytes + over 30 million files) from Amazon Web Services to the data center in Ukraine
- conducted first marketing campaign for attracting business with work with government and tenders
- organized first Data Science Hackathon based on public procurement data
What is the current status of your innovation?
Since 2016 ProZorro became a fully digital public procurement platform. Considered as one of the major democratic achievements in terms of fighting against corruption. And we are ready to share our philosophy with other countries.
At the same time, we are improving eProcurement system. For example, development of online portal for controlling bodies to make monitoring and control of public procurement online and transparent; development of risk indicators for tenders with violations; further integrations with state registers.
Collaborations & Partnerships
eProcurement system ProZorro launched by the “golden triangle” of partnership –government, business and society.
The government (Ministry of economic development and trade) developed the legal framework. State-owned enterprise ProZorro is an administrator of the central electronic tenders database (IT part). The business environment provides part of the e-procurement infrastructure through the marketplaces. Civil society is responsible for anticorruption activities and control on procurement.
Users, Stakeholders & Beneficiaries
Government officials (Ministry of economic development and trade, SEO Prozorro) made transparent and innovative public procurement system that saving budget money.
The business environment - renewed his belief in working with the state as an example of innovation marketplaces in ProZorro system.
Civil society organisations can conrol how effectively money of taxpayers are spent on public procurement by goverment authourities.
Results, Outcomes & Impacts
ProZorro from a start up transformed into self-sustainable government eProcurement system. It has made unprecedented migration of data from Amazon Web Services to Ukrainian data center which makes system complies with the legislation.
In two years of operation of ProZorro, all the government authorities in Ukraine make purchases through eProcurement system and saved $1.9 billion of budget funds. E-system Prozorro with its Business Intelligent module is a single point of access to machine-readable data, which is built on the Open Contracting Data Standards providing one of the most advanced and effective analytical tools for procurement data in the world. ProZorro is able to control procurement and track whether public agencies are using taxpayer money efficiently and transparently through the openness of government data.
Challenges and Failures
In the beginning of 2015, the main challenge was whether a functionality of eProcurement system would be effective and supported by government authorities that purchase. Deputy head of the presidential administration offered to test the software on so-called ‘below-the-threshold’ procedures – procurement(s) for small amounts and opinion leaders in the government pushed for the reform in this period.
Another issue is lack of financing from the State Budget. The problem was solved by involving private commercial marketplaces that already provided e-procurement services for commercial sector and supported first financing - 35 000 $. The biggest financial support was made by international organizations (WNISEF, GIZ, IBRD).
Since 2017, ProZorro became self-sustainable, according to the Ukrainian legislation all the government data must be in Ukrainian data centers. With a help of highly qualified experts and donor ProZorro moved from Amazon to Ukrainian data center.
Conditions for Success
- readiness and motivation of civil society to fight with corruption and to create reforms in the country. We chose to do a “bottom-up” approach that entails a group of activists taking the lead on developing an eProcurement system for below-the-threshold purchases.
- Support of the government made the start-up on public procurement become legal. New employees come from leading IT companies and business to Ministry of economic development and trade and to SOE ProZorro to continue development of eProcurement system. Openness of government data on public procurement gave rise to numerous projects.
- Also, important part is international organizations (donors) belief and support in eProcurement system development and effectiveness.
What is the best policy around public procurement is frequently raised question -civil society is always dissatisfied with the quality of public services. Businesses complained about the complexity of procedures and the number of references for tenders. The government suffers from the bureaucracy and trying to "improve" the process with the latter. Historically, public procurement sphere is related to corruption. Our approach is based on the close cooperation of business, government and civil society.
In 2017 Moldova started piloting system of public e-procurement M-Tender, which is established on the basis of the Ukrainian system ProZorro. But a model like ProZorro has the potential to be adopted by any country struggling with a lack of openness in its public spending. We offer a qualitative leap in building ecosystems of public procurement in another country.
The main lessons learned from public procurement reform in Ukraine:
- public interests are more important than than the interests of those who govern;
- digitalization of government is a key factor of change;
- the principles of openness will increase transparency, justice and professionalism, and trust in the ecosystem;
- results of public procurement reform can be shared with the world.