The underside of the system: who, how and why pays in ProZorro


ProZorro in the system introduces a progressive scale of payment for participation in tenders. How many will pay the suppliers - evaluation of Alexander Starodubcev

The electronic system of public procurement ProZorro was probably the most effective investment of civil society: it does not cost the budget a penny and have saved about a billion UAH. The new tariff system, which was approved by the Cabinet, will help to build on the success of the pilot project and ensure the transfer of all of the tenders in electronic format

Recently approved an important document for the future translation of all public procurement in ProZorro. Talking about betting rates for participation in tenders. I want to tell you in detail about how the logic was laid in this system. First, because tariffs are one of the most frequently asked questions from the media. And secondly, the main principle of the system (and we're not going to change it) - transparent.

So, what logic is incorporated in the tariffs. We proceeded from the fact that the system should not make, but must be self-supporting, which will guarantee its independence. Thus for state (all state procurement - state-owned companies, ministries, departments, utility companies, etc.) the use of the system will be free. In addition, we believe that costs should not be borne by taxpayers who do not participate in public procurement. Normal engineer does not have to pay for maintenance of the system ProZorro, which he does not use. But when it comes to the entrepreneur who through ProZorro sells the state its products and services, he as a businessman should pay for the use of the system.

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Without a penny from the budget

I want to remind you how to build the system. It was not used a single penny of tax payers funds. The project is financed by international donor organizations and private trading venues under the supervision of Transparency International. Received from donors funds were spent on software development and writing code is very time-consuming and expensive process. In addition, it was required to Finance the purchase of equipment, because to deploy a system that would stand the simultaneous operation of tens of thousands of tender commissions across the country, is not easy. Another article of consumption - marketing of public procurement. Before the reform, the state did very little to involve the business community in public procurement and increase competition. We consider it a priority. Last year the team ProZorro conducted more than 100 workshops across the country to train customers and business representatives work with the system. And since may on a platform of Prometheus launches Ukraine's first mass public online course "Public procurement", also free to all comers.

Donors have supported and continue to support the system at the stage of its formation. But it is not going to last forever - we must learn to work independently

Throughout the project spent about $350 000. For comparison: ready Korean system (which for our purposes still would have to adapt) we were offered to buy for $10 million Difference is obvious.

See also Anyone that buys through the system ProZorro

The cost of participation

However, to make the system completely free it is impossible. Yes, donors have supported and continue to support the system at the stage of its formation. But it is not going to last forever - we must learn to work independently. Even when the system is released for production, it will need to service and maintain in working condition. You will also need to be improved: like any other software, it needs to evolve to meet new needs and close opportunities for fraud, which will seek out dishonest players. It requires funding. According to our estimates, about 35-50 million hryvnias a year. Given the size of the savings that have already been obtained ProZorro, the amount is paltry. However, we believe that have no right to take this money from the budget. In our opinion, these funds should pay those who earns on tenders, i.e. suppliers: companies and natural persons-entrepreneurs.

The more involved participants in the auction, the more you earn site and the more competition at auctions and costs are below budget

The main question is how much will the participation in public tenders. At the stage of the pilot we have developed cost 170 UAH for participation in the tender is more expensive 35 000 UAH. A more complicated scale to pilot stage to calculate does not make sense, because pilot trading limited subthreshold amounts (up to 200 000 UAH for goods and services and 1.5 million UAH for works).

However, from 1 April, when ProZorro will be transferred all the big tenders in the country, it makes sense to apply a progressive scale. We started literally with a minimum of one non-taxable minimum (17 USD) for participation in the tender cost up to 20 000 UAH, because making even a minimal fee, the supplier starts to be serious about the purchase. In addition, we recorded the maximum rate of 100 minimum (1700 USD) for participating in tenders costing more than UAH 1 million. Thus, the more involved the participants at the auction, the more you earn site and the more competition at the auction and below budget expenses. Everyone wins.

See also Max Nefyodov: three successful case work in the system ProZorro

For comparison, in Georgia recorded in the amount of $25 (about 700 USD). Pay with customers and suppliers regardless of the size of the tender. In Austria, on average, about 200 euros, or 6000 USD. As you can see, our tariffs are more than modest.

Тарифи ProZorro Final.png

Internal kitchen

A little more on the expenditure side: where will be sent the money. ProZorro - two-level system consisting of a Central database and connected to it trading platforms. Thus, the entire service load and customer service are borne by venues, they are responsible for the access to the system. However, the state supports the work of the CDB, its protection, etc. on this Basis, there are only three types of payments:

1. Fee provider of electronic trading platform for the submitted proposal. The approved tariffs (progressive scale) ranging from 17 to 1700 USD depending on the amount of the tender.

2. The price that the electronic trading platform sends the system. Part received from the participant the amount of Playground reserves, and part (also fixed) gives the system ProZorro.

3. The price that returns the system ProZorro a platform from which to tender came by the customer. We want to ensure efficiently served both the supplier and the customer. This motivates site to provide the best service and to fight not only for suppliers but also for customers. It encourages competition and increases the service function for which the government rarely manages to "excellent."


Thus, the proposed tariff system solves several problems at once. First, it allows the system to be self-supporting and not to take money from the state budget. Secondly, it allows you to stimulate trading platforms to actively engage suppliers to tenders. And third, through the system of reverse payments, we encourage sites to provide quality service state customers, for which the use of system charge.

Calculations and projections

Based on the statistics for 2014, we forecast that in 2016 will be held in ProZorro about 25,000 nedorogoy tenders. Every tender is expected, on average, three sentences. The average weighted tariff for participation in the tender in 2014 amounted to UAH 470. Thus, for 2016, we forecast revenues received from vendors for participation in tenders in the amount of 35 million USD.

From this money for the needs of sites will come 22 million USD a year. It is expected that in 2016 will be connected to 10 platforms and each of them will have about 180 000 UAH per month. While this amount does not cover even the operating costs, not to mention the possibility to recoup the funds that the site already invested in developing, connecting and further development of the system (each site has invested more than $10,000 in connection costs on its own development is difficult to estimate, they range from $30 000 to 50 000).

Tariffs1.jpgThe money that will be received by the administrator ProZorro - SOE Soundtree, will go to support the Central database. Support includes the hosting and maintenance of the system, the maintenance of the infrastructure and the wages of IT-specialists. In 2016 of funds that receive ProZorro for participation in tenders, would still be insufficient to maintain full functioning of the system, so we asked a little help from the budget. The corresponding request has already been sent to the Ministry of Finance and is provided in the budget for 2016 (12 million USD).

In 2017, the system will reach self-sufficiency. However, fees for compulsory procedures with barely enough money to even support the infrastructure platforms. Accordingly, the site will be interested in improving the administration bid to make them interesting for customers. By law, the administration auction, the buyer can simply download a report of the transaction and not use a competitive procedure if the auction will not be of interest to buyers. Want to earn? Make customers understand the value of these procedures for themselves.

As you can see, the logic of tariffs is based on the successful operation of the pilot system and projections for 2016. Furthermore, it stimulates competition venues and ensures the independence of the system. We are ready to start from 1 April.

стародубцев.jpgAlexander Starodubtsev,
the head of the Department of public procurement Ministry of economy