Digital tools to monitor and predict risks in auditing Ukraine’s revolutionary online public procurement system.

Ukraine is transforming its public procurement system to bring public procurement into the open, so citizens get a better deal and government runs smoothly. EBRD has supported the Ukrainian government to develop a new legal framework, and to develop cutting edge tools which can process vast amounts of procurement data in real time. State auditors can now quickly & pre-emptively spot risks or inefficiencies in the system and address them. It is the first innovation of this kind in the world.

Innovation Summary

Innovation Overview

Ukraine’s annual public procurement budget is worth up to US$20 billion. How it is spent has a massive effect on its people – it determines what medicines they can access, what schoolbooks they read, and how easy it is to travel.

Following decades of secrecy and corruption, the revolution of 2014 created the conditions to overhaul the public procurement system for goods, works and services. The intention was to give taxpayers a better deal and make government more effective and trusted.

To achieve this a new legal framework and cutting-edge tools were needed, built on the principles of open government and open data. EBRD has worked with the Ukrainian government, civil society and businesses to develop both. This has allowed the country to leap ahead of the rest of the world in how it manages procurement.

First, EBRD led a collaboration of government, civil society and businesses in building a cutting-edge digital system called Prozorro, which means “transparency” in Ukrainian. Built on the Open Contracting Data Standard (OCDS), this system can manage the entire public procurement process systematically, efficiently and transparently. Key to its potential is the ability of auditors to use the data to detect risks and inefficiencies early before they become problems.

During a successful pilot phase, the system saw excellent uptake and generated vast amounts of data. When processed effectively in real time, these data enable auditors to proactively anticipate risks, react quickly when abuses or abnormalities are detected, and flag gaps and inefficiencies in the system for future improvement.

Initially, it was assumed that civil society would process this data, but it was soon obvious they lacked the resources, skills or capacity. Data that could be fed back into the system to flag risks and make it more efficient and transparent was not being processed, which significantly hampered its effectiveness.

So, the EBRD team behind Prozorro again worked with the Ukrainian government to first develop the legal basis for a system of indicators to flag these risks early and mitigate them. They then developed tools that could deliver this, combining cutting edge business intelligence technologies with real-time risk analysis techniques.

The Prozorro system is unique in drawing information from existing commercial platforms into a single central repository. So, the auditing system needs to be able to plug data from lots of different platforms into a singular system and detect and flag risks across a constantly changing data set.

A critical part of the reform was to create an independent body responsible for picking up previously unknown risks identified by the new analytical tools, flagging them to auditors and identifying ways the system could be improved.

These innovations will have benefits right the way through Ukrainian society. It is designed for use by government officials who use it to ensure the government tendering service is fair and efficient. It allows them to do things in minutes that would take their peers in other countries days, and to ensure they are enforcing the principles of open contracting now enshrined in Ukraine’s law.

These changes make it much harder for the procurement process to be abused, and easier for civil society to monitor and support it. It allows policymakers to show they are building a healthy, inclusive economy which rewards innovation and quality of service effectively. And it brings new companies and workers into the economy by reducing biases and other barriers to entry. The ultimate beneficiary is the Ukrainian citizen, who gets better products and services from companies equipped to the do the job, at the lowest possible price.

The process has been built with the future firmly in mind. Still in its pilot phase, the platform has been built using data-driven analytical tools which highlight instances of risk in procurement, and feed back into these principles and inform them for future.

All data on suppliers and previous tenders will be online and made easily accessible to the authorities. Any risks or issues with a specific company will be logged in the system for future reference. Data can be analysed to detect common problems across the whole procurement system, and any changes needed for future. This means it can be constantly improved and refined to deliver the best possible service for the people of Ukraine.

The innovation’s ground-breaking approach and early success has implications for state procurement all over the world, and the open government movement in general. It conforms with the OCDS, meaning the same principles and approach can be applied anywhere in the world.

The project is currently under review by the OECD Auditors Alliance, and a version of the project will be piloted in the Kyrgyz Republic from June – December 2019.

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Year: 2018
Organisation Type: International Organisation

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