Law of Ukraine
"On Government Procurement"
Date of entry into force:
April 20, 2014
The Law establishes the legal and economic principles of procurement of goods, works and services for the needs of the state and the territorial community.
Article 1 of the Law defines the main terms used in it.
The scope of application of the Law is defined by Article 2 of the Law.
The Law applies to all customers and government procurements of goods, works and services, provided that the cost of the procurement item (not including the value added tax) is equal to or exceeds UAH 100,000 for a good (goods) or service (services), or UAH 1,000,000 for works. The cost of a government procurement item (goods, services and works) is reviewed every 24 months, with consideration of consumer price indexes and industrial producer indexes. Based on the review results, the Cabinet of Ministers of Ukraine submits to the Verkhovna Rada of Ukraine a law draft on amendment of this Law. The conditions, order and procedures for procurement of goods, works and services can be established or amended exclusively by this Law, except for cases provided for by this Law. The provisions of this Law can be altered exclusively through amendment of this Law.
Domestic and foreign participants take part in government procurement procedures on equal terms. Customers ensure free access of all participants to information on procurement provided for by this Law. The customer may not set discriminatory demands to participants (Article 5 of the Law).
Article 7 of the Law establishes that state regulation and control in the sphere of procurement are carried out by the Authorized Body (central executive authority implementing state policy in the sphere of government procurement) and other bodies, within the scope of their competence.
Chapter III of the Law establishes general terms of government procurement.
Article 10 of the Law determines the procedure for publishing information about government procurement.
According to Article 11 of the Law, the competitive bidding committee is formed by the customer (general customer) to organize and hold the procurement procedure. The membership of the competitive bidding committee and the provision on the competitive bidding committee are adopted by resolution of the customer (general customer). The competitive bidding committee may not include officials and representatives of the participants, their family members, or people's deputies of Ukraine, deputies of the Verkhovna Rada of the Autonomous Republic of Crimea, deputies of local, city district, district, or regional councils. The competitive bidding committee must consist of a minimum of five persons. If the number of officials (officers) in the customer's staff number is less than five, the competitive bidding committee must include all officials (officers) of the customer. The head, secretary and other members of the competitive bidding committee may be trained in the issues of organizing and holding government procurement. The work of the competitive bidding committee is managed by its head. The head of the competitive bidding committee organizes the committee's work and is personally responsible for the execution of the committee's functions. The competitive bidding committee:
- plans government procurement procedures;
- draws up and approves the annual government procurement plan;
- selects the procurement procedure;
- carries out government procurement procedures and preliminary qualification of participants;
- ensures equal conditions for all participants, and provides for an objective and fair selection of the winner;
- provides for drawing up, approval, and storage of relevant documents on the issues of government procurement, as established by this Law;
- carries out other actions provided for by this Law.
The resolution of the competitive bidding committee is recorded in the minutes and signed by all members of the committee present at the competitive bidding committee session. If a member of the competitive bidding committee refuses to sign the minutes, their refusal and the reasons for it are noted in the minutes.
According to Article 12 of the Law, government procurement can be carried out via one of the following procedures:
- open bidding (Chapter IV of the Law);
- two-stage bidding (Chapter V of the Law);
- call for quotations (Chapter VI of the Law);
- preliminary participant qualification (Chapter VII of the Law);
- negotiated procurement procedure (Chapter VIII of the Law).
The customer can carry out the above government procurement procedures with the use of electronic communication.
Government procurement under framework agreements is regulated by Article 13 of the Law.
According to Article 16 of the Law, the customer requires that participants or preliminary qualification participants submit documentary information to confirm their conformance to the qualification criteria. The customer can set the following qualification criteria:
- availability of equipment and material and technical base;
- availability of suitably qualified staff with the necessary knowledge and experience;
- documented experience of performing similar agreements;
- financial capacity (balance sheet, income statement, statement of cash flows, a certificate from the servicing bank confirming lack (presence) of overdue amounts on loans).
The customer does not establish qualification criteria and does not determine the list of documents that confirm information submitted by participants or preliminary qualification participants about their conformance to such criteria, in the following cases:
- call for quotations procedure;
- procurement of oil, raw petroleum products, natural and oil gas, electric energy, power transmission and distribution services, centralized heat supply, postal services, stamps and pre-stamped envelopes, telecommunication services (including radio and television signal broadcasting), centralized water supply and water disposal services, and public railway transportation services.
According to Article 17 of the Law, the customer decides to deny a participant or preliminary qualification participant permission to participate in a government procurement procedure or a preliminary qualification, and must refuse the participant's (preliminary qualification participant's) competitive bidding proposal (qualification proposal, quotation) in the following cases:
- the customer has conclusive evidence of the fact that the participant or preliminary qualification participant is offering, giving, or agreeing to give, whether directly or indirectly, a reward of any form (employment offer, material valuable, service, etc.) to any officer of the customer or another state authority, in order to influence the decision as to the winner of the procurement procedure or the customer's choice of a certain government procurement procedure;
- the participant's or preliminary qualification participant's official (officer) authorized to represent the interests of the participant or preliminary qualification participant, or a natural person who is a participant or preliminary qualification participant, has been held liable according to law for corruption-related offences in the sphere of government procurement;
- in the past three years, the business entity (participant or preliminary qualification participant) has been held liable for offences under Article 6, part 2, paragraph 4, or Article 50, paragraph 1 of the Law of Ukraine "On Protection of Economic Competition", namely, engaging in concerted anti-competitive actions related to distortion of bidding (tender) results;
- the natural person who is participant or preliminary qualification participant, has been convicted of a crime with lucrative motives, and the conviction has not been expunged or removed from the records according to the procedure established by law;
- the participant's or preliminary qualification participant's official (officer) authorized to represent the interests of the participant or preliminary qualification participant has been convicted of a crime with lucrative motives, and the conviction has not been expunged or removed from the records according to the procedure established by law;
- the competitive bidding proposal (qualification proposal, quotation) was submitted by a government procurement procedure participant that is affiliated with other participants of the procurement procedure and/or with a member (members) of the customer's competitive bidding committee;
- the participant or preliminary qualification participant has been declared bankrupt according to the procedure established by law, and liquidation proceedings has been initiated against them.
The customer may decide to deny a participant or a preliminary qualification participant permission to participate in a government procurement procedure or in preliminary qualification, and may refuse the participant's (preliminary qualification participant's) competitive bidding proposal (qualification proposal, quotation) in the following cases
- the participant or preliminary qualification participant has arrears on taxes and fees (mandatory payments);
- the participant or preliminary qualification participant does not carry out business activity according to the provisions of their statute;
- the participant or preliminary qualification participant is registered in an offshore area. The list of offshore areas is established by the Cabinet of Ministers of Ukraine.
The procedure for contesting government procurement procedures is established by Article 18 of the Law.
The main requirements to a government procurement agreement are established by Article 40 of the Law. The terms of the government procurement agreement must not be different from the content of the competitive bidding proposal or quotation (including price per unit of goods) submitted by the winner of the government procurement procedure. Essential terms of the government procurement procedure cannot be changed after its signing and until the parties fulfill the full extent of their obligations, except in case of:
- decreasing procurement amounts, in particular, with regard to actual amount of the customer's expenses;
- changing the price per unit of goods by no more than 10% in case of fluctuation of the market price of such goods, provided that such change does not result in an increase of the agreement total;
- improvement of the procurement item quality, provided that such improvement does not result in an increase of the agreement total;
- extension of the validity term of agreement and term of fulfilling obligations to deliver goods, perform works or render services, in case such extension is caused by objective circumstances (confirmed by documents), including force majeure circumstances and delays in the customer's expense financing, provided that such extension does not result in an increase of the agreement total;
- approved downward adjustment of the price (without a change in quantity (volume) and quality of goods, works, and services);
- change of price caused by a change of tax rates and fees, corresponding to such change of rates;
- change of the inflation index determined by the state statistics authorities according to the legislation, change of the foreign currency exchange rate (if the procurement agreement stipulates a price adjustment procedure depending on the exchange rate), change of stock exchange quotations, regulated prices (tariffs) and normative used in the procurement agreement;
- change of terms due to application of the provision according to which the term of validity of a government procurement agreement can be extended by a term required to hold the procurement procedure at the start of the following year, in the amount not exceeding 20% of the previous year's agreement total, if appropriate expenses have been approved according to the established procedure.
The Law also introduces appropriate amendments to:
- Articles 164-14 of the Code on Administrative Offences of Ukraine;
- Articles 75, 77, 78, and 79 of the Economic Code of Ukraine;
- Articles 1 - 4 of the Law of Ukraine "On Specifics of Procurement in Some Spheres of Economic Activity ".