The ripple effect of UN transparency: the case of procurement in Ukraine
BY Sandra Cavallo, Anastas Boiko | March 7, 2018|Comments 0
Times have never been easy for small businesses in Ukraine.
Since the conflict broke out in east Ukraine, the Ukrainian GDP plunged by over 10 percent in 2015 alone. Since then, welfare, livelihoods and social cohesion have been directly affected by the consequences of the conflict. Many entrepreneurs have moved away from the conflict zones due to the disruption of basic services and the risk of shelling.
Thankfully, things are starting to get on better footing. As the country’s economy steadily began to recover in 2016 and 2017, with a GDP growth slightly above 2 percent, new opportunities for Ukrainian businesses began to emerge. This included the introduction of a free-trade zone with the European Union. This is good news, but success stories of local businesses making their way to EU markets are still scarce.
Small local businesses, we hear you
The UN’s operations in Ukraine have grown since the events of 2014 and the subsequent armed conflict. More UN projects mean more procurement needs, and it is no secret that some businesses stand to gain from an increased international presence in conflict-affected areas.
At the UN, we deal with mostly medium and small-sized Ukrainian businesses on a daily basis. When we issue procurement notices, we know from experience how difficult it can be for a local company to successfully fulfill the criteria of a transparent, international tender. In some cases, we have to reject up to 30 percent of tender proposals due to errors in their submissions. To become a provider for a UN agency, businesses need to meet high standards, including accountability and transparency. Is there something we can do to turn this situation into a stable positive effect for local businesses?
A new way of doing business: Increased transparency
The local companies that we work with get the message: to seize new opportunities, they need to step up their organizational standards and increase transparency, no matter how big or small the business.
Transparency is on the rise in Ulkraine, and in some ways is even seen as a way to attract customers. For example, a searchable e-declarations database, launched among international fanfare in 2016, is now where all Ukrainian public servants declare their assets. Also, some anti-corruption organizations are developing tools to verify conflict of interests and cross-check public contract award decisions with a list of companies owned by city council representatives and their family members. And Ukraine’s ProZorro system won international awards for making all public tendering transparent and verifiable by any citizen online.
A core principle for the UN, transparency, is essential for high-quality public procurement. An open and transparent procurement process improves competition, increases efficiency and reduces the threat of unfairness or corruption.
With this core principle in mind, we asked ourselves: How can we be more transparent?
Demystifying UN procurement
Our solution to this big question was: let’s take the streets! And we (kind of) literally did…
Instead of using the usual communication channels to disseminate our tenders, we adopted a more proactive approach and reached out to the wider private sector with a series of public meetings where we talked about the ins and outs of procurement as practiced in the UN. We talked about how all bidders are evaluated equally from the solicitation stage, throughout the evaluation process and until the contract is signed.
Apart from making the organization more transparent, our second goal was to support local bidders to improve their working practices and be able to meet the high demands of our tenders. The hope is that this will increase competition helping to ensure that we, the UN, receive the best value for money in our procurement processes.
In our effort to take procurement out on the road, we went beyond the capital city of Kiev and travelled to key cities across the country: Lviv, Kharkiv and Odessa in the west, east and south of Ukraine. We made special efforts to connect with those companies that were internally displaced by the ongoing conflict. In one year, we met face-to-face with over 400 representatives of local businesses from many different industries: food production, construction, pharmaceuticals and advertising. This gave us the opportunity to engage with local businesses, hear their concerns, and answer their questions.
At these public meetings, companies that previously worked for the UN spoke about their experiences sharing why they had failed several times before succeeding. They talked about the importance of needing to rely on quality, transparency and demonstrated results, instead of personal contacts, unofficial payments, or other non-transparent practices, were some of the issues highlighted. This is still a mindset change from the still widespread practices of the old times!
And we got ambitious…
All these interactions with local vendors raised another question: can our initiative have a ripple effect so local businesses will be prepare to compete beyond the UN market? It may still be too early to tell but we are eager to see the results. We can always hope that this will be only the first step on a thousand-mile journey: the journey towards conquering world markets, rephrasing the idea of the Chinese philosopher Laozi.
Meanwhile, we are getting great signs of success: one of the agencies working in Ukraine, UNDP, is already seeing an ever-growing number of new bidders. Having more companies to choose from will always help us ensuring best value for money, a sacred principle in our procurement processes. The end result: helping the organization spending taxpayers’ money in the most effective way. Come back to learn how we are doing!
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