Checking of Public Procurement: How to Detect Unscrupulous Competitors

The concept of a tender provides for fair competition. But in practice this is where hidden tricks are often applied. Therefore, participants in public procurement are checked in the same way as any other counterparties. In this article we tell you how to do it effectively.

Each initiator of the procurement procedure must check participants of the competition for compliance with the law. This is especially relevant to state-owned enterprises-customers of public procurement. According to Articles 11 and 17 of the Law of Ukraine "On Public Procurement", the organiser must refuse those who do not meet the requirements of the law to participate. To detect these violations, it is necessary to check everyone who participates in the competition.

Checking has a clear purpose: the customer (initiator of the procurement) must make sure that legal entities and individuals participating in the procurement procedure meet the requirements specified in Article 17 of the Law of Ukraine "On Public Procurement". And there are a lot of such requirements: a list of 13 factors, from links with other participants in the procurement procedure to the use of child labour.

Is Thorough Checking of Procurement Needed? Judicial Practice

The history of the tender UA-2019-11-18-001979-c began almost two years ago. The Western Office of the State Audit Service of Ukraine started monitoring the procurement on the basis of the risk indicator RISK 1-5-2.

It turned out that a participant owed to the State Tax Service of Ukraine and it is a violation of the requirements of the law. According to Article 17, the organiser refused it to participate and rejected its tender offer. The participant filed an appeal to renew its rights in the competition. The case is still pending. It could not have started if the customer of the procurement had checked all the participants at the application stage.

Another case illustrates even more clearly the need to check procurement participants. A participant provided forged documents, although it did not actually meet the criteria for the participation in the procurement. Over the last three years the participant was prosecuted for the violation of Paragraph 4 of Part 2 of Article 6, Paragraph 1 of Article 50 of the Law of Ukraine "On Protection of Economic Competition". The customer of the auction, without checking the authenticity of the documents, approved this participant’s offer and violated the articles of the Law of Ukraine "On Public Procurement".

When the violation was detected, the customer rejected the offer of the participant-violator. It, in its turn, referred to the lack of clear requirements from the initiator of the procurement.

The results of the competition were cancelled after the case had been considered by court. Its decision states:

"… The current legislation does not provide for the depth of checking to be conducted by the customer while examining tender offers in the procedure of their consideration. However superficial research is also unacceptable. Evaluation of tender offers in the procedure for recognition of the bidding winner cannot be carried out only on the basis of visual review of documents without assessing the veracity of the documents submitted by participants. Of course, such an assessment must be made on the basis of information available to the customer."

Simply put, superficial checking of procurement participants is unacceptable. And even if the depth of checking is not determined by the law, checking of procurement participants is the task of the organisers; and of the participants themselves, if they do not want to get in an ambiguous situation.

Tools and Methods of Analysis of Public Procurement

The information mentioned above can be found in open registers, in the State Register of the Persons Who Committed Acts of Corruption or Corruption-Related Offences, the Unified State Register and sanctions lists.

In practice the structure and operation of data sources complicate obtaining information. For example, to obtain data from the register of corrupt officials, it is necessary to use an electronic signature in order to log in, then to submit a request. As the result of the search, an archive with a personal certificate and a digital signature of the National Agency on Corruption Prevention of Ukraine will be downloaded. You will be able to read and analyse information from it.

Other registers work on a similar principle. You also need to take into account their slow operation because of the periodic overload of requests.

If you do not have time for this, checking turns out to be superficial, and you may skip important data.

"Analysis of Tenders" from YouControl will simplify the task of checking a public procurement participant. It takes into account all the factors that influence the legality of participation in a bidding:

• Corruption offences of legal entities and individuals;

• Fines of the Anti-Monopoly Committee of Ukraine;

• Litigations related to officials;

• Links with participants of a tender;

• Bankruptcy;

• Absence of beneficiaries;

• Individuals’ sanctions;

• Absence of anti-corruption programme

• Use of child labour;

• Individuals’ debts.

Both the type and importance of factors are taken into account. A user can mark various factors as the most important, and the system will first signal their presence.

Why Is a Special Tool for the Analysis of Tenders Needed?

"Analysis of Tenders" combines and automates everything that would have to be checked manually. This saves time and synchronises all the necessary steps, as it is aimed at checking participants of public procurement.

Unlike the tools of other services and systems, the analysis from YouControl focuses on risk prevention, not just data collection. And it instantly detects links between the winner and other participants of tenders, both in the present and in the past. Thus the customer can quickly confirm or deny the compliance of a participant in order to make an informed decision on cooperation.

Not only the organiser but also any of the participants can check the tender participants. And if your competitor wins, it is possible to find a violation and achieve the revision of the results in your favour. Thus checking is also a way not to lose profits. The principle of free competition enshrined in the idea of a tender is preserved, but you can control its observance.

Check participants of a tender now.