State Penitentiary Service saves UAH 5 million in first round of medicine procurement with ProZorro system – Ministry of Justice, activists


The new procurement procedure results in saving when purchasing one type of medicine but leaves the space for corruption risks when purchasing another one.

Kyiv, September 21, 2016. This year over UAH five million was saved in course of the first round of medicine procurement for the State penitentiary service through the ProZorro system, said Natalia Sevostianova, First Deputy Minister of Justice of Ukraine at a press-briefing at Ukraine Crisis Media Center. “We expected that we would have spent at least UAH 15.8 million, but we actually spent UAH 10.5 million. We saved 34 per cent [the difference between the estimate and the price offered] on average. We saved 69 per cent on some positions, for example, on antituberculosis medicine. These numbers are impressive, we have never saved so much in course of the service’s procurement,” said Sevostianova. She noted that the State penitentiary service was underfinanced annually by 40 per cent. Thanks to the money saved additional resources were obtained to reform the penitentiary system.

New procedure for medicine procurement

What was special about this year’s procurement is that one lot included only one type of medicine. This was the recommendation of the experts from the All-Ukrainian Network of People Living with HIV/AIDS. “It thus became possible for the direct producers to take part in the tender and offer lowest prices,” noted Sevostianova. Earlier when several types of medicine were included into one lot it narrowed down significantly the number of companies that could take part in the tender.

At the same time, noted Serhiy Dmytriyev, member of the coordination council of the All-Ukrainian Network of People Living with HIV/AIDS, antibiotics were still united into one lot. “We turned to the financial inspection asking them to check the situation,” he noted. Another drawback that he named was the condition to pay the supplier 90 days after the medicine was received. “It is not to the benefit of the supplier. Many refuse to take part as the practice of paying three months after is a practice they do not understand,” explained Dmytriyev. He also added that the tender documentation does not contain the nuances related to the fact that the Ministry of Justice will be the legal successor of the State penitentiary service.


“We see the two big problems: either wild negligence or wild corruption,” he stated.

First Deputy Minister reminded that over 2014-2015 the state and penitentiary agencies spent about UAH 140 million on procurement of medicine (68,5 and 72,3 million respectively). “We have discovered the simple truth – only two companies were winning in all the procurement competitions that the State penitentiary service announced, they were winning in turn. Thus, as a result of lack of healthy competition the prices were high,” she noted. There were attempts to use the ProZorro system earlier but “they always found the ways to make the tender not happen or not happen for a long time or to submit an appeal or have it cancelled.” In July 2016 the Ministry of Justice, Transparency International, Anticorruption Action Center and the All-Ukrainian Network of People Living with HIV/AIDS signed a memorandum on cooperation that foresees conducting the audit of the State penitentiary service’s previous procurement rounds as well as training of the new staff from the procurement department. Respective recommendations were also provided to the service’s tender committee as part of the memorandum signed.

“We will continue analyzing the procurement course and we hope that when procurement will be passed into the direct responsibility of the Ministry of Justice, it will be conducted under constant control of the memorandum participants,” Sevostianova added.