Projects & Procurement - Ukraine

On November 5 2008 the government approved amendments to the Regulation on the Purchase of Goods, Works and Services from State Funds. The changes stipulate that the regulation will not apply to the procurement of land surveys, research and scientific projects or disassembly work in connection with the renovation of the Olympic Stadium, which is Ukraine's main sports complex, the national football stadium and a key venue for the Euro 2012 football championships. As a result, the standard tender procedure will not be used for the purchase of goods, works and services for the stadium's renovation before the championships.

However, the decision has proved controversial for three reasons:

Ø        Article 7 of the Budget Code stipulates that the state budget must be disbursed according to the principle of just and unbiased distribution and in the interests of social wellbeing. This principle is determinative for all budgetary legislation in Ukraine and is intended to guarantee the fair and equal distribution of social benefits. The waiver of certain provisions in the sphere of state procurement contravenes legislation that prohibits the introduction of new laws for specific projects. 

Ø        The new regulation contradicts the principle of equality before the law, as enshrined in Articles 13 and 24 of the Constitution.

Ø        It has been cogently argued that the Cabinet of Ministers erred in applying too literal an interpretation of the regulation. The Cabinet intended to abolish tenders for the execution of renovation work on the stadium, but the terms of the regulation do not envisage its application to the procurement of scientific surveys, research projects or disassembly work.

These three reasons appear to justify the criticism of the government's attempts to issue orders for public works without holding tender procedures.