Public Monitoring: Case 2. Identification of Misuse of Justifications for Sole-Source Procurement

Two legislative grounds are established for the use of sole-source procurement: unsuccessful bids or justifications in accordance with Article 39 of the Public Procurement Law.

 One possible violation that can be detected using this module is the assessment of the appropriateness of invoking Article 39 clauses. There are over 50 different justifications provided in Article 39. In this case study, we will present methods for identifying violations, which public monitoring can use for future directions.

The simplest violation to analyze is the use of prohibited justifications for sole-source procurement. 

As of May 2023, several justifications for sole-source procurement have been removed. By navigating to the “Non-Competitive Procurements” tab, you can visualize procurements in terms of utilized justifications through the “Ranking” chart. To obtain the latest data, you’ll need to apply a filter for the year 2023.

Now, let’s compare the justifications listed against those that have been removed. For instance, the presence of Clause 19 is a violation and warrants further investigation. We can pin this justification and review the list of concluded contracts under the “Contract Details” tab. To facilitate further work, templates for reporting this specific violation are provided in the website’s Knowledge Base.

Subsequent work involves familiarization with the contents of Article 39. Let’s examine two more cases of misuse of justifications. Each of them requires scrutinizing the text of the justification.

For example:

Sole-Source Procurement in Violation of Justification Conditions Under Sub-Clause 42 of Article 39

“42) procurements made by municipal administration units in towns of district significance, villages, settlements, rural districts for homogeneous goods, services, and works, if the annual volume of such homogeneous goods, services, and works, in monetary terms, does not exceed three thousand times the monthly calculation index, established for the corresponding fiscal year by the Republican budget law;”

Within this justification, two possible violations can be identified:

1.  The procurement of homogeneous goods, services, or works with an annual volume exceeding 3000 Monthly Calculation Index (MCI).

To identify such violations using the module, you need to:

1. Open the “Non-Competitive Procurements” tab and select justification under Clause 42 and the current year.
2. Open the “Plan Item Table” and download the data for further processing.
3. Evaluate the downloaded data for plans with identical North American Industry Classification System (NAICS) codes that exceed 3000 MCI

2. The use of this justification by purchasers other than municipal administration units in towns of district significance, villages, settlements, and rural districts. To identify such violations using the module, you need to:

1. Open the “Non-Competitive Procurements” tab and select justification under Clause 42 and the current year.
2. Open the “Purchasers List” and verify if any of the purchasers listed are not related to municipal administration units in towns of district significance, villages, settlements, or rural districts.
3. Utilize filters by budget program administrators to quickly identify potential violators.

Sole-Source Contracting for Any Services, Except for Revisions to Preliminary or Project Cost Documentation by the Entity That Developed Said Documentation, Based on Sub-Clause 3 of Clause 3, Article 39, Constitutes a Direct Violation of Procurement Law

In the context of using a public procurement analytics module, identifying this violation requires examining the procurement plans of organizations to identify services planned for sole-source acquisition through direct contract execution.

Access to the necessary data for analysis can be gained by:

1. Applying a filter for “Type of Work” to services, and “Method of Procurement” to sole-source, justified under Sub-Clause 3 of Clause 3, Article 39;
2. Evaluating the results for the presence of services other than revisions to preliminary or project cost documentation.

In the current case study, we have explored how to utilize the analytics module to identify direct violations of procurement legislation.