When it comes to the digitalisation of Polish public procurement, we can learn from Romanians and Ukrainians

We have constructed a new public procurement law, but things will continue to operate the old-fashioned way. After terminating the contract with its creator in March, the e-procurement platform has still not been created. Meanwhile, procurements and tenders have already been fully digitized in Ukraine or Romania. Krzysztof Izdebski, president of the ePaństwo Foundation, discusses how an online system could help small and medium-sized enterprises in the fight for projects worth 10% of Poland’s annual GDP.

Procurements account for nearly 10% of our GDP. Despite this, there is little discussion about them in public space. Why is the ePaństwo Foundation the only one dealing with this topic?

The transparency of spending these funds is an element of openness of the state’s functioning. We operate in a project funded by the European Commission, which aims to analyze access to public procurement data. It is also implemented in Hungary, Romania and Spain. Unfortunately, Poland came out the worst. We look at other countries with envy.

Where is our weakness coming from?

It’s all about standardization and access to data. In Romania, every public procurement, even below this threshold, is included in a publicly accessible register.

Not enough transparency?

We are most interested in small orders, below the threshold of 30,000 euros. That’s around 30% of public procurement and funds, which are virtually unchecked due to shortcomings in regulations and methods of documenting them. For years now, we’ve been urging local governments to publish records of their expenses or contracts, at least to a limited extent. This is bearing fruit slowly – we managed to convince officials in Gdańsk. More and more local governments follow in their footsteps.

What are our problems with data standardization?

Currently, registers offer limited knowledge. It’s still guerilla activity because everyone shares data in a different way and a different format. Operating them then becomes extremely challenging.

The problem often lies in minor flaws, e.g. neglecting the correct names of bidders. For example, if we try to connect KRS databases with public procurement databases, then „Microsoft Sp. z o.o” will not be included, if someone wrote „Microsoft Polska Sp. z o.o.” in a procurement order. Hundreds of thousands of bidders would then have to be checked manually or the formulas changed on an ongoing basis, which is both labour- and cost-intensive. The same applies to contract records, which allow examining a single office. It is, though, difficult to check, for instance, how ordering paper looks in local government units in the Mazowieckie province.

In the same project, we are also working on a methodology for assessing the risks of corruption. We are comparing how many of these orders are under the threshold by less than one percent. This may prove to be a signal of someone starting to try not to exceed this threshold – for example, wanting to outsource the matter to a specific company. In Poland it is virtually impossible to check; in Romania, it only takes three clicks.

If new technologies can seriously help the state in some areas, then perhaps the issue of standardization and digitisation of procurements should be crucial. The Polish e-procurement system project has been under construction for four years now; in the meantime, it has been abandoned. This year we had another presentation of the platform’s strategy and vision, but the effects are still lacking. Why?

Poland has a huge problem with implementing large IT projects. We can spend hours talking about ePUAP, which finally began to work, although many years too late. Furthermore, I don’t think there is any coherent vision based on what the Polish state wants to see on this platform or what it wants to use such a system for. The predominant approach is to do only what EU authorities require of us.

One of the objectives of the proposed legal changes is to facilitate access to public procurement for more small and medium-sized enterprises. Does business not push the administration to implement a fully electronic procurement process?

Unfortunately, when we talk about public procurement, many business experts tend to focus on the needs of an individual bidder, which I hold a grudge against them about. This is important, as here lies the key to how to allow small and medium-sized enterprises to enter the market. So voices are raised, like: „Why can’t we send a bid via ordinary email or a scan?”

This makes sense for a single entrepreneur, but for an institution managing the entire system, the ability to compare different tenders, orders or bids is extremely important. The lack of common standards and forms would result in data chaos and prevent meaningful analysis. In short, we are digitizing pathology.

Meanwhile, a world-recognized and fully electronic system, supporting all public procurement and providing easy-to-analyze data on relevant charts, operates in a neighbouring country. In a country that is at war and which has been torn by corruption since its beginnings, in Ukraine. How was Prozorro created?

Prozorro is interesting because it was created as a private-non-governmental initiative. Only last year was it fully handed over to the state. This system is also beginning to be used in other countries of the former Eastern Bloc.

These countries are using Ukrainian software?

Systems based on Prozorro solutions are starting to operate e.g. in Armenia and Moldova. Interestingly, the program was invented in Kyiv by Georgians and they are still helping with it. Inspired by Euromaidan, they said that creating a modern, transparent IT public procurement system could help combat the scourge of corruption.

There are many factors behind Prozorro’s success. Ukrainians received serious support from EU institutions, but also private capital. Finally, there would be no success without the openness on the part of Ukrainian administration and officials, who feel a strong desire to change the situation and digitisation. This can not only be seen in the case of this system. My favourite example is the central bank of Ukraine, which shares all data from the accounts of public institutions.

Can you view ministry account statements on an ongoing basis?

Precisely. We had tried to convince the NBP to a similar approach, but its reaction was to adopt the NIMBY approach. This was explained by the inability to fulfil the above postulate due to the definition of banking secrecy, which is truly hopeless in Poland. Such strong transformations, including changes in mentality, may succeed in a country that starts everything from scratch. Here we have a constant change of habits and systems that are already in place.

Backwardness boost in Ukraine?

The easiest way to do things is from scratch, where they do not exist yet. That succeeded in Prozorro. The system is used for public procurement, for a thorough change of the procurement process. It contains (and provides) information about the contract itself, shared in the relevant data standards. There is also an analytical module friendly for the business itself.

It applies standard data analysis software, used in the private sector to analyze data, connected to data sources from the system.

Yes, Prozorro’s open way of preparing the system allows adding various modules to it. One of them, named Dozorro, is intended for monitoring public procurements in terms of corruption. To this end, it uses an ongoing comparison of data from various bids.

Which means it looks for corruption by looking at similar orders and their results statistically.

Yes, it analyzes risk factors. However, with Prozorro, you can analyze all orders from any angle. This is a matter of Ukraine again, where corruption is discussed a lot because there is indeed a lot of it. That is why there are dozens of local NGOs using data from Prozorro and Dozorro to check public money spending.

Are there NGOs analyzing procurement and tender data in their municipalities in Poland?

Including the widely understood civil society in dealing with public funds is not welcome in Poland. Although we are trying to convince decision-makers that it is worth including citizens in the process of planning public procurements and controlling their implementation, there is unfortunately still a huge fear of justifying the decisions made. Therefore, the 100% price criterion is so popular in tenders – selecting a contractor does not require any further explanations.

The price criterion is interesting. Prozorro also includes an element of competition between bidders. Once the deadline for submitting documents has passed, companies see each other’s anonymous bids and can still change them to stand out from the crowd. This mechanism was introduced to provide savings for the state. Does this not further emphasize the importance of price as the most relevant criterion?

Perhaps it does. In Ukraine, however, according to various reports and analyzes, the main problem was overpaying. Moreover, the Ukrainian budget has far more problems than ours. So this is a slightly different situation.

Savings also affect society’s imagination. If we are paying seven thousand zlotys a month instead of ten for meals of the same quality for a school canteen, citizens start to see the benefit of introducing the new system.

What elements of Prozorro could be transferred to Poland? 

A separate issue that Prozorro solves, and that we still struggle with, are the changes to the contract after the tender ends. Annexes, increasing budgets, changing assumptions – this information is required to calculate the final amount of public money we spend.

This amount is therefore different from the one in the tender offer.

Generally speaking, it is. And in Poland, we don’t have universal control over that.

We have said a lot about the fact that the existence of IT systems in, for example, Romania and Ukraine, is also the result of these countries’ major problems with corruption. However, this is not the only difference. Comparing the history of the Polish platform and Prozorro, we can see a huge difference in the process of creating a technological solution for administration. 

In Poland, we have had attempts at creating a vision, multi-page documentation for one big tender. In Ukraine, it began with a small working prototype, tested on low-budget orders, built to allow adding new modules. Isn’t this the key to how to introduce technology in administration?

Creating precise specifications is extremely difficult, indeed. One needs to anticipate for a few years ahead as to what exactly will be needed and how it should work. Modularity is the answer – it means accepting the reality, in which new challenges would appear. Having tested the system, users report their desire to introduce changes or help create a direction for further development.

I have the impression that in Poland, IT projects exist to fill the gaps. So the idea is to „settle” a problem at hand, but without stopping to think about how to use the potential opportunities. Today, we care about increasing the number of SMEs in tenders, but we must not forget that in five years most of the business turnover will be done electronically. We, therefore, lack a vision, which can be seen in the case of the e-procurement system.

Is it not so, however, that this vision is practically impossible to create? Predicting what the economic turnover in the digital area would look like in a few or a dozen years is just short of utopian. I think this is the main advantage of staged, the modular construction of systems.

Yes, definitely. In many IT projects, including those in the private sector, modularity allows changing and developing the system, instead of creating it from scratch should your needs change. If we’re discussing savings, these are introduced by modularity.

We, at the ePaństwo Foundation, are not debating open public data, because it is a „light subject for the implementation of grants”. It is also an element that enables cooperation and interoperability between various systems in administration.

IT systems in Poland are designed in a siloed approach. There is a separate public procurement platform, the KRS system is created separately. All these elements are created independently, they are unable to communicate with one another. Finally, an official or citizen must spend a lot of time collecting information from various sources.

It is absurd that we as citizens have a separate portal for e-PIT, health matters and ePUAP. Furthermore, we’re only starting to merge them.

Would you rather install one application where you can do many things, or have a separate one for each thing? The answer is obvious.

The key is data availability and interoperability, which are ensured by common standards. They guarantee that IT systems can „talk” to each other. This, in turn, reduces the time necessary to check, prepare and finally submit a bid, thus introducing greater market transparency.

Going back to public procurements, small procurement procedures in smaller towns are often too complicated for local entrepreneurs. This issue should probably be addressed. However, I do not know whether this issue is being raised among officials and politicians, or whether it remains only as a slogan of greater competitiveness and allowing more small businesses.

It is pointed out that one of the factors of corruption is the small number of bids. Most often, however, this does not result from the tender setting, but the problem described above. Too complicated rules mean that people in small and medium-sized enterprises cannot spend a lot of time preparing bids.

Technology can help. The British, for example, are analyzing data on filling out forms. They compare the fields that bidders fill out for an extremely long time or abandon their further filling completely, and strive to simplify these places or add helpful information.

Indeed, but we are talking of a country that is unable to create forms for completing property declarations of public persons. I find all these explanations saddening. Mr Mazur from the National Justice Board has spoken out recently, explaining his error in not reporting part of his savings by stating that this was merely the first version of his statement.

Of course, a properly prepared and structured form would increase the transparency of statements. But I always highlight how such a document would first and foremost be an aid for those filling it out. If there is a form, hints also pop up as to what the fields mean. Failure to fill out some of them may block the possibility of sending an incomplete statement. The computer supports the user in filling out the document. Likewise, it can help in preparing bids, which are also standard after all.

Consultations on public procurement law were wide-spread, which gained my approval. Of course, a small company X from Wieluń will not take part in them, but there are organizations and chambers responsible for representing its interests.

When it comes to the law, we managed to start a dialogue. When it comes to technology – not so much?

I haven’t heard about it happening in the case of technology.

Do you think we have a real chance to see an electronic procurement system in 2021?

It seems that the Public Procurement Office is finishing work on the specification. The announcement should, therefore, appear soon. Is one year enough to build such a system, seeing how it has not been successful in the last 12 months? This I do not know.

Polish version is available here.