Recently, the SmartTender team had the opportunity to talk to Mykola Tkachenko, the new director of SOE “Prozorro”, and discuss his professional plans and prospects for further development of the electronic system: improving the functionality, the future of procurement for the reconstruction of Ukraine from the World Bank, the introduction of artificial intelligence and the improvement of electronic document management for more convenient work of users.

What Features and Benefits of SOE “Prozorro” Convinced You to Start Working for this Company?

One of the decisive factors was the support of the Ministry of Economy of Ukraine, which said it would do everything possible to implement our joint plans. Our interaction is constructive: it not only requires us to complete tasks, but also helps us find good solutions and broaden our horizons. My goal is to make the system better for our customers and suppliers.

Advantages of Prozorro

And although I was offered to join other teams, when I received the offer to head Prozorro, I accepted without hesitation. It was immediately clear that the people I talked to were on the same page with me.

How Familiar Were You With the System Before You Started Working With It?

I know some of the people who stood at the origins of Prozorro personally. I recall that in 2015-2016, when the system had just started, I had a certain “sporting” envy when I read about those who were already working in the SOE. Even then, they offered great things with an interesting history in an industry that was new to me. At that time, I was working in the corporate sector, responsible for the development of ERP systems and automation, working with the agricultural and construction sectors.

Frankly speaking, I still have little direct experience in procurement, including public procurement. I fully rely on the team and want to interact with them productively. For my part, I try to bring an alternative opinion from the business perspective.

Prozorro system

As a Manager, Do You Plan to Make Changes to Your Management Approach in Your New Job? What Principles of Communication With the Team and Work Organisation Do You Consider Extremely Important?

The interaction of our team is based on the principles of dialogue, where everyone has an equal right to express their opinion. There is not only the right to vote, but also responsibility for it. This is a feature of a liberal society, where all team members know what they want or do not want.

My role as a leader is to avoid negative developments and to motivate each team member to be creative. The team consists of those who drive the country and contribute to its transformation for the better. My task is not only to support them, but also to solve complex problems that may arise, to take over the moments that distract from fruitful work. I also ensure communication with our stakeholders.

Changes in the management approach

And on this basis, it is worth creating an action plan aimed at continuous improvement and having the strength to maintain it. It is important that this plan does not remain only on paper or in words, but is put into practice.

However, it is worth noting that there will be no general line or specific tasks for the team. All this will be based on the principles of “pull” (when team members independently request tasks), not “push” (the leader actively transmits tasks and instructions). Thus, no one will be responsible for their thoughts and decisions. Employees will take this responsibility on themselves.

What Challenges Have You Already Faced as Director of SOE “Prozorro” and How Do You Plan to Solve Them?

It all depends on the perception of each person. For me, a challenge is an opportunity, and I treat it accordingly. The biggest challenge is the packet of documents that I have to sign in the morning when I enter my office. I do it three times: in the internal and external document management system and in printed format. Sometimes it can be a bit depressing, but then again, I deal with such matters until 10 am, and then I get back to my main job.

However, it is worth noting that there is another aspect of work that also requires attention, namely the realisation that the result depends not only on you, but also on others (partners, employees, stakeholders, regulators). In this case, you cannot rely on your own efforts or your team alone.

Challenges of Prozorro

This is how we find a balance, but without losing sleep at night. If necessary, we slightly adjust the plan, deviate from the planned trajectory. This is a part of life.

How Do You and Your Team Ensure Work-Life Balance, Taking Into Account the Many Tasks Facing SOEs?

We are really lucky to have not only a strong team, but also people who form the ecosystem. Therefore, when there are a lot of tasks to be done, everyone understands that it is impossible to do everything at once. We are aware that there is no room for miracles. In particular, we have limitations in both human resources and finances, so we simply agree on priorities and deadlines, and it's great.

Every day we have internal synchronisation between team members and external synchronisation with stakeholders. Everyone understands the importance of this process.

Work-life balance

What are Your Goals for the System's Development?

My wish is that Prozorro will become an international platform for procurement, not only for public but also for commercial procurement. We have a specific vision of how this can be achieved. It has been formed recently, and I think we will be able to implement it within 2-3 years, regardless of whether I am here or not. Our team has a clear path and will not deviate from it, as it is inevitable and can become a fascinating story.

How do we work to achieve this goal? We are carefully carrying out the process of transforming the system's internal technology stack, ensuring its high flexibility and customisation. We are sincerely grateful to the World Bank for their statement that Ukraine's recovery procedures should be conducted through Prozorro. This was a significant impetus for us to create an effective system that is not fully subject to state legislation.

Such solutions give us ample opportunities to introduce flexibility into the system. We can adapt business processes for our users to ensure their comfort and reduce the cost of preparing tender documents. In addition, we take into account the needs of our customers to avoid unnecessary efforts or obstacles in their business activities.

Do you Have Any Plans for the Implementation of New Functionality and Ensuring Greater Transparency in Public Procurement?

We are actively implementing digitalisation wherever possible. Our goal is to abandon fixed PDF formats that do not allow editing and introduce e-contracting, which is already successfully operating in IT-Enterprise and SmartTender. We also plan to introduce such an electronic document management system in our work.

Fields that are included in standard contracts and are widely used in the country will remain uneditable. However, it will be possible to correct variable elements, such as the names of counterparties, payment terms and amounts, and the list of lots under consideration. All this will be integrated into the electronic version of the contract, which will then be approved and signed by both parties to the procurement. After that, thanks to Prozorro's integration with state registries, the contract will be automatically transferred to the necessary institutions. Thus, the entire process will be as fast, clear, and modern as possible.

We also plan to develop electronic documentation. This means that not only contracts but also all accompanying tender documents will be digitised to the maximum extent possible. This solution will help to avoid attempts by customers to manipulate the procurement market by narrowing the specific terms of the tender in someone's favour. We want to ensure that participants do not have to provide unnecessary certificates, certificates or other documents that are time-consuming and cause unnecessary problems for small businesses. For them, collecting all the necessary documents requires considerable effort and excessive formalities, unlike large companies that may have a whole staff dedicated to preparing proposals.

New functionality of Prozorro

In order to prevent such situations and create simpler and more favourable conditions for small and medium-sized businesses to participate in public procurement, we are focusing on standardising requirements and integrating with registers. This will help to quickly collect basic certificates, certificates, and other necessary documents that are currently not automatically obtained. We are confident that this will reduce entry barriers for small and medium-sized enterprises in the public procurement market.

We strive to make all processes as simple, open and controlled as possible. Prozorro is not an anti-corruption system, but primarily a procurement system. It enables organisers to work effectively. If something goes wrong, there are already relevant authorities for whom the system provides the necessary public information in a freely accessible format so that they can properly perform their tasks, draw conclusions and bring offenders to justice.

You Mentioned the World Bank and its Recommendations for Improvements to the System. What Exactly Do You Mean When You Talk About a “Procedure for Donors”?

Procurements for which the World Bank will provide money and which it will personally control will be conducted under slightly different procedures than those required by Ukrainian law. For example, they may have their own appeal procedure, when complaints will be considered not by the AMCU, but by the World Bank itself. We also need to introduce the possibility to submit bids in different currencies and other liberalising measures to comply with the World Bank's rules for tenders.

And since we are developing our system as a designer, by and large, any other donors will also be able to use Prozorro to conduct procurement under their own rules.

Procedure for donors

What is Your Opinion on the Opportunities and Prospects for the Development of Prozorro Market?

I had the opportunity to get acquainted with the procedures for requesting a quote, in which customers purchased printers and other office equipment. As a result, they were approached by 8-10 potential suppliers with different prices, which resulted in significant savings. If we compare the best and worst offers, the difference in cost was approximately 7-8%. In many such purchases, savings can reach 30% or more.

We understand that those who have the goods in stock and have a small logistical leverage are more likely to win the tender, which, accordingly, affects the price. In general, the domestic market is stimulated, as the most favourable offers are often made by local suppliers, which contributes to the development of entrepreneurship in the region.

In my opinion, Prozorro Market is something that we should definitely develop. Tendering procedures should remain, of course, but it is large tenders with an auction stage where something non-standard or requiring works or services is procured. Standard requests should firstly go through the catalogue. Moreover, reviewing offers in the marketplace takes much less time. And if the required product cannot be found in Prozorro Market, then a tender can be announced.

How Secure is the Prozorro System Against Cyberattacks? Your Company Participated in the Bug Bounty Project – Do You Continue to Cooperate With White Hackers to Identify Potential Threats?

There is a joke about the elusive Joe: “Why can't they ever catch him? Because no one wants him”.

Similarly, when you have a very transparent system where everything is available, there is no point in attacking it at all. It is possible to erase all the data, but our team has already done a lot of work, and we have system backups (data backups) that I think are very well done. I won't go into the details of how this works, so as not to provoke dark hackers. However, I can say that everything has been implemented to the level that we consider sufficient.

Something that could be of interest to cybercriminals and affect our ecosystem is the ability to block bidding. Such an attack can target one, two, three, or even five electronic platforms. We have 14 of them. To block them completely, it is necessary to set up a bot farm or organise a large-scale attack that will completely shut down the system. But how long will this work? One day? One hour? The next day, the system will recover.

A few weeks ago, one of our sites was attacked. We responded skilfully, and it is possible that one of the users submitted an offer from another site. So this does not pose a serious threat to the system as a whole.

Cybersecurity in Prozorro

Therefore, I want to express my gratitude to the team, especially the architects, who have developed the ecosystem design that allows it to remain stress-resistant to such challenges.

At the same time, I understand that there is still room for improvement in the security of our system. And I am very pleased that soon, together with several platforms, we will resume the Prozorro Bug Bounty programme to find vulnerabilities in our system. This is an opportunity for us to provide all the necessary infrastructure and conditions for ethical hackers to find vulnerabilities in our system before the russians do.

What Advice Can You Give to Small and Medium-Sized Enterprises that Want to Participate in Prozorro Procurement? What Can Help them Win More Contracts and Grow?

If these companies intend to participate in public procurement, it is already a 90% guarantee of success. If a supplier doesn't know what to do, we have the Prozorro Infobox portal and our social media, where we provide a lot of useful information. According to Prozorro statistics, if a new supplier participates in at least 5 procurements, it will definitely win at least one. If at first they still encounter some unclear nuances of participation, over time they will fully understand what to do, how and when. And it is from this moment that his success will begin.

Businesses should pay attention to the volume of procurement: there are large and small volumes.

Tips for businesses

Therefore, the choice of such procurement is the first step to a successful start.

By the way, by the end of the year, we plan to introduce a procedure similar to the “stock exchange glass”. Let me explain in more detail what I mean. In exchange purchases, there are situations when several suppliers can bid for a large volume of goods, and they break it down into parts that they can provide. For example, there is a request for 500 units of three-legged chairs, and you have only 100 in stock. However, you offer the best price. So they take your 100 units first, then someone else joins in with the other 50, and a third supplier adds 350 more. This way, the required quantity of goods is formed – 500 units. This gives you the opportunity to get better prices and allows small businesses to participate in large tenders, ensuring their profit. Customers, on the other hand, can go beyond the large monopolies that usually control the market and set too high prices, knowing that they are the only ones who can offer services or goods in such volumes.

Equal opportunities for business

First and foremost, we are interested in developing the sales channel for Ukrainian companies, as the money would remain within our country. However, we do not set any directives, we just want to promote the development of national business. But, in any case, we are ready to consider all possibilities, including the involvement of foreign suppliers in the bidding process.

Today, What Processes in Prozorro Can Artificial Intelligence Perform to Improve the Bidding Process for Participants? Have You Already Tried to Use It in Your Work?

The exchange procurement platform I mentioned above opens up opportunities for implementing an artificial intelligence mechanism. For example, there are requests, and there are offers that do not fully meet them. And it is artificial intelligence that could combine them and ensure the necessary exchange between the customer and suppliers. The artificial intelligence mechanism replaces human labour, where someone would have to manually decide who to invite or exclude from the procurement. Our plans include the development of this platform, but we also need to develop the relevant Ukrainian legislation. We aim to address these issues in the near future, perhaps even in 2024.

As for the use of artificial intelligence by our team, yes, I periodically engage ChatGPT to help. For example, during one of our brainstorming sessions on the development of the Prozorro strategy portal, the team spent an hour discussing what functions it could and should perform. We worked through various options and projects and came up with creative ideas. At the end, I asked the artificial intelligence a question, and it turned out that 9 out of 10 options suggested by the AI were exactly on target. However, one idea was irrelevant from the point of view of Ukrainian legislation.

Of course, this does not mean that we could simplify the process to a single request to artificial intelligence. But it clearly shows that our team is moving in the right direction. Our specialists understand global trends, see the prospects and the process systems that support them. That's all I can say on this topic for now. We are testing hypotheses, because some of the answers provided by artificial intelligence in conversations can be quite comical.

Artificial intelligence in Prozorro