Oleksandr Akulenko - Prozorro.Sale

How is Prozorro.Sale does seek and add new directions of work? What exactly allows the system to quickly reach new markets? Read about all this in our exclusive interview with the deputy head of the information technology and telecommunications department of the state-owned company Prozorro.Sale Oleksandr Akulenko!

1. What is the difference between the work of the Prozorro.Sale system from Prozorro procurement, because they are often confused?

The Prozorro.Sale system we made sales to ensure transparency in everything that the state sells or leases. And the procurement system Prozorro was created to openly and publicly carry out public procurement. Procurement is regulated by the Law “On Public Procurement”, according to which a large number of customers use several types of regulated procedures. And these procedures are mandatory for use by most government customers.

In the case of the Prozorro.Sale system is the other way around. We have many different types of procedures. We started by selling the assets of the Individual Deposit Guarantee Fund. Then we expanded the system, now we have more than 10 separate directions of work, and each of them is regulated by a separate law or regulation, for example:

- Law “On the privatization of state and communal property”;
- The Decree “On the implementation of a pilot project to introduce auctions for the sale of special permits for the use of subsoil through electronic tendering”;
- Bankruptcy Code of Ukraine.

This determines the specifics of working with each of the areas. It is necessary to understand the details and understand how the system should work both from the technical and the legal side. The same applies to sites: they need to adapt to each direction and work by the document by which it is regulated. This also applies to customers, since they need various actions to participate in various auctions.

2. The functionality of Prozorro.Sale is constantly expanding. What action algorithm do you use to implement new directions?

First of all, we are trying to understand how this area worked before us since there are several possible options:

1. There was no market at all before.
2. Offline auctions were held in special rooms or electronic auctions on individual sites.
3. Assets were allocated directly by the decision of authorized persons or authorities.

Next, we need to analyze this business process to understand how it works, what problems there are, and what needs to be changed. Maybe the state does not manage such property efficiently and receives less money. Or potential bidders lack equal access to bidding to sell an asset.

By the way, this is precisely the situation with the assets of "Ukrzaliznytsia" JSC - a significant part of the senders did not have or thought that they did not have access to the rental of rolling stock. When we launched the corresponding project, all of them got the opportunity to pay the fair market price transparently and openly during the auction and receive the necessary wagons for cargo transportation.

So, having understood the problem, we are looking for the most acceptable and effective way to solve it using the Prozorro.Sale system. Sometimes this is just an adaptation of an existing system. This is in cases where we understand that the process is similar to a function already implemented and does not fundamentally different. But sometimes a completely new system is created.

This year we launch sales of quotas for the distribution of electric energy from renewable sources, the so-called "green auctions". And this is something that was not previously sold in our system, and therefore it was impossible to use existing approaches. Therefore, we left the general principles of Prozorro.Sale.

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But the auction mechanism itself had to be created from scratch.

3. Why is the Prozorro.Sale system working with so many marketplaces?

According to the plan, our system is two-level. The first level is the administrator of Prozorro.Sale (we), which ensures the coordination of technical and legal work and the same rules for everyone, and the second level are platforms that directly interact with bidders and organizers.

This principle of operation is the same both in Prozorro procurement and in the Prozorro.Sale system. Its goal is to maximally remove the influence of the state from these relations because the open market is the most effective. Separately, without platforms, the state is not capable of providing the necessary level of competition, full-fledged and convenient service for all customers. We can provide the rules of the game, but the rest provide the platforms.

"Our main task is to ensure equal conditions for access of all sites to the system."

Since we have so many directions for work, each site easily finds something interesting for itself, focuses in this direction, and becomes an expert in it. Some platforms, on the contrary, cover the whole range of possible auctions, relying on the convenience of access to any auctions from one interface. Our main task is to ensure equal conditions for access of all sites to the system, provided that they adhere to general standards of work quality.

For my part, I follow that they meet the technical requirements, are guaranteed to be able to work with the system. Lawyers ensure that documents are processed correctly and that sites are reliable partners. Our managers monitor and help sites work better, fulfill their obligations, and provide quality service to customers. Our team is very professional – for advice, you can contact anyone and get relevant answers. All this makes the system strong and stable.

4. How do you ensure such a high level of training for team members?

Firstly, we have a very cool team: every person working at Prozorro.Sale is very well versed in his part of the work and can do even a little more. I, as a person who launches new directions directly, have an understanding of everything that happens.

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That is, I consider my area of responsibility not only what happens directly in the IT part, but also what happens with the system in a complex: from the idea of the bill to the successful sale and operation of property by the client. To do this, you need to at least partially understand both legal issues and business processes and site activities. You need to know how they interact with customers.

Secondly, when a new person comes to us, conditions are created for him and time is given for adaptation. Then we try to introduce the specialist to all areas of work, principles, and processes, first, in the form of team presentations. In my opinion, despite the position, every specialist should understand what exactly we are doing and how the system works. And already due to the knowledge of these principles and understanding of the culture of this reform, a person develops as a specialist in his field.

This is very important, especially for launching directions that were not previously in the system. So even a new specialist who came to Prozorro.Sale to participate in the creation of a new project will be able to consistently implement it according to the basic principles of the general idea of our system: to bring money to the state budget and ensure high-quality operation of all sites.

5. Who can bid and what are the restrictive criteria for this?

Globally, the system does not provide specific restrictions for participating in auctions for certain categories of users. But, as I said earlier, we need to take into account the specifics of each of the areas in which we work. For example, if we take auctions for the sale of rights of a claim by the Deposit Guarantee Fund, the bidder cannot be the person for whom the loan is issued or a person associated with it.

In the case of small privatization, there are restrictions on participation for citizens of aggressor countries, as well as companies that cannot demonstrate transparent reporting for the last period and confirm their ultimate owners. However, there are areas in which restrictions are not provided at all. In many auctions, the participation of non-residents is even welcome, because it is an investment in Ukraine.

By the way, the big advantage of the openness of the system is that even before the start of bidding, a person can open the auction page on the site and see all restrictions on participation. That is, you can immediately check whether you have the right to apply. If the participant considers that the existing restrictions are discriminatory, then even before the start he can ask the organizer a question or even demand to cancel such requirements. And there are many cases when the organizers reviewed the conditions and made a detailed description of the lots.

In general, there are very few cases when someone has applied for bidding and then discovered that he is subject to restrictions. Of course, if there are requirements, then there will always be participants who want to violate them. All information is open, platforms advise the user, and he decides on participation.

Even in such cases, the organizer cannot simply refuse the winner, referring only to his requirements. However, if there are legal prohibitions that do not give the right to sell the lot to the participant, then the organizer needs to disqualify it in the system. This information is also public: the system shows for what reasons the disqualification took place. We also do not hide the number of such cases, they can be found both in the Prozorro.Sale system and in the public analytics modules.

6. How do you see the system path in 4 years and what are your plans for its development?

I joined the project in November 2016, and therefore I saw its path almost from the very beginning. Just a week after that, the first auction at Prozorro took place. And from the very beginning, we created a system for the sale of the assets of the Deposit Guarantee Fund, since then Ukraine faced a real problem due to the abundance of insufficiently effective banks that went bankrupt. But what does this mean?

Bankrupt banks operated by the Fund acted on the market. The depositors of these financial institutions needed to return the money in some way, but we did not have effective tools for the sale of a property. Such challenges have never been in other countries. On the one hand, we had the idea of reform, and on the other, the Deposit Guarantee Fund as an organizer, because he was interested in solving the problem.

When we saw that the system works efficiently with the Federal State Financial Fund, the reform began to grow. We thought: if it works with such assets, then why not try in other directions? The next step was the sale of property of state enterprises.

We started with those non-core assets with which the enterprises themselves were ready to experiment (say, with scrap metal). It turned out that here the Prozorro.Sale system help to sell efficiently, including through the activities of the sites. The latter knew the market well and could quickly attract a sufficient number of participants. And competition increased the market and ensured price increases.

We saw that the assets are selling well, so we decided to try to take up a new direction - rental. In the summer of 2016, we had a pilot project with Ukrposhta, which turned out to be very successful: the company received more than 50% increase in rental rates. Then we expanded the project to include additional facilities, and already this year a law came into force that allows you to rent all utility and state property exclusively in the Prozorro.Sale system.

Further expansion continued continuously. In addition to renting or selling property, we have launched auctions for the implementation of mineral rights, including oil and gas. We also sell rental rights of the rolling stock of JSC Ukrzaliznytsia. We rent out places for legal MAFs in cities. You can even sell retail space in utility markets.

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Everything that can be digitized for an electronic auction - our system can. Accordingly, our team has more and more expertise to establish effective work with each direction, the maximum price increase and benefit for the state.

7. How do you find new markets where Prozorro.Sale launches a new business?

There are several different ways to do this. Sometimes we understand that a certain area of work can be made more efficient through electronic auctions. But often the organizers come to us, as the creators of successful reform, and ask for help. And if we understand that this will solve certain problems at the state level, then we are dealing with this issue.

There are cases when the state receives a request for a problem that can be solved through the use of Prozorro.Sale auctions. Then we get involved in the development of the bill and the resolution of the Cabinet of Ministers as experts we enter into working groups to ensure the most efficient launch of the direction. The ideal situation is when several factors coincide at once.

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Then the ideal situation develops and everything happens as quickly and efficiently as possible. For example, with the Deposit Guarantee Fund, we moved forward very quickly – in just a few months we agreed on the concept and in a few months – we got the pilot product ready. The organizer had a desire, we had a desire to work in this direction, there was support from the state, and a request in the market.

And if there are obstacles, then we have the experience of how to gradually move towards the goal and get the result. In some areas that have existed for a long time, people have a strong habit or it is simply not everyone's advantage to change the system.

Sometimes the high level of complexity of the market interferes. Leasing state and the communal property is an example of an industry in which most are interested in changes that have helped to better manage hundreds of thousands of square meters of state or communal property. Many bodies are responsible for it. To do this, you first need to restore order in this sector.

Already in the 2017 year, we began a pilot project in this area in cooperation with “Ukrposhta” JSC, but only now, in 2020, the area should be fully launched. Now work is underway on the resolution of the CMU, after its adoption, everything will work. Many had a desire, but since the sphere is very complex, it takes a lot of time to really reform it (and not just create the appearance of reform).

8. What can you recall interesting lots or trading examples when the most fierce struggle was between the participants?

Over the years, lots were very many, so it is difficult to identify any of them. The first to come to mind are subway cars, which were sold as scrap metal. Then the attention of the press and society was riveted to this lot.

It is especially interesting that as a result, the winner made hostels out of these cars and showed that they can be useful not only as metal. And recently I saw a very interesting lot – a real bunker in the Ivano-Frankivsk region. For someone, owning such an object can be a cherished dream! A very diverse property appears in the system.

And if we talk about the duration of the auction – the longest, if I am not mistaken, was carried out as part of small-scale privatization. More than 100 participants tried to buy an object in Kyiv, which is why the auction did not stop for more than 15 hours and ended the next day at 4:00 am.

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9. Tell us about your first auction: how did this happen? Nervous in the process?

My first auction took place in 2016, at that time I worked in the team for only a week. Then we did not even know for sure whether the bidders would come to bidding, and also whether the auction would take place. It’s very exciting to watch how the reform that you read about in the news and Facebook posts come to life! It was not just one auction, but four as many, and all went well.

We were confident in the operation of the system since we had already conducted test runs, demonstrations for journalists, and consultations with sites. But still, everyone was very happy that the system worked successfully according to our plan. Everyone was convinced that the reform needed to be developed and we came to where we are now.