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COVID-19 data-driven monitoring in Ukraine: how much do masks cost?

This post is part of our ongoing content on COVID-19 emergency procurement. The civic procurement monitoring initiative DOZORRO and Transparency International Ukraine have analyzed the demand and prices of surgical masks in Ukraine over the first quarter of 2020, using ProZorro’s open contracting data and OCDS-based business intelligence tool. With a global shortage of masks, it is critical to keep prices transparent to avoid potential manipulation by procuring entities and speculation by suppliers. The Ukrainian approach is a great example of how the disclosure and use of open contracting data can help manage such risks.

Learn more about our recommendations for keeping emergency procurement open, fast, and smart, with data collection and disclosure, and read our guidance on using contracting data to monitor COVID-19 procurement

On April 1, the Government of Ukraine introduced stricter measures to fight COVID-19. Among other restrictions, all people must wear a mask or respirator in public places.

There are different masks

There are several types of medical-grade masks being procured by Ukrainian authorities. A single-use surgical mask reduces transmission of the virus through exhaled droplets. It is usually a three-layer mask with a filter between two external layers of non-woven fabric.

There are also three types of respirator masks offering varying levels of protection: FFP1, FFP2, and FFP3. They are usually used by medical staff or the military working on the frontlines of the emergency response.

Mask prices in the ProZorro system

Nationwide quarantine measures and the rapid spread of COVID-19 in Ukraine have led to price gouging and shortages of goods that were not in high demand before the outbreak. Medical masks are up to twenty times more expensive than they were in January 2020. So how many medical masks have been purchased in 2020 via the country’s e-procurement system ProZorro and for what price?

According to our calculations, public entities bought almost 2.5 million surgical masks for the total amount of UAH 25 million between January 1 and March 28, 2020 (± USD 1 million with an average exchange rate of 1 USD = 25 UAH). The month with the largest volume of purchases was March at 1.8 million masks. In February, entities bought 547,000 masks, and in January 108,000.

In mid-February, procuring entities started buying surgical masks more actively. For instance, on February 14, eight tenders were announced on ProZorro for the purchase of 228,000 units in total. Almost 90,000 units were purchased through direct agreements; the rest through open bidding.

The second peak of procurement happened on March 26, when over 1.1 million masks were purchased. One million of them were bought by Kharkiv Municipal Clinical Hospital No. 13 for UAH 14 million (± USD 560,000). The winning supplier, SOFI-MED LLC, must deliver them by April 30.

In January and February 2020, procuring entities mostly purchased surgical masks based on competitive bidding (below-threshold simplified competitive procurement, open tender). Most of them were successful and ended in the conclusion of agreements. In January 2020, suppliers bought surgical masks for UAH 0.68-1.5 on average, in February for UAH 0.7-3.2. 

But in March 2020, 55% of competitive tenders were unsuccessful, meaning not a single participant made a bid. This means that there was a shortage of the product and/or that suppliers raised their prices. At the beginning of March, suppliers refused to sell medical masks for UAH 2-3 per unit, and in the middle of March, even UAH 7-12 per unit was not enough anymore. The average price jumped to UAH 10-25 per item.

For instance, ME ODESFARM supplied 1,000 surgical masks for UAH 24.5 per item to the Department of Municipal Property of Odessa City Council. SP Zheleznova O.V. supplied 2,000 masks for UAH 25.5 per item to the Territorial Directorate of the State Judicial Administration of Ukraine in Donetsk Oblast. SP Bastiuchenko O.V. supplied 5,000 masks for UAH 23 per item to the Center for Traffic Organization.

The rapid price increases and the big gap between the average and maximum price may indicate price gouging. Although definitive conclusions cannot be drawn from the data alone, scrutinizing the data provides critical insights to be investigated further.

On March 12, Deputy Minister of Healthcare Viktor Liashko said that the Anti-Monopoly Committee of Ukraine would check prices for personal protective equipment. By the end of the month, on 30 March, the Kyiv Oblast Territorial Division of the AMCU opened a case against manufacturers, suppliers and pharmacy chains in Kyiv and Kyiv Oblast due to the significant increase in mask prices.

It is interesting that one of the suppliers involved in the case sold masks to public procuring entities in March for the same price as in January and February 2020 — around 3 UAH per unit. In March, Tekhnokompleks LLC supplied 5,000 masks to Okhmatdyt children’s hospital for UAH 2.99 per unit, 3,600 masks for UAH 3 per unit to the Head Directorate of the National Police of Ukraine in Cherkasy Oblast, and 1,500 masks for UAH 2.96 per item to Kyiv Municipal Children’s Infectious Hospital. While in January and February these were some of the highest prices in the system, in March they were low relative to others.

Who are the top 5 suppliers of masks?

For the period January to March 2020, we can identify five leading vendors that earned the most and supplied the largest number of masks, accounting for 67% of the total spending and 48% of the total quantity. They are SOFI-MED LLC, TRANSPORT COMPANY AUTOLINE LLC, ODESFARM municipal enterprise, SP Polozhii Yevhen Oleksandrovych, and DIMAKS VBK LLC.

*the average exchange rate 1 USD = 25 UAH

With the insights from open data on contracts and prices, we can monitor which procuring entities are purchasing which items, when and how. We can also monitor who wins these deals and all the anomalies in the system to keep our public spendings accountable. Based on similar research, the Anti-Monopoly Committee has already started its investigations. Moreover, such analytics and use of data (including our business intelligence tool) empowers procuring entities. It gives them an opportunity to better understand the market and plan their procurement purchases properly.