Project Support to the Establishment of the State Aid Control System in Ukraine ( Kyiv

Project “Support to the Establishment of the State aid control system in Ukraine” (Kyiv, Ukraine)

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Project Title: / Support to the Establishment of the State aid control System in Ukraine
Project No: / 2016/382073
Framework contractor: / AETS
Location of Action: / Kyiv, Ukraine
Beneficiary: / Antimonopoly Committee of Ukraine
Date of Report: / 27thMarch, 2017 (revised)
Reporting Period / Inception Period (7th February, 2017 – 20th February, 2017)
Submitted to: / Delegation of the European Union to Ukraine
Prepared by: / Mrs. Daiga Lagzdina, Team Leader

Table of Content

Abbreviations ……………………………………………………………………………………………...... / 3
Background…………………………………………………………………………………………………...... / 4
Project Synopsis…….………………………………………………………………………………………...... / 5
Methodology ……………………………………………………………………………………………………… / 6
3.1. / System and System components ………………………………………………………………………… / 6
3.2. / Enterprise Architecture to build a system …………………………………………………………… / 6
3.3. / Approach to development State Aid information system ……………………………………. / 7
3.4. / Agile vs Water-Fall approach ………………………………………………………………………………. / 8
3.5. / Core deliverable of system development ……………………………………………………………. / 9
Plan of Operation……………………………………………………………………………………………...... / 10
4.1. / Activities carried out during inception period ………………………………………………...... / 10
4.2. / Overall work plan for the Project Implementation……….………………………………...... / 11
4.2.1. / Component 1: Study visit …………………………………………………………...…………………...... / 11
4.2.2. / Component 2: Operational set-up of State aid control system…….………………...... / 13
4.2.3. / Component 3: Capacity building……………………………………..……………………………...... / 20
4.2.4. / Component 4: System testing………………………………………………………………….……...... / 23
4.2.5. / Overall work planning …………………………………………………………………………………………. / 24
4.3. / Closure meeting …………………………………………………………………………………………………. / 24
Overall Risks and Assumptions.………………………………………………………………………….. / 25
Reporting ...... ………………………………………………………………………………………...... / 25

Abbreviations

Term used / Explanation / Meaning of term used
AMCU / The Antimonopoly Committee in Ukraine
BP / The State Aid Business Processes
BPM / Business Process Management
BPMN / Business Process Modeling Notation
DMN / Decision Model Notation
DMS / Document Management System
EIS / Enterprise Information System
EUDEL / The Delegation of European Union in Ukraine
FC / Framework contract
RAD / Rapid Application Development
RFP / Request for Proposal
SAU / AMCU’ State Aid Unit
SDLC / Software Development Lifecycle
SRS / Software Requirements Specification
TA / Technical Assistance
The Beneficiary / The Antimonopoly Committee in Ukraine
The Law / The Law on State Aid to Undertakings
The Project / Project “Support to the Establishment of the State aid control system in Ukraine”
ToR / Terms of Reference of the Project
WFM / Work-flow Management

Background

The purpose of the Law on State Aid to Undertakings (the Law) is to regulatea State aid control systemin Ukraine. The Law shall come into force on 2nd August, 2017. As of this date, all State aid granting bodies must notify the Antimonopoly Committee of Ukraine (AMCU) of any new State aid measure.

In accordance with the transitional provisions of the Law, AMCU must be notified of all existing State aid, i.e. any State aid which has been inimplementation prior to 2nd August, 2017 and is still applicable after this date, by 2nd August, 2018 at the latest.

In addition tothe Law, AMCU has adopted several procedural ordinances, i.e.:

AMCU Ordinance of 28th December, 2015 No.43-rp approving ”Procedure formonitoring State aid to undertakings”;
AMCU Ordinance of 28th December, 2015 No.43-rp approving “Procedure for thesubmission of information on existing State aid to undertakings to the Antimonopoly Committee of Ukraine, completingthe form and fulfilling the requirements forsuch a submission”;
AMCU Ordinance of 28th December, 2015 No.43-rp approving “Procedure formaintaining and accessing the register of State aid to undertakings”;
AMCU Ordinance of 4th March, 2016 No.2-rp approving “Provisions on the Procedure for submittingand drafting notifications of new State aid and for amendments to existing State aid”;
AMCU Ordinance of 12th April, 2016 No.8-rp approving “Procedure on the considerationsforcases on State aid to undertakings”.

AMCU internal procedural regulations, as mentioned above, provide procedures forAMCU to deal with new and existing State aid, they provide notification templates fornew State aid, amendments to existing State aid and notification of existing State aid measures, set-up minimum requirements to submit complaints on illegal State aid or misused State aid, as well as establish procedures for monitoring State aid and for running the State aid registry.

AMCU has drafted the regulation on recovery of unlawful State aid which has been commented on already by DG COMP.

On 7th February, 2017 AMCU approved seven drafts of State aid by-laws relevant for the compatibility assessment of State aid measures (General criteria, Regional Aid & SMEs, Environment, Training, Employment, Research & Development, Rescue & Restructuring) and a draft Law amending some Laws of Ukraine aligning them in correspondence with legislation on State aid to undertakings. They were published for consultationon 23rdFebruary, 2017 and the deadline for comments is one month from the date of publication.

There has been a specialised State Aid Unit operating in AMCU since March 2017, consisting of7 employees. AMCU plans to increasethe State aid unit to 32 employees by the end of 2017.

The State Aid Business Processes (BP) are being identified and formalised by AMCU, specifically by the State Aid Unit (SAU) in collaboration with line departments, specifically the Department of Documentary Support and Logistics which is responsible for IT support and document management including archiving.

AMCU is in theprocesses of implementing a large Enterprise Information System (EIS) with such core modules as

Document Management System (DMS)
Work-flow Management (WFM)
Web-site and
Corporate intranet

which are foreseen to be based on Business Process Management (BPM) platform/suite module. The EIS is deemed to substitute existing legacy DMS systems and cover business processes and work-flow of State Aid business processes to be managed by the SAU in collaboration with other lined departments.

Project Synopsis

2.1.Global objective

The overall objective of the Project is to support the establishment of an effective State aid control system in Ukraine as required under the EU-Ukraine Association agreement.

2.2.Specific objective

The specific objective of the Project is to assist AMCU to establish a State aid control system by 2nd August, 2017 in accordance with the Law of Ukraine on State aid to undertakings.

Assistance provided by the Project is foreseen as “bridging assistance” until a dedicated technical assistance project can take over sometime in the third quarter of 2017.

2.3.Expected results

Result 1: Study visit to well-run State aid control authorityis proposed and organised.

Result 2: Operational arrangements, including relevant IT solutions, are identified, developed and ready to be implemented in orderto effectively run a State aid control system in Ukraineby 2nd August, 2017.

Result 3: Large granting bodies are trained so that they can effectively fulfil their notification obligations as of 2nd August, 2017.

Result 4: Developed State aid control mechanisms are tested with up to three of the largest State aid granting bodies in Ukraine.

2.4. Location and duration

Start date of the Project is 26th January, 2017.

Project activities will be implemented by 1st September, 2017.

Overall duration of the Project is foreseenuntil21st November, 2017.

Experts already started working on the Projectprior tothe Introductory meeting which was held in Kyiv (Ukraine) on 7th February, 2017. Advanced work undertakenby experts (preparatory work for IT solutions, Study visit, reviewing legislative and operational arrangements already in place, etc.) was targeted to ensure the Project start was a quick and smooth one and to ensure effective cooperation with the Beneficiary as of 7th February, 2017 onwards.

Input by each expert is expected to be 125 working days. Principally the location of the assignment is Kyiv, Ukraine, with the exception of days used for the Study visit and 15% of work being performed as home-based. Some training activities will beperformed in otherregions ofUkraine.

Methodology

3.1System and System components

As per the ToR scope “to support the establishment of an effective State aid control system in Ukraine” it is important to clearly define the system which is part of the Management Information System (MIS) discipline:

“System - is a set of interrelated components, with a clearly defined boundary, working together to achieve a common set of objectives by accepting inputs and producing outputs in an organised transformation process”[1].

The five components (aka“resources”) as per (MIS) discipline are:

People (i.e. system owners, technical support, developers etc.)
Data (i.e. data, information, knowledge)
Software (i.e. applications, system software, procedures etc.)
Network (i.e. network hardware, network interfaces etc.)
Hardware (i.e.: nodes, physical servers etc.). The basic hardware of a system is paper and pencil

Development of any system must consider all five components; the system cannot be referred to as a ‘system’ if any of the components are ignored.

Under the ToR of the current FC, experts shall focus on ‘People’, ‘Data’ and ‘Software’ resources while assessing and making recommendations on ‘Network’ and ‘Hardware’ resources.

3.2Enterprise Architecture to build a system

Enterprise (or System) Architecture (EA) is the discipline which helps to manage objects of an existing system or a system-under-development (SuD). The Enterprise Architecture (EA) is guided by ISO/IEC/IEEE 42010Standard “Systems and software engineering — Architecture description”,which is an international standard for architecture descriptions of systems and software with its own system -The Open Group's Architecture Framework (TOGAF) and Enterprise architecture modeling languageto support the description, analysis and visualisation of architecture named ArchiMate.

The Enterprise Architecture (EA) approach has been undertaken to build a platform for the majority of EU e-services and is currently named European Interoperability Reference Architecture (EIRA)[2]. The EIRA“re-uses terminology and paradigms from TOGAF such as architecture patterns, building blocks and views”[3]. EIRA has become a solid system to enable rapid delivery of business services in specific EU member-states or at government-to-government (G2G) level.

It is foreseen that the current project shall take into account the best EU practices and for the purpose of sustainability, standardisation and further scalability of the project outputs the TOGAF framework and ArchiMate modeling language shall be applied.

Passive Structures / Behaviour / Active Structures
Business Layer /

Representations (i.e. forms, documents
Business Objects

Business Services
Business Processes

Business Interface
Business Role
Business Actor

Application Layer /

Data Objects

Application Service
Application Function

Application interface
Application Component

Technology Layer /

Artifact

Infrastructure Service
System Software

Infrastructure Interface
Node
Network

Figure 1: ArchiMate language summary

3.3Approach to development State Aid information system

There are different approaches to system analysis and design. The life cycle approach (as opposed to object-oriented analysis and design (OOP) ) remains predominant among classical organisational approaches and is still a standard both for EU member-state institutions and Ukraine[4].

The standard that governs the life-cycle approach is ISO/IEC 12207:2008 Systems and software engineering -- Software life cycle processes.

The key Life Cycle Process groups are as following:

During the course of Inception period,it was discovered that AMCU is in Acquisition Process of a Document Management System. Therefore, the Project shall align its activities and shall contribute within the scope of State Aid business service to finalse the Acquisition Process as well as contributing to the development of Software Requirements covering Software Architecture.

3.4Agile vs Water-Fall approach

While bearing in mind the software life cycle and its key components (groups) there is always room for management decision to undertake a classical “water-fall” or agile/scrum to software development.

The classical “water-fall” method is appropriate in cases of well documented,predictablefunctional requirements and clear technology and policy environments. In case of undefined (chaotic) functional and non-functional requirements, it is recommended to undertake the Agile/Scrum approach and possibly the Rapid Application Development (RAD) prototyping approach, shortening iterations of the development to gather client’s feedback as soon as possible to be able to adjust the development roadmap.

Although the timeframe is tight, sufficient time has been foreseen to allow for 2 iterations of Functional Requirements and System Design and only one iteration for the Document Management System to be acquired via open tender by AMCU.

3.5Core deliverables of system development

Regardless of the software development approach undertaken (in case of scrum/agile the core phases are allocated in each iteration) the core deliverables of any process of system development (even if it is a paper-based system) shall follow the core phases of a system development life cycle:

Project Charter: defining scope, out of scope, subject matter experts etc.
Functional Requirements: defining “what” shall be done
System Design (could be done using RAD, prototyping): defining “how” it shall be done
Total Cost of Ownership (TCO)is frequently omitted but is important to the sustainability of a project and is highly recommended
Coding and Testing results in product manuals: developer, administrator, operator.

Plan of Operation

This Section described the scope of activities to be executed within the Project, deliverables (outputs) to be produced by the Project, as well as expected timing of outputs.

All outputs produced by the FC experts will be produced in English. Upon request by the Beneficiary, and with agreement, some outputs will also be provided in Ukrainian.

4.1. Activities carried out during the inception period

Kick-off meeting for the Project was held on 7th February, 2017.

During the Inception period (7th to 20th February, 2017) the following activities were performed and deliverables (outputs) produced:

Meeting with Mr. Eugene Stuart, Team Leader of the EU funded Project “Harmonisation of Public Procurement system in Ukraine with EU Standards” (project’s hand-over meeting) took place on 8th February, 2017 at the EUD’s premises;

Updated list covering four well-run State aid control authoritieswas sent to the Beneficiary (AMCU) and EUD on 10th February, 2017 (initial paper was prepared for discussion during the kick-off meeting and submitted officially on 6th February, 2017);

Country for Study visit and its timing was agreed with the hosting country, Romania; and communication with the hosting country is on-going to agree on the duration of study visit and its agenda;

AMCU’s established legal framework was assessed and some discussion started with AMCU’ State aid unit to deliver outputs requested for Component 2;

Some expertise and advice in legal drafting (secondary legislation important for State aid eligibility assessment) have been provided to AMCU;

Gap assessment performedon the existing Ukrainian legal framework to make the State aid system operational;

IT expert participated in planning and review meetings on the Request for Proposal (RFP) and Software Requirements Specification (SRS) for the EIS which shall cover the State Aid processes as well as the overall document workflow of the AMCU;

IT expert carried out an assessment of the IT Environment withinthe AMCU to identify consumption capacity and non-functional requirements (part of functional requirements artifact) that shall serve as afoundation for the next Functional Requirements and System Design

IT expert prepared a Project Charter for the IT component which is part of the SDLC prior to committing to Functional Requirements and System Design;

IT expert initiated the identification of business (sub)-processes and business functions to be automated for the State Aid processes;

AMCU provided FC experts by 7th February, 2017 with office accommodation at their premises, which also includes necessary office equipment, telephone, internet access. FC experts are now using they own computers, therefore there is no need to provide them (although initially computers were also provided).

4.2.Overall work plan for the Project Implementation

Following the provisions in the ToR, the Project activities are grouped into 4 components, namely: Component 1 – Study visit; Component 2 –Operational set-up of State aid control system; Component 3 – Capacity building; and Component 4 – System testing.

4.2.1.Component 1: Study visit

Activity 1.1. Presentation list of a minimum of three well-run State aid control authorities for the Study visit

Activities to be performed / Timing / Constrains and Assumptions
1. / List of four well-run suitable state aid control authorities and selection criteria presented to AMCU and EUDEL.
Selection criteria shall cover the following aspects: Status with EU; Placement of State Aid controlling competence before and after Accession to EU; Placement of State Aid competence; Operational arrangements (State Aid control mechanisms); Cooperation models with State Aid granting authorities; Reputation; Training; Central database (IT); Availability to host Study visit / Beginning of February 2017 / Active cooperation from the proposed host countries to organise Study visit
2. / Assignationof the country for the study visit from the list of countries proposed / By mid-February 2017 / Request fromAMCU or EDUDEL to consider another country for Study visit other than those proposed
3. / Agreement with host country on dates and duration of Study visit / Beginning of March 2017 / Availability of host country to organise Study visit on dates chosen by AMCU
4. / Agreement on delegation from AMCU for the Study visit / By mid-March 2017 / Delays in decision regarding delegation from AMCU

Activity 1.2. Elaboration of the questionnaire for the Study visit

Activities to be performed / Timing / Constrains and Assumptions
1. / Initial proposal by FC experts on questions to be covered by Study visit to ensure relevant expertise from the host country / Beginning of February 2017 / Initial proposal shall be entirely revised
2. / Revision of the initial questionnaire, in conjunction with AMCU / By mid-March 2017 / Delays in elaborating questions of interest from AMCU side
3. / Sending questionnaire to the host country / By mid-March 2017 / Delays in elaborating questions of interest from AMCU side

Activity 1.3. Drafting of agenda for the Study visit

Activities to be performed / Timing / Constrains and Assumptions
1. / Initial proposal by FC experts on draft agenda for Study visit / Beginning of February 2017 / Initial proposal shall be entirely revised
2. / Revision of the initial draft agenda, in conjunction with AMCU / By the end of March 2017 / Delays in proposals from AMCU side
3. / Communicating draft agenda with the host country / By the end of March 2017 / Delays in proposals from AMCU side
4. / Receiving proposal from the host country on exact planning of Study visit / By the end of March 2017 / Delays in proposals from host country
5. / Agreement on final agenda for Study visit / Beginning of April 2017 / Delays in proposals from host country or agreements from AMCU side