An exhaustive list of requirements to non-competitive procurements is specified. The current version of the Federal Law № 223 does not provide for an exhaustive list of cases in which single-source procurements are admissible. Customers draw up such a list in their regulations on procurement [2] – a document adopted by the authorized body of the company providing for its procurement activity. The Federal Law № 223 in this regard is characterized by more discretionary nature in comparison with the Federal Law № 44-FZ dated April 5th, 2013 “On the contract system in public and municipal procurement of goods, works and services” which provides for an exhaustive list of cases of single-source procurements [3].
The Draft Law proposes to set forth legislative requirements for non-competitive procurements, including single-source procurements. Non-competitive procurements are proposed to be admissible in the following cases:
- procurements of goods, which are within the scope of activities of natural monopoly entities in accordance with the Federal Law “On Natural Monopolies”; [4]
- procurements of goods, works or services for an amount not exceeding one hundred thousand rubles;
- procurements of certain goods, works and services as a result of an accident and other natural or man-made emergencies and other procurements.
The procedure for carrying out procurements in electronic store is provided. Under the Draft Law, a procurement in electronic store is a procurement conducted electronically on one of the electronic platforms. A list of suitable electronic platforms is already specified in Government Order № 1447-р dated 12th July, 2018 [5]. The list includes such platforms as JSC “Unified electronic trading platform”, JSC “Electronic trading systems”, CJSC “Sberbank – automated system of procurements”. The procurement procedure in the electronic store varies depending on whether it is a competitive procurement or a non-competitive single-source procurement. In the first case procurements are conducted by means of quotation session. In case single-source procurements are conducted, a customer is entitled to conclude a contract either by holding a quotation session or by sending a consent to the supplier who uploaded its offer in the electronic store. If quotation sessions are held, the customer uploads an offer to enter into a contract in the electronic store, which is the start of a quotation session. A person who sent the smallest price offer is the winner of the quotation session. The customer and the winner sign a contract within 24 hours following such session. Therefore, the legislator provided for a simplified procedure for conducting single source procurements – providing consent to supply goods.
The requirements a customer can set forth in its procurement documentation are defined. The Draft Law sets out certain requirements to a bank guarantee provided by procurement participants as security for procurement application or contract.
The bank guarantee:
- shall be issued by a bank included in special list of banks [6];
- its form shall comply with the requirements to the form of the bank guarantee stipulated by the Government upon the agreement with the Central Bank [7], as well as with the requirements to its inclusion in the register of bank guarantees.
The Draft Law also defines a closed list of information a customer can require under its procurement documentation. If the Draft Law is adopted, a customer will not be allowed to demand information and documents other than stated in the Federal Law № 223.
The actions of the customer and procurement participant during the formation and execution of the procurement contract. The Draft Law stipulates that communication between the customer and the supplier on all of the questions connected with conclusion and execution of the contract shall be conducted in the unified information system.
Expertise is required to assess the supplied goods. Such expertise can be conducted by the customer or with the assistance of external experts. It is expected that the Government of the Russian Federation will specify a list of goods, works and services, compliance assessment of which is done with the assistance of external experts is necessary.
Appealing procedure is modified. The procedure for appealing the actions of the customer, procurement commission and operator of the electronic platform in the competition authority (FAS) is only partially covered by the Federal Law № 223. Most of the provisions on such procedure are contained in art. 18.1 of the Federal Law “On the protection of competition”
[8]. The Draft Law proposes to provide for the procedure for appealing in the Federal Law № 223 in more detail. The procedure proposed in the Draft Law allows filing the appeal with the use of the unified information system and involves significantly shorter terms for filing, acceptance and consideration of the appeal. Under the Draft Law, for comparison, the appeal is filed within 5 hours after commission of the appealed acts, the competition authority publishes the decision or/and instruction on the elimination of violations in the unified information system not later than 6 hours after receiving the appeal. Under the Federal Law “On the protection of competition”, an appeal can be filed within 10 days from summing up the results of the procurements. Herewith, under the Draft Law the appeal shall be considered within the terms provided in art. 18.1 of the Federal Law “On the protection of competition” if a procurement participant files it within 10 days. If the Draft Law is adopted, the appeal will be conducted electronically without the presence of representatives of competition authority, supplier, procurement participant. Therefore, the Draft Law also modifies art. 18.1 of the Federal Law “On the protection of competition”. Under the Draft Law, if the procurements conducted under the Federal Law № 223 are appealed, the competition authority is not obliged to publish information on receiving the appeal, suspending the procurements or information on the outcome of the consideration of the appeal since such information is forwarded to procurement participant, supplier and operator of the electronic platform using the unified electronic system.
The Draft Law proposed by the Government certainly addresses gaps in legislation on government procurements. A great number of the proposed changes such as criteria for conducting single-source non-competitive procurements rely on the provisions of the Federal Law № 44. The proposed version of the Federal Law № 223 covers areas that used to be beyond legal regulation, for instance, cooperation between the customer and the supplier at the stage of execution, modification and termination of the contract. On the one hand, the consequences of the increased regulation will be legal certainty and less potential for abuse. On the other hand, the customers will not be able to settle a number of issues independently. In particular, an exhaustive list of cases in which non-competitive procurements are admissible will be specified, the customer will not be allowed to request information and documents at his own discretion. We cannot fail to mention the legislator’s commitment to digitalization of the procurement procedure that contributes to the awareness of procurement participants. For instance, in connection with the spread of coronavirus infection certain customers had to delay procurements. The Ministry of Finance in its letter [9] confirmed that customers are entitled to do so since the spread of infection is a force majeure situation. Under para. 6 art. 3.2 of the Federal Law № 223 information on the delay of the procurement is published in the unified information system on the day of adoption of such decision. Therefore, suppliers can immediately become aware of the delay. Positive changes include shorter terms for appealing, increased opportunities for the supplier, competition authority, procurement participant to cooperate with each other through the use of the unified information system.
Ksenia Stepanischeva, Counsel
Ekaterina Pochtareva, Junior associate
[1] https://regulation.gov.ru/projects#StartDate=12.3.2020&EndDate=13.3.2020&kinds=6&npa=99932
[2] Art. 3.6 of the Federal Law № 223
[3] Art. 93 of the Federal Law№ 44-FZ dated April 5th, “On the contract system in public and municipal procurement of goods, works and services”(hereinafter – the Federal Law № 44)
[4] Federal Law № 147-FZ dated August 17th, “On Natural Monopolies”
[5] Government Order № 1447-р dated July 12th, 2018 “On approving the list of operators of electronic platforms and specialized electronic platforms, provided for on the Federal Laws № 44-FZ dated April5th, 2014, № 223-FZ dated July 18th, 2011”
[6] https://www.minfin.ru/ru/perfomance/contracts/list_banks.
[7] Government Regulation № 1005 dated 8th November, 2013 «On bank guarantees used for the purposes of the Federal Law “On the contract system in state and municipal procurement of goods, works and services”»
[8] Federal Law № 135-FZ dated July, 26th “On the protection of competition”
[9] Ministry of Finance Letter № 24-06-808/24649 dated 27th March, 2020 “On conducting procurements during public holidays”