Government procurement in Russia

Government procurement in Russia relates to the public procurement in Russia by all governmental, regional and local authorities. The government procurement in Russia represents a big segment of the budgetary expenses. The volume of government purchases makes about 25 trillion rubles in 2015 and 30 trillion rubles in 2016.[1] The government purchases system is constantly modernized due to changes in legislation, technical components and information.

History

The system of public procurement attracts more and more the attention of the public sector, government and private sector.To develop the system of public procurement, we need to remember the experiences of the past. It is important for a specialist of any sphere to know the development periods in his field of activity.

The first period from 1992 to 1997. During this period, a big number of documents were adopted, among them 826-UP and 53-FZ. These documents were designed to become the legal basis for regulating the public procurement. Nonetheless, at this stage it was not required to hold a tender when placing a procurement order. This was successfully used by economic agents for personal gain (see Corruption), and thus further additions to the legal base were necessary.

The second period from 1997 to 2006. During this period, legal documents 305-UP and 97-FZ were adopted, which were to become the basis for the formation of the modern system for regulating public procurements. The aforementioned legal documents regulated only the actions of federal customers and were not able to build an appropriate system of placing order process.

The third period from 2006 to 2014. The beginning of the next stage in the formation of the government procurement system is associated with the passing of the federal law 94-FZ. This law brought many changes in the process of procurement order placing, for example, the introduction of the electronic auction, exclusion of the two-stage procedure, introduction of the concept of initial (maximum) contract price. Closed procurement procedures were prohibited, with the exclusion of the orders constituting state secrets. A finite list of situations was created, outlining when an order could be placed with a single source. The use of qualification criteria was limited, along with other changes.

The fourth period from 1 January 2014–present. Federal law 44-FZ comes into force. 44-Fechnology Z regulates the procedures related to the forecasting and planning of public needs, including goods, services, procurement, monitoring, and audit.

Electronic procurement

The Electronic procurement system in Russia was introduced for the first time in 2006, when it was used for incidental, minor tenders. However, it was not until 2009 that the transition process started of shifting to electronic tenders as the main form of conducting public procurement. Since then, the share of electronic tenders in the public procurement sector has been steadily increasing. As of 2016, 56,5% of procurement orders were realised in the form of an electronic tender.

As of 2018, there is strong support for transferring 100% of public procurement orders into the electronic format. The main argument in support of this process is the increased transparency and lower rates of corruption associated with electronic tenders. On the 2018 All-Russian Government Procurement Forum in Moscow, propositions were made to use the blockchain technology for public procurement. Blockchain has already been tested for procurement orders of medicaments in Novgorod oblast and, according to Sergey Gorkov, "all the questions regarding the medicaments are precise, clear, and very quick to solve". As part of the same forum, the head of the Federal Treasury (Russian: Федеральное казначейство) Roman Artyukhin announced that, starting 1 January 2019, all the paper procurement orders will become history.[2]

In the February 2017 report by Andrey Khramkin, the director of the Public Procurement Institute, the next steps in the process of transition to the all-electronic procurement system are outlined:

...the following actions are expected:

1. Further integration of state budget, tax, judicial and other databases with the data from unified information system (in order to decrease the number of documents attached to the bids and in order to facilitate inspections of authenticity of data provided by participants).

2. Creation of universal unified platform which would host all state and municipal goods and resources to be distributed according to a competitive procedure (procurement, privatization, sale of lease rights, concession, etc.)

3. Transition of all forms of procurement to the electronic form and paperless document flow.

Legislation

Russian Federal Law N94-ФЗ of 21.07.2005 requires all federal, regional and municipal government customers to publish all information about government tenders, auctions and other purchase procedures on special public government websites.

On June 2012 The Law "On the Federal Contractual System of Procurement of Goods, Works and Services" came up for the first reading in the State Duma. The bill is based on a comprehensive approach to procurement of goods, works and services for state and municipal needs by forming the federal contractual system. It, specifically, ensures the regulation of the entire procurement cycle: planning and forecasting of state and municipal needs, forming and placing orders, fulfillment of contractual obligations and the analysis of the results, as well as monitoring, control and auditing of the observance of requirements. The bill establishes a number of anti-dumping measures enabling rejection of applications with inordinately underestimated prices.[3]

While until now only additions were made to the original legislation, there have been suggestions of rewriting the legislation completely, in order to more accurately address the present-day problems.

Education and Certification

In many countries laws demands or recommends customers and suppliers to have certified procurement specialists. Special education organizations provide certification, courses and seminars and publish recommendations for different procurement procedures.

In Russia, numerous public procurement research institutions exist, providing opportunities for further training and certification of professionals working in public procurement. Some higher education institutions, like RANEPA (Russian: Российская академия народного хозяйства и государственной службы при Президенте Российской Федерации, РАНХиГС), also offer courses and certifications in public procurement.

In 1998, The Institute of Public and Regulated Procurement, Competition Policy and Anti-corruption Technologies (a.k.a. the Public Procurement Institute) was founded. The Institute works as a research, educational, and expert organization in the field of state and municipal procurement, corporate and other government regulated purchases, and has been part of the public anti-corruption activity.

Corruption

Corruption is widespread in real life and now also it is a popular topic in economic research. The focus in this article will be on corruption in public procurement in Russian Federation.

In 2006-2013 public prоcurement in all the Russian regiоns was regulated by a single law, Federal Law N94-ФЗ, accоrding tо which the suppliers can be chosen only thrоugh a competitive procedure for all the procurements abоve 100000 rubles.[4] The rules imply that information оn fоrthcoming procedures is published online at the special centralized website, the single one for all the regions and for all the prоcurements. After the prоcedure all the results (including names оf bidders, mоst оf the bids, winning supplier and the price оf the cоntract) are alsо available at the same website. Fоr all the prоcedures the prоcurer sets a start price, which is the maximum pоssible price оf the cоntract. In the course of prоcedure bidders make bids that are lower than the start price. The bidder with a minimum price оffer wins the contract. Tо set the start price a procurer usually asks for the price quotations frоm a few arbitrarily selected firms in the market, which send him the price at which they would be able tо perform the 12 contract. There are two major types of procedures available fоr procurers – sealed bid auctiоns12 (for purchases belоw 500000 rubles) and оpen electrоnic auctions13 (may be used for all the purchases but оbligatory for mоst of the purchases above 500000 rubles). If only оne supplier applies tо participate in the оpen auction, he оbtains the cоntract at the start price. Befоre the Federal Law №94 was introduced, pоocurers were almost free to chоose any supplier they wanted, tо pay him any price, the higher – the better. After that the contract wоuld be performed at the minimal pоssible cоsts. And everything that was nоt spent would be shared between the procurer and his supplier. Despite оf the attempts tо make the procedures more transparent, tо increase the participation оf private firms in public procurement and tо fight corruption, there are still a lоt of viоlations that limit the efficiency оf public prоcurement. A prоcurer is still able tо get round mоst of the limitations. If a prоcurer was nоt benevоlent, and wanted tо enrich himself, he would try tо negоtiate with a single firm (we will call him insider) the shares оn the surplus they receive from the procurement contract, and then tо prevent outsiders from participating in the procedure. So, at the very first step he may set the start price higher, by chоosing the highest price frоm the price quotations, оr by choosing firms he is asking these quоtations frоm. Then he may tune the specification оf the gоods sо that only one firm is able tо perfоrm the cоntract. The оther way tо limit competition is tо include special clauses оf delivery that are nоt suitable tо mоst оf the firms, оr make the contract very shоrt sо that outsider wоn’t be able toоmake it. If nevertheless sоme оutsiders applied tо participate in the prоcedure, he may still exclude sоme firms frоm bidding in the оpen auctiоn, referring tо sоme gaps in the documents they provided. As prоcedure with the оnly bidder may be suspicious, in sоme cases, the procurer оr the insider may call anоther firm tо participate, but not tо bid, at least nоt tо bid aggressively. That will always result in repeated interactiоns between the procurer and insider in variоus prоcurement prоcedures. Sо, by cоrruption in public prоcurement we will mean sоme actiоns оf a procurer that are aimed at receiving private gain frоm distribution of prоcurement cоntracts to private firms.

Statistics

About 3 000 of new tenders, auctions and requests for quotations published each day. About 250 000 purchase announcements published per year on federal procurement website.

Web resources that collect procurement information also are a source for additional statistics like usage of specific file formats among official organizations or regional economic activities.

See also

References

  1. ↑ http://zakupki.gov.ru/epz/main/public/home.html
  2. ↑ "Госзакупки в России переходят в цифровой формат | Москва | ФедералПресс". ФедералПресс (in Russian). Retrieved 2018-05-02.
  3. ↑ "Bill on contractual purchase of goods has 1st reading in Duma". Itar Tass. 21 June 2012. Retrieved 21 June 2012.
  4. ↑ "Федеральный закон "О размещении заказов на поставки товаров, выполнение работ, оказание услуг для государственных и муниципальных нужд" от 21.07.2005 N 94-ФЗ (последняя редакция) / КонсультантПлюс". www.consultant.ru. Retrieved 2018-05-01.


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