Procurement of state-owned companies

Public procurement in Russia

• Public procurement in Russia

Law of 223-FZ

At the beginning of 2017, purchases from state-owned companies are regulated by the Federal Law "On the Procurement of Goods, Works, Services by Certain Types of Legal Entities" of 18.07.2011 No. 223-FZ.

The list of types of legal entities is diverse: from state corporations and subjects of natural monopolies to budgetary institutions. Despite the fact that such companies are owned by the state or municipality, for the most part they are commercial organizations, the main purpose of which is to make a profit.

For convenience, in this article we will call them state-owned companies, and the law itself is abbreviated as the Law of 223-FZ.

According to the Ministry of Economic Development of Russia, at the end of 2016, 86,419 legal entities covered by the Law of 223-FZ were registered in the Unified Information System.

In the field of public procurement, there is also the Federal Law "On the Contract System in the Field of Procurement, Goods, Works, Services to Meet State and Municipal Needs" of 05.04.2013 No. 44-FZ. It will not be discussed, but, nevertheless, it must be mentioned so as not to be confused with the Law of 223-FZ.

If the FZ-223 deals with state-owned companies, then the Law "On the Contract System" regulates purchases carried out by state and municipal authorities (also by some other entities, but we will not concern them here). In other words: the Law of 223-FZ - for state-owned companies, the Law "On the Contact System" - for government agencies.

Another important difference is the "airiness" of our 223-FZ Act compared to the strict Contract System Act. And here we come close to the question of what is the meaning and benefit of the Law of 223-FZ.

The Good Intentions of the Four Principles

The main objectives of the 223-FZ Law are to protect competition, expand opportunities for market participants and provide state-owned companies with goods, works and services of the best quality at market prices.

The law declares four principles: 1. Informational openness 2. Justice, equality, non-discrimination 3. Target Cash Expenditure 4. Prohibition of unmeasured requirements for bidders

"In general, normal and necessary principles, except maybe principle No. 4, which seems a little strange," says TAdviser Alexey Sulin, managing partner of the law firm Axis Pravo. - Firstly, this is a special case of principle No. 2 and it was possible to do without duplication. Secondly, it is possible to establish immeasurable requirements not only for the participant in the purchase, but also for the product (work, service) and, for that matter, it made sense to also reflect this in the law. "

By the way, abuses by the customer can be of a very different nature. For example, these can be not only immeasurable requirements, but also vice versa, the establishment of an unreasonably accurate set of characteristics of a product (work, service), which often indicates that the customer has already decided on a choice and describes the requirements for a specific product (work, service). The same goes for the participant, when the description includes the only participant in the purchase and no one except him can meet the requirements of the purchase even purely technically.

However, despite the importance of the declared principles, the main problem is not this, but whether it is possible to hope for the observance of these principles in practice.

Why only 5% of purchases go through a tender or auction

In their activities, state-owned companies are guided not only by law and by-laws, but also by procurement provisions that they accept independently. In these provisions, state-owned companies regulate the procedure for preparing and conducting procurement procedures, the process of concluding contracts, and also establish possible methods of procurement.

The latter is very important, since the current procurement procedure, namely paragraph 3 of Article 3 of the Law 223-FZ provides for the following:

"The procurement regulation may provide for other (other than tender or auction) methods of procurement."

That's 90% of what businesses need to know about the 223-FZ Act. Why?

The fact is that the law prescribes state-owned companies to adopt procurement provisions that should guide them in the process of carrying out this activity. At the same time, it allows you to provide for other procurement methods in the provisions. And the most important thing is that no one demands that these methods be competitive, which implies that state-owned companies are actually allowed not to hold contests, auctions and other events obliging them to conclude an agreement with the winner who offered the best conditions or price. Of course, state-owned companies are actively using this.

"According to the Ministry of Economic Development, only 5% of purchases under the Law of 223-FZ are carried out on the basis of tenders or auctions, i.e. in conditions of competition, while the remaining 95% of contracts are concluded by purchasing from a single supplier or in other ways that state-owned companies creatively generate and fix in their procurement provisions," says Alexey Sulin from Axis Pravo.

In total, over the 2016 year, the regulator counted about 4500 thousand ways, among which there are those whose creativity deserves a separate mention: "short purchase," "direct purchase," "new method of purchase," "invitation to cooperation," etc.

In fairness, it must be said that the state-owned company must justify the choice of the procurement method. However, as a rule, there are no problems with the justification.

What to do business: study the procurement provision

The short answer to this question will be: to study the procurement provision. In the conditions of the liberal and actually framework Law 223-FZ the provision on procurement of a particular customer becomes paramount. An example is the Regulation "On Procurement of Goods, Works, Services," approved by the Board of Directors of PJSC Rostelecom.

The Regulation contains both bidding procedures (open tender, open auction) and non-bidding procedures (open quotation request, open request for proposals, open competitive negotiations).

"What does" non-bargaining "mean? This means that when using these procurement methods, the customer is not bound by the requirements of the Civil Code of the Russian Federation and is not obliged to conclude an agreement with the winner of the procurement. In other words, the conclusion of the contract is the right of the customer. If the winner, for example, an open request for quotations (which is not recognized as trading), will appeal against the actions of the customer who refused to conclude an agreement, he has significantly less chances of winning than the winner of an open auction or open tender (where the norms of the Civil Code of the Russian Federation on bidding apply), "explains Alexey Sulin

In addition, the customer has the right to make changes to the procurement documentation, establish additional test tasks for customers, and take other actions to clarify the qualifications of the procurement participants before the deadline for submitting applications.

In accordance with the rules of PJSC Rostelecom, an open purchase from a single supplier is a procurement method in which there is no competition, and the proposal to conclude an agreement is sent to one supplier. As with all other methods, procurement from a single supplier is carried out in certain cases, the list of which is given in the Procurement Regulations.

Thus, participating in the procurement carried out by PJSC Rostelecom, it is necessary first of all to study the Regulation "On the procurement of goods, works, services" valid in this organization, especially those sections of it that talk about the procurement method that is used in a specific situation.

And it is likely that despite the external injustice of the final purchase, it is fully consistent with the Law of 223-RF and the position of the company. Although it is possible that not, because it all depends on the specific situation.

Does the ruling on the priority of Russian goods give real advantages?

The conversation about the 223-FZ Act and its shortcomings would be incomplete without mentioning the regulation, which has been in effect since 01.01.2107.

This is a decree of the Government of the Russian Federation of 16.09.2016 No. 925, which has a difficult name: "On the priority of goods of Russian origin, works, services performed by Russian persons in relation to goods originating from a foreign state, works, services performed by foreign persons."

The main innovation is the introduction of a reduction factor in relation to the cost of Russian goods (works, services). This means that when comparing prices for goods (works, services) of Russian and foreign origin, it will be considered that Russian products have a cost of 15% lower than the cost indicated in the application.

Of course, the contract should eventually be concluded at the declared value. This is the meaning of priority. True, the reduction coefficient is provided for competitive procurement methods, and the fly in the ointment in this undertaking is still the same problem - the ability of state-owned companies to establish non-competitive procurement methods, which is a simple way to evade the right and necessary initiative.

Chronicle

2022: 1.6 times increase in purchases of the largest state-owned companies from small businesses in the Russian Federation

The volume of purchases of the largest state-owned companies from small businesses in the Russian Federation in 2022 increased 1.6 times compared to 2021 and amounted to more than 7 trillion rubles. This is stated on May 15, 2023 in the message of the SME Corporation (engaged, in particular, in monitoring the fulfillment of requirements for the volume of purchases from small businesses).

It follows from it that in 2022 the volume of purchases of the largest customers from SME suppliers in absolute terms increased by 2.6 trillion rubles, more than 12 thousand customers made purchases, including 9 thousand regional ones. The list of purchased goods has more than doubled to 1.1 million items. Over 70% of total purchases from SMEs are industrial products, and more than 9% are innovative, high-tech. In 2022, purchases in scientific and technical fields increased 10 times, the SME Corporation said.

The volume of purchases of the largest state-owned companies from small businesses in the Russian Federation increased 1.6 times

It is noted that at the end of 2022, drugs became the most frequent items of purchase from SMEs in the segment of up to 50 million rubles. With a contract amount of up to 200 million in the first place, oil products, up to 400 million rubles - mining products, up to 1 billion rubles - vehicles and equipment.

The largest volume of purchases from small businesses in 2022 was demonstrated by Sberbank Insurance LLC (333.3 billion rubles), Russian Railways (245.3 billion rubles), Rostelecom PJSC (145.6 billion rubles), Gazprom Komplektatsiya LLC (103.4 billion rubles), FGC - Rosseti PJSC (101.2 billion rubles).

The SME Corporation added that in 2022 the quota for purchases of state-owned companies from SMEs increased from 20% to 25%. The list of the largest federal and regional customers that fall under the monitoring of the SME Corporation and regional authorities was also expanded.^[1]

Procurement of government agencies

Main article: Procurement of government agencies

The article collects data on the procurement of government agencies, which are regulated by the Federal Law "On the Contract System in the Field of Procurement, Goods, Works, Services to Meet State and Municipal Needs" of 05.04.2013 No. 44-FZ.

See also

• Import substitution in state-owned companies
• IT public procurement in Russia
• IT in the US public sector
• IT Public Procurement (Ukraine)
• Oracle (the largest public procurement in Russia) 2014-2015
• Procurement automation: experience of the largest customers, market structure, trends. TAdviser study

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