General information about procurement system in Russia

Procurement principles in Russia

The main characteristic principles of procurement in Russia are the same as in most developed countries:

  • Efficiency 
  • Profitability 
  •  Equity 
  • Transparency 
  • Responsibility 

Furthermore, the government in Russia places orders in compliance with following criteria: 

  • Promotion of domestic production and employment market (preferences to native product, preferences to small businesses, organizations of people with disabilities and subjects of penitentiary system);
  • Provision of national security (both foreign customers and imported goods don’t participate in procurement for national defense and state security needs) .

Principle of efficiency stipulates that the system of state order placement works immediately with minimal paper-laden processes and expenditures. This system therewith allows to get a product with the best quality-to-price ratio. 

Principle of profitability declares the dominant role of economic criteria in procurement (price is the most important one), though it’s necessary to provide sufficient amount of resources and control over state contract execution in course of order placement. 

Principle of equity implies honest realization of procurement in compliance with earlier declared rules and criteria, so that all participating suppliers have equal opportunities. 

Observance of this principle is of great importance since procurement is at taxpayers’ expense. The whole process of procurement should be fundamentally fair, but what is even more important, it should be treated as fair by all participants and people in general. It promotes relations of confidence and esteem between state customers and suppliers. This factor makes state procurement more attractive and encourages more people to participate in bidding, so that competition to sign up an order significantly increases and budget funds are spent more reasonably. 

Transparency in procurement is the result of special measures and procedures as well as preparation of reporting at every stage of procurement. This principle implies in-time, system and free provision of necessary, full information to concerned parties with help of common access resource (www.zakupki.gov.ru). This principle is applied to all procurement aspects including general terms of procurement, criteria of order application evaluation. 

The principle of responsibility means that public authorities and public officers are subject to disciplinary, civil and administrative (sometimes – criminal: in cases resulted in financial losses for budget or in cases of improper performing of functions) actions for their decisions and consequences.

Methods of procurement in Russia

All purchasing methods in Russia are divided into two categories: competitive and non-competitive procedures. Competitive procedures can be competitional and out-of-competition. 

The main ways of state order placement are: open tender and electronic auction. They imply that a customer establishes rules of tender or auction (contract conditions, requirements to tender participants, date and place, procedure of participation, criteria of tender or auction victory) and draft standard documentation. Therefore, bid invitation is placed on the Internet. On the basis of information in the bid invitation a supplier can decide if a tender is worth participating. The number of bidding participants competing with each other is unlimited, in the end the customer can choose a winner among participants. 

Participation in tender to conclude the state contract implies that interested person prepares a bid where they set up their proposals, mention price (rates), date and terms of delivery or work performance. 

To participate in electronic auction it’s necessary to prepare an electronic digitally signed bid. The winner of a tender is the participant who offered the most acceptable conditions while the winner of an auction is the participant who offered the lowest price. The winner receives the proposal to conclude a contract. Tender and auction procedures don’t include customer-participant negotiations. 

If a purchased object is connected with a state secret, closed tenders and auctions take place. Information about closed tender procedure and results isn’t published. 

Except tenders and auctions there are quotation requests. It is supposed to be one of the easiest competitive procedures in procurement. It’s used for buying small amounts of standard goods, works and services represented on current market. When a state customer requests a quotation they conduct market research, set initial price and places an order on www.zakupki.gov.ru. The suppliers are permitted to set only one quotation without further opportunity to make changes. The only criterion of quotation evaluation is price. 

Single-source procurement (direct contraction) is also the procedure of state order placement. It’s realized when any other procedure is impossible or results in failure from economic point of view. This procedure is admissible in case of: 

  • Procurement by natural monopolies; 
  • Urgent procurement in the event of emergency;
  • Procurement of little funding.

The choice of procedures of state order placement depends on special parameters or their combination, for example, order cost and size, object of procurement, special conditions (circumstances of insuperable force, liquidation of consequences of natural or technogenic emergencies etc.).

Procurement control

As state procurement is funded by taxpayers, the government is obliged to expend financial resources efficiently and prevent them from theft. It demands organization of clear control and audit system. 

There are three types of procurement control: 

  • Depending on time of control activities (preliminary, operative, follow-up control);
  • Depending on control authority relation to controlled object (external and internal);
  • Depending on the direction and object of control (objective and efficient expenditure, observation of legislation requirements and instructions). 

 Each type of procurement control is legally regulated. 

The main feature of state procurement is not only official authorities’ regulation but also public monitoring (first of all participants of order placement). 

Procurement system provides every bidding loser with opportunity to appeal against the result. All over the world a bidding loser has a right to contest legality of order placement administratively or judicially. Federal Antimonopoly Service plays the principal role in procurement control in Russia. It handles participants’ complaints, prevents collusive bids, bring bidding participants and organizers to justice.