Access of small business to government procurement to be simplified

19th June 2015

Ministry of Economic Development of the Russian Federation prepared a draft law that simplifies access of small and medium enterprises to the procurement of state-owned companies.

Ministry of Economic Development of the Russian Federation prepared a draft law that simplifies access of small and medium enterprises to the procurement of state-owned companies.

The draft amends the Federal Law of July 18, 2011 № 223-FZ “On procurement of goods, works and services by certain kinds of legal entities”.

Let us remind that President Vladimir Putin in his message to the Federal Assembly in December 2014 spoke about the need to facilitate access of small business to government procurement. 

The amendments provide for taking measures against companies that do not fulfill standards in terms of purchases from small business (at least 18% of the total procurement).

Now in Russia the average share of small business in government contracts does not exceed 10-11%, says adviser to the chairman of the Federal Intersectoral Council of “Business Russia” Sergey Varlamov.

Ministry of Economic Development of the Russian Federation supports the proposal to temporarily transfer the violators under the action of a more stringent federal law of April 5, 2013 № 44-FZ “On the contract system in the procurement of goods, works and services for state and municipal needs”, where the failure to comply with any of the terms and the procedures entails penalties. For example, the penalty for non-publication of data on procurement for state-owned companies can reach up to 500 thousand rubles, says General Director of the National Association of Procurement Institutions, a member of the General Council of “Business Russia” Sergey Gabestro.

It is also proposed to limit the choice of procurement procedures for state-owned companies. The company will be able to choose the method of procurement only if the contract value exceeds a certain threshold. Thus, the Ministry plans to increase the proportion of procurement through tenders and auctions.

Today, companies are trying to avoid such methods of procurement concealing the procedure under “other purchases” (more than 41% of total procurement). In fact it is the purchase from single supplier, which is incomprehensible to market participants and absolutely uncompetitive.

Additionally, the amendments will deprive companies with state shares more than 50% of the right to set their own procurement regulations. According to the amendments, the companies will be required to use the standard provisions. But at the same time they will have the right to set the qualifying requirements to participants.

Source: RBC

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