The public procurement bidding process in Russia

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The bidding process

i Notice

Public procurements must be published within a unified information system that is located on a designated website. The content of the contract notice and terms for such notices will depend on the value of the contract, type of procurement procedure and other factors.

It is possible to place orders for goods, works or services without a procurement procedure or procurement publication in cases such as those set forth in Article 93 of Law No. 44-FZ (procurements from a sole supplier). Although in the area of procurements from a sole supplier there is generally no need for publication, there are some exceptions. For instance, there is a requirement to publish notices in relation to, inter alia:

1. procurements of goods, works or services from the natural monopoly companies falling within the scope of Federal Law No. 147-FZ of 17 August 1995 on Natural Monopolies, as well as procurements of services of the central depository;
2. services in the areas of water supply, heat supply and gas supply (except for services related to the sale of liquefied gas); and
3. services in the area of storing and importing or exporting narcotic agents and psychotropic substances.

The contracting authorities are obliged to publish their procurement plans for a three-year period and scheduled plans for each financial year based on their procurement plans.

ii Procedures

Where procurement regulations apply, contracting authorities must use one of the procedures prescribed by the relevant procurement regime. Procurements can be done through competitive methods of determining suppliers or from a sole supplier. Such competitive methods include:

1. tenders (namely, public tender, tender with limited participation, two-stage tender, closed tender, closed tender with limited participation and closed two-stage tender);
2. auctions (including closed auction);
3. requests for quotations; and
4. requests for proposals.

As of 2019, amendments to Law No. 44-FZ entered into force, obliging the contracting authorities to conduct all competitive procedures specified above in an electronic form. However, Law No. 44-FZ sets out an exhaustive list of exceptions (e.g., procurement from a sole source, procurement conducted in foreign countries and procurement conducted via closed procedures).

Electronic procedures (including filing applications for participation in procurement) and contracting are carried out through an electronic platform. Law No. 44-FZ provides a detailed regime for conducting electronic procurements.

The prevailing type of procurement procedure is an electronic auction. Procurement from a sole source means procurement from a particular supplier without a tender, which may be done in exceptional cases envisaged by Law No. 44-FZ. These exceptional cases include, for instance, the conclusion of the following contracts:

1. the supply of Russian armaments and military equipment that have no Russian analogues and are made by the sole manufacturer, with the supplier of such armaments and military equipment;
2. rendering services in relation to water supply, water discharge, heat supply and gas supply (except for the services related to the sale of liquefied gas);
3. services in connecting to (cutting in) engineering networks at prices (tariffs) controlled in compliance with Russian legislation;
4. storing, importing or exporting narcotic agents and psychotropic substances;
5. the procurement of goods, works or services for an amount not exceeding 100,000 roubles, provided that the total annual volume of procurements, which the contracting authority may make pursuant to this provision, must not exceed 2 million roubles or 5 per cent of the aggregate annual volume of the authority’s procurements and must not comprise more than 50 million roubles (it is noteworthy that the 100,000 roubles limitation does not apply to contracting authorities operating outside of Russia, such as diplomatic or trade missions, consular offices, etc.);
6. the delivery of items of cultural value (including museum collections, rare and valuable editions, manuscripts and archival documents) intended to replenish state museum funds, libraries, archive funds, film and photo funds, as well as similar funds;
7. the procurement of goods of which the manufacturing process has been established, modernised or developed in Russia, in accordance with a special investment contract, which is a new type of contract introduced in 2015 for the purpose of promoting national industry. The investor under such a contract must be approved by the government provided that certain conditions are met (e.g., the investment should equal or exceed 3 billion roubles);
8. the procurement of legal services for protecting the interests of Russia in foreign and international courts and arbitral tribunals, and in the bodies of foreign states (introduced in 2017);
9. the procurement of works relating to the modernisation of federal state information systems that provide informational and legal support to the Russian parliament, and services that support such systems (introduced in 2017); and
10. some other exceptional cases provided by Law No. 44-FZ.

With effect from 1 July 2018, Law No. 223-FZ lists competitive and non-competitive procurement methods, but as opposed to the provisions of Law No. 44-FZ, the list is not exhaustive. A procurement policy, established in accordance with Law No. 223-FZ, may set forth other competitive methods aside from tenders, auctions, requests for quotations and requests for proposals, provided that such methods comply with the conditions established by Law No. 223-FZ. Non-competitive methods, in turn, include methods that do not comply with these conditions (e.g., procurements from a sole supplier). Similarly to Law No. 44-FZ, competitive procurement procedures under Law No. 223-FZ must be held in an electronic form, unless otherwise stipulated in the procurement policy. Competitive procurement procedures under Law No. 223-FZ whose participants are limited to small- and medium-sized businesses must be held in an electronic form only.

All procurement policies adopted in accordance with Law No. 223-FZ had to be brought in line with the current version of Law No. 223-FZ and published in the unified information system by 1 January 2019. Procurement policies that do not comply with Law No. 223-FZ after this date are deemed to be not published and, therefore, may not be used for holding procurement procedures.

iii Amending bids

A bidder is entitled to modify or withdraw its application before the expiry of the period for filing applications, subject to the provisions of Law No. 44-FZ. In these cases, a tender participant or auction participant does not forfeit the right to the monetary assets provided to secure the application thereof. The modification of an application or a notice of its withdrawal is deemed valid before the expiry of the period for filing applications. In relation to requests for quotations, a bidder is entitled to change or withdraw its application for participation in the request only if the contracting authority has amended the notice making the request for quotations. Once the period for filing applications has expired, no changes to the bid may be made.