Is There a Need for a New Law on State Procurements?

Pursuant to the request of the President of the Russian Federation, the Ministry of Economic Development of Russia plans to prepare proposals on improving legislation on public procurements until 1 April.

In addition, Evlira Nabiullina promised to submit until 1 April for the President’s review a draft Concept of the Federal Contract System as the next step in building a unified legal space, which will regulate all stages of procurements for the state needs: from the process of forming the state needs to the acceptance of government contracts executions results.
Indeed, current regulatory control procedures to meet government needs are fragmentary at present. In particular, at a formative stage (planning) of the state order, budget legislation, which seeks to ensure targeted use of budgetary funds, is valid. The phase of placing the state order, which is provided for by the Federal Law № 94-FZ "On placing orders for goods, works and services for state and municipal needs" (FL-94) is rightfully considered to be the best regulated. In fact, there is no special regulation for the government contract execution. As a result, government customers are forced to follow the general provisions contained in the civil law.

Under these circumstances, the need to enhance transparency and improved regulation of all procedures involved in the process of meeting state needs, is in no doubt. The lively social and inter-agency discussion was just about the nature and methods of the implementation of proposed changes. In particular, the Ministry of Economic Development proposes in the framework of the Federal Contracts System to implement the new law rather than to introduce a set of separate regulations, including the FZ-94, while the Federal Antimonopoly Service, is proposing an alternative program of reforming the public procurement system, and is preparing amendments of its own to the current FL-94.

In our view, the question of whether substantial legislative amendments in the sphere of public procurements will take the shape of the new law, or they will be accommodated within the current FZ-94 and other legal acts, is a matter of legal technique. And the obvious reason that the normative acts of the Government of the Russian Federation are only advisory in nature to other levels of government, are easily offset by the realities of the current centralized model of political administration and de facto "one-party system”.

While drafting reforms, it is much more important not to depart from the obvious achievements of FZ-94, which are related both to the control of corruption and subsequent improvement of competitive ways to state procurement. There is cause for concern when under the slogans of exhaustion of the anti-corruption potential of the current normative and legal regulation in the sphere of state procurements and the need to preserve and enhance anti-corruption elements contained in the FZ -94, the Ministry of Economic Development in constructing a pattern of the Federal Contract System as a whole and in determining the list of placement of state procurements in particular, parts from the consideration of customers’ integrity in the implementation of procurement activities and places not well-founded hopes on the effectiveness of public control over the activities of the state contract parties.

In our view, in order that recommendations regarding the improvement of procurement activities were effective, they must be developed for the current level of public consciousness (legal awareness), i.e. restrictions incorporated in legislation should not be eased at once. This should be done gradually, in line with the development both of the Russian society and institutional environment.

It should be remembered that the law on state procurements must, first of all,  ensure the ability of the state customers to purchase goods (works, services), corresponding to the required quality, as this determines, whether they achieve objectives set by the society or they fail. In this context, prevention of corruption and saving budgetary funds are important (but not mandatory) conditions for the execution of primary task of legislation regarding public procurements.

I.А. Sokolov – Candidate of Sciences (Economics), Head of Budgetary Policy Department