Amendments to the Federal Law on Awarding Public Contracts and some Other Legislative Acts.

17.03.2009

LEGAL ALERT No. 9.

Goltsblat BLP advises that Federal Law No. 308-FZ “On Amendments to the Federal Law “On Awarding Public Contracts for Goods, Works and Services for Federal and Municipal Government Needs” and Certain Legislative Acts of the Russian Federation” (hereinafter – the “Law”) was adopted on 30 December 2008.

The most important developments introduced by the Law include:

1) The possibility of a reduction in the price of a federal or municipal government contract subject to agreement between the parties, without the other terms and conditions being amended.

2) Obligation imposed on the Russian Government to determine cases and the procedure for reducing prices of government contracts for construction, reconstruction and capital repairs concluded before 1 January 2009. The Law stipulates that losses caused by the contract price reduction are not reimbursable to the contractor.

3) Greater possibilities for applying the criterion of the participant’s qualifications. The maximum significance of this criterion for awarding contracts for educational, legal and expert review services has been increased to 45 per cent. Initially, it was totally prohibited to apply this criterion for awarding public contracts for counter-corruption considerations (except for R&D contracts or technology-related work).

4) The possibility of selecting a specialised organisation by entering into a sole-source contract. The Ministry for Economic Development previously considered it unlawful to select a specialised organisation by awarding contracts in this way.

5) Cancellation of a federal or municipal government contract only by agreement between the parties or by a court ruling, this totally eliminating any unilateral, out-of-court withdrawal from the contract.

6) More stringent requirements on the members of a contract-awarding commission.

7) Additional measures for supporting Russian producers. Foreign producers are excluded from national treatment, meaning that goods of Russian origin, work performed and services rendered by Russian entities have priority. Admission terms for such goods (work, services) are to be established by the Ministry for Economic Development on the instructions of the Russian Government.

The conditions for small business participating in the awarding of contracts have been changed. The initial (maximum) price of contracts (lots) awarded to small businesses is to be determined by the Russian Government. Until it does so, the initial price should not exceed 2 million roubles for services and 3 million roubles for goods and work. Municipal customers are now required to award individual contracts to small businesses, as only state customers were previously.

8) Clarification of the requirements governing tender documentation and tender and auction bids.

9) An extension up to 30 days for the period for evaluation and comparison of bids for certain contracts. The notice period for a repeat open auction for supplying medications has been cut to 7 days (the general 20-day period used to apply to this type of procurement).

10) A more specific procedure for holding open electronic auctions. A new requirement has been introduced: for participation in an auction, preliminary accreditation is needed. Such accreditation is to be granted by the e-marketplace operator for three years. The procedure for selecting marketplace operators and operating conditions is to be determined by the Russian Government by 1 July 2009.

With the exception of certain provisions, the Law came into force on 1 March 2009.

For more information, please contact:

Vitaly Mozharowski, Partner,
Commercial/Industrial Real Estate and Construction,
Goltsblat BLP
Tel: +7 (495) 287 44 44,
Email: info@gblplaw.com

Elena Barinova, Partner,
Real Estate Investment and Finance,
Goltsblat BLP
Tel: +7 (495) 287 44 44,
Email: info@gblplaw.com

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