Russian Defense ministry to introduce new procurement rules

The Russian Defense Ministry is to introduce new procurement rules for contracts above 50 million rubles. The companies bidding at corresponding tenders will have to prove they are experienced in fulfilling state and municipal contracts. Experts believe the innovation will ensure rhythmical supplies, but can decrease competition and affect prices, the Izvestia daily writes.

Russian Defense ministry to introduce new procurement rules
Kamaz 78504 towing Isothermal transport-docking unit 15T555 displayed at Army 2018 near Kubinka (Picture source: Army Recognition)

The government drafted amendments to the resolution on additional requirements to participants in the procurement of specific types of products, works and services. The document obtained by the newspaper is at the stage of agreement and anti-corruption examination. Only a company which has properly fulfilled all supplies in the past three years can bid. The total cost of previous contracts should comprise at least one-third of the new price.

The amendments want to give defense procurement contracts only to reliable companies, expert Oleg Zherdev believes. "Over a dozen types of violations and embezzlements are reported in defense procurement. In particular, they take money for production, cash it and disappear. Now the companies will have to prove they can arrange timely supplies," he said.

Government procurement has been seriously monitored of late. A special Defense Ministry department is in charge of it. Procurement is controlled by the Federal Security Service and the Audit Chamber, Zherdev said.

Tougher requirements have to decrease the number of bidding companies, expert Alexander Perendzhiev said. "Naturally, it may trigger a price growth. But the proverb says buy nice or pay twice. You will have to pay dearly for low-quality products in wartime. The new rules will do away with shadow or ghost companies which have no production of their own and win tenders due to dumping prices and then search for the necessary products on the market or make gray orders at defense enterprises," he said.

The explanatory note to the government resolution said successful implementation of state and municipal contracts is an obligatory requirement for the bidders which "allows no dual interpretation." The rules concern the amounts above 50 million rubles to avoid "artificial restrictions on small and medium businesses", the document said.

The new rules have to rule out situations when a major amount of budget money disappears together with a fly-by-night company or because of criminal schemes, expert Vadim Kolyuzin said. "The struggle against such methods was not very effective and it was decided to toughen the rules. I am sure it is one of the measures to ensure discipline in defense procurement," he said.

The new rules concern supplies of weapons, military hardware and property. In particular, the rules cover procurement of all cold arms, minelayers, airplane units, salute and signal guns to protect facilities and borders. In 2016-2017 the share of defense contracts below 50 million rubles comprised 53 percent of the total amount, the Izvestia said.

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