31 08 2022
A Short "Guide" to Public Procurement for Beginner Entrepreneurs
One of the ways that business entities carry out their commercial activities is public procurement. It is legally defined that public procurement is the purchase by customers of goods, works, services in whole or in part at the expense of budgetary funds and (or) their own income, with the exception of income from international airports related to the provision of services to non–residents of the Republic of Kazakhstan.
The customers are state bodies, state institutions, as well as state enterprises and quasi-public sector entities.
Individual entrepreneurs and legal entities can participate as participants (potential suppliers) of public procurement.
The following qualification requirements are imposed on potential suppliers:
1) having legal capacity (for legal entities), civil capacity (for individuals);
2) financially stable and have no tax arrears exceeding six times the monthly calculation index established for the corresponding fiscal year by the law on the republican budget.
3) not a subject to bankruptcy or liquidation proceedings;
4) have material, labor and financial resources sufficient to fulfill obligations under the public procurement contract;
5) work experience (except in cases when the subject of public procurement is recognized as the availability of a license and (or) permission from a potential supplier).
Public procurement is carried out in the following ways:
2) at auctions;
3) request for price offers;
4) from a single source;
5) through commodity exchanges;
6) through an electronic store.
The most common methods are a competition, a request for price offers and from a single source.
In the competition, from a variety of potential suppliers, you need to choose the most suitable one by qualification, price and other criteria. In addition to the price offer and the application security (1% of the amount allocated for the purchase), the participant must document the availability of permits (licenses, permits), labor and material resources specified in the tender documentation developed by the procurement organizer (customer).
Asking for price offers is one of the easiest ways to participate in public procurement. This is due to the fact that the annual volumes of purchased homogeneous goods, works, services in value terms do not exceed 8000 MCI. That is, the limit of the amount for which it is possible to conclude a public procurement contract is up to 8000 MCI.
In this method, in order to participate, it is necessary to provide a price offer and make an application security in the amount of 1% of the amount allocated for the purchase. To make a security application, the participant must have the necessary amount in the electronic purse of the public procurement web portal.
The winner is the participant who offered the lowest purchase price. With the participation of one participant or no participants at all, repeated purchases are carried out by the organizer of the purchase (the customer).
One of the grounds for purchasing from a single source is the recognition of repeated purchases as failed due to the filing of an application by one participant or the absence of applications. If one participant participated, he is sent an invitation to participate in procurement from one source. Next, the participant sends a justification for the price that was indicated when participating in repeated purchases. It prescribes how the proposed price is formed, as a rule, the cost per unit and quantities are indicated.
If the winner is determined, the participant within 10 working days from the date of entry into force of the public procurement contract is obliged to provide security for the execution of the public procurement contract in the amount of 3% of the total amount of the contract (using an electronic wallet). The enforcement of the public procurement contract is returned to the participant within five working days from the date of the supplier's full and proper fulfillment of its obligations under the public procurement contract. These procedures are applied regardless of the methods of public procurement.
egarding the work in the web portal, it is important to determine the planned amount of participation for one ad (lot), since it is necessary to connect the tariff in the following ranges:
The maximum amount of participation in one purchase:
up to 1 million KZT– 1 MCI per year;
up to 10 million KZT – 10 MCI per year;
up to 100 million KZT – 20 MCI per year;
up to 1 billion KZT – 60 MCI per year.
There is also the possibility of connecting a tariff without a limit on the amount in one purchase by paying 122 MCI.
As a filter from unreliable counterparties, the register of unscrupulous participants in public procurement is used, when entering which participants do not have the opportunity to participate for 24 months.
The grounds for entering into the register are a court decision and a decision of the authorized body.
By a court decision, participants are not allowed to participate in public procurement in cases of providing false information on qualification requirements and (or) documents affecting the competitive price offer, as well as those who have not fulfilled or improperly fulfilled their obligations under public procurement contracts concluded with them.
By the decision of the authorized body, participants are not allowed to participate in public procurement in the event that the determined winners evade the conclusion of a public procurement contract.
Conclusion: public procurement with competent participation allows entrepreneurs to make a profit by supplying goods, performing work, providing services to state legal entities and quasi-public sector entities.
To understand which tariff to choose, it is necessary to find out how much the offered goods, works, services are in demand in a particular region and the country as a whole.
It is also important to monitor the prices of the goods, works, and services offered. This allows for flexible pricing when applying for a purchase of interest.
According to the methods of procurement, it is worth noting the narrow profile of competitions, where licenses are required, documentary evidence of the material and technical base, the availability of specialists with the necessary documents, etc.
To avoid inclusion in the register of unscrupulous participants, it is necessary to carefully study the procurement documentation, primarily the technical specification before submitting an application. There is a possibility that the delivered product (service, work) does not meet the requirements of the procurement documentation and this may entail collateral damage (for example, paid delivery to the customer), litigation and loss of useful time. During the operation of the public procurement contract, timely and proper fulfillment of obligations is of priority, since customers are obliged to apply to the court no later than thirty calendar days from the day when they became aware of the fact of the supplier's violation of contractual terms. In case of non-compliance with this provision of the law, customers face administrative liability in the form of a fine of 30 MCI.
The author of the article: MG Partners lawyer Omar Shurenov.