Saltanat Seilbekova, Consultant of MinTax Group, in her article comments on the most important amendments and additions that took place in September 2019 in RoK legislation on state procurement.

Significant amendments and additions were introduced to the Rules of carrying out state purchases approved by Order of the RoK Minister of Finance #648 dated 11 December 2015 (hereinafter – the “Rules”).

In particular, with effect from 1 September 2019, a new qualification requirement was introduced for potential suppliers of services (works), namely, in order to participate in state procurement one must be a financially stable enterprise that has no tax arrears exceeding six times the MRI[1].

At that, the financial stability of a potential supplier is determined on the basis of data from the information systems of state revenue authorities.

Below we present a schedule of criteria for determining whether a potential supplier is financially stable.

Data	Requirement
Revenue (current assets)	Revenues (current assets) of the potential supplier during 3 years preceding to the previous year must comprise not less than one half of the amount allocated for the performance of the state purchase, but not more than four hundred thousand times the MRI
Taxes paid	The taxes paid index during 3 years must comprise not less than 3% of income of the potential supplier. The taxes paid index is calculated according to the formula: TPI = TP/AAI х 100% where: TPI – taxes paid index; TP – amount of taxes paid; AAI – aggregate annual income of the potential supplier
Fixed Assets (FA)	an average annual value of the potential supplier’s fixed assets during 3 years must comprise not less than 1/15 of the amount allocated for the performance of the state purchase, but not more than four hundred thousand times the MRI
Wage Fund	wage fund of employees of the potential supplier during 3 years preceding to the previous year must comprise not less than 1/15 of the amount allocated for the performance of the state purchase, but not more than four hundred thousand times the MRI

It should be noted that the qualification requirement in the form of financial stability is presented to potential suppliers participating in state procurement through a tender with preliminary qualification selection on CAO[2]. In the meantime, if potential suppliers do not meet the above requirements, they will not be able to participate in the procurement. This requirement will allow to strengthen the prevention of construction companies’ default on obligations. In addition, we believe that this will help to control and facilitate the fulfillment of financial and social obligations by potential suppliers to labor collectives.

The next innovation for potential suppliers is the introduction of an electronic depository, which is an electronic database containing information and documents confirming the experience of potential suppliers. The electronic depository is formed by the authorized body on the web portal with respect to the list of GWS[3] on the basis of information and documents confirming the work experience entered by potential suppliers to the state procurement web portal of the RoK.

There are fixed terms established for the presentation by potential suppliers of information and documents confirming their work experience. In particular, potential suppliers are obliged to present the data required for the previous periods (for the recent 10 years) by 31 October 2019, and for the current year – by 31 December 2019. In case the information and documents confirming work experience are not presented within the specified deadlines, the procedures will be performed to check whether the documents are true and reliable. Further, after the reliability of the documents presented has been confirmed by the relevant state bodies, officials and other individuals and legal entities, such information will be entered into the electronic depository.

So, this innovation will prevent potential suppliers from presenting false information. If any potential suppliers provide false data in respect of information and documents kept in the electronic depository, such supplier will be included in the register of bad-faith participants of state procurement for a period of 2 years.

At present, a list of GWS has been established for which the electronic depository in the sphere of state purchases should be formed.  This list includes CAO and engineering works. The list of information and documents confirming the work experience of a potential supplier entered into the electronic depository can be found in Appendix 26 to the Rules.

Furthermore, there are some changes in the procedure for carrying out a tender with a preliminary qualification selection. In particular, the tender is carried out in two stages. At the first stage, the qualification body compiles a list of qualified potential suppliers. At that, in order to be included in the list of qualified potential suppliers, one must meet the conditions specified in Appendix 4-1 to the Rules. The list of qualified potential suppliers is compiled by the qualification body based on data from relevant information systems. At the second stage, the customer makes public purchases through a tender among potential suppliers included in the list of qualified potential suppliers.

It should be noted that the Order of the RoK Ministry of Finance dated 31 May 2019 approved a list of GWS the purchases of which are carried out by a tender with a preliminary qualification selection. This list includes the following GWS:

1. CAO (effective from 1 September 2019);
2. furniture products (effective from 1 July 2019);
3. light industry products (effective from 1 July 2019);
4. goods belonging to the categories (according to the classifier of informatization facilities) of software and electronic industry products included in the register of trusted software and electronic industry products (effective from 1 January 2020);
5. services for the creation and development of informatization facilities of the “Electronic Government” (effective from 1 January 2020).

At that, the conditions for inclusion in the list of qualified potential suppliers have also been defined. The table below presents the nomenclature of GWS and conditions for their inclusion into the list of qualified potential suppliers.

No.	Description of goods, work, services	Condition
1	CAO	Financially stable status
2	Furniture products	Availability of the Industry certificate issued by Atameken – RoK National Chamber of Entrepreneurs (NCE Atameken) to the manufacturer of furniture industry goods
3	Light industry goods	Availability of the Industry certificate issued by NCE Atameken to the manufacturer of light industry goods
4	Goods belonging to the categories (according to the classifier of informatization facilities) of software and electronic industry products included in the register of trusted software and electronic industry products	The goods of the potential supplier are included in the register of trusted software and electronic industry products formed by the authorized body in the sphere of information security
5	Services for the creation and development of informatization facilities	Availability of the corresponding Industry certificate issued by NCE Atameken

It should be noted that potential suppliers are automatically excluded from the list of qualified potential suppliers in the following cases:

1) the potential supplier was included in the list of bad-faith participants of state procurement;

2) availability of restrictions associated with participating in the state procurement, as provided for by sub-paragraphs 3), 4), 5), 6), 7), 8), 9) and 10) of paragraph 1 of Article 6 of the Law on purchases[4].

The procedure for submitting participation applications by potential suppliers has also been amended. Now, the application is considered as submitted if the potential supplier has collateralized the application for participation in the tender.

Some changes were made in the procedure for determining the dumping price of the tender participation application. If earlier, when a potential supplier submitted a bid for participating in GWS procurement, the dumping price was considered as the amount lower than half the price allocated for procurement, now the dumping price is recognized as the amount lower by 20% and more. Thus, avoiding the dumping price will allow customers to select those potential suppliers who, in their opinion, are able to fulfill contractual obligations with proper quality, within the financial capabilities of the customer.

Further we present requirements to work experience in the market of GWS to be purchased. So, the customer has the right to specify a qualification requirement regarding work experience for a period of 1 year to 5 years, depending on the amount allocated for public procurement through a tender or auction. In terms of work experience, the following requirements are established:

Period	Amount in MRI	Amount, KZT
1 year	Over twenty five thousand times the MRI	63,125,000
2 years	Over fifty thousand times the MRI	126,250,000
3 years	Over one hundred thousand times the MRI	252,500,000
4 years	Over one hundred and fifty thousand times the MRI	378,750,000
5 years	Over two hundred thousand times the MRI	505,000,000

In the meantime, new qualification data forms have been introduced.  At that, when purchasing works in the field of construction (CAO and engineering work) and not related to construction, potential suppliers present qualification information filled out using various forms.

Thus, the potential suppliers were given updated forms of information about  the potential supplier’s qualification for GWS purchases, according  to appendices 5, 5-1, 6 и 7 to the Rules.

In turn, the new forms of standard contracts have been introduced, which are also different for GWS purchases. At the same time, standard contracts for procurement of works both related and unrelated to construction also differ from each other. The forms of standard contracts can be found in Appendices 19, 20, 20-1, 20-2, 20-3, 21 to the Rules.

The provisions of the Law on State Procurement as well as the Rules for carrying out state purchases referred to in the article can be found on the official Internet resource of “Adilet” legal information system of regulatory legal acts of the Republic of Kazakhstan.

[1] The monthly reference index established by the Law of the Republic of Kazakhstan “On the Republican Budget” for the next financial year (one MRI in 2019 comprises KZT 2,525).

[2] Construction and assembly operations.

[3] Goods, work and services.

[4] RoK Law “On State Procurement” #434-V ZRK dated 4 December 2015.