Public procurement system in the Kyrgyz Republic

17/11/2020
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Nurida Baizakova

Nurida Baizakova, Director of the Public Procurement Department under the Ministry of Finance of the Kyrgyz Republic

Public procurement is the purchase of goods, performance of work and the provision of various kinds of services for the needs of the state, carried out at public funds. As a rule, public procurement affects all spheres of public life (from the purchase of office supplies, furniture, construction of buildings, structures, to the purchase of medical equipment, vehicles, medicines and food).

The annual volume of successfully conducted public procurement is more than 63.0 billion soms. For example, in 2019, 77,477 tenders were successfully held for the amount of 63.2 billion soms, of which goods for 33.8 billion soms, works for 18.1 billion soms, services for 11.3 billion soms. For comparison, in 2018, 87,159 tenders were successfully held for a total of 69.9 billion soms, of which goods for 43.5 billion soms, jobs for 16.9 billion soms, services for 9.5 billion soms.

Currently, public procurement is carried out in accordance with the Law of the Kyrgyz Republic "On Public Procurement" dated April 3, 2015 No. 72 (hereinafter referred to as the Law) and a number of by-laws. The public procurement system of the Kyrgyz Republic is based on the principles of publicity, openness, legality and impartiality in relation to suppliers (contractors). The legislation in the field of public procurement regulates the procedure for conducting procurement in the Kyrgyz Republic, clearly delineates the powers and functions of stakeholders, and provides for an appeal mechanism during procurement procedures.

The law provides for public procurement methods such as one-stage, two-stage, simplified, lowering prices and the method of direct contracting. Also, the Law provides for a two-package method of a one-stage method. In addition, the Law provides for a tender to conclude a framework agreement; conducting prequalification procedures, as well as conducting centralized procurement. For the procurement of consulting services, the law provides for five selection methods: selection based on qualifications and cost; selection by qualification; selection under a fixed budget; selection at the lowest price; selection by direct conclusion of a contract.

According to the current legislation in the field of public procurement, purchasing organizations (hereinafter referred to as customers) are all budgetary organizations, state and municipal enterprises and joint stock companies with a state share of 50 percent or more. At the same time, suppliers (contractors) can be individual entrepreneurs, representatives of small and medium-sized businesses, representatives of large enterprises and companies, LLCs, JSCs, enterprises of any form of ownership, both domestic and foreign, with the necessary experience, timely paying taxes and social contributions , and meeting other criteria provided by the customer.

Thus, you cannot spend the funds provided for procurement at your own discretion. It is also impossible to choose "their" supplier, since customers must hold a tender, objectively and impartially evaluate all received offers from suppliers, and choose the offer that is most suitable for price, price and quality, depending on the chosen procurement method.

Since 2015, all public procurement is carried out electronically on the public procurement portal http://zakupki.gov.kg (hereinafter referred to as the portal). To date, the portal is the only source of information on ongoing public procurement, as well as a tool that allows you to implement the entire cycle of procurement procedures for both the procuring entity and suppliers (contractors). Procurement information is published on the portal and must contain all requirements and criteria for suppliers. After the announcement is published, everyone who is willing and able to participate form their applications (so-called competitive applications) and submit in electronic form on the portal. Since the introduction of the portal (June 2, 2014) to date, 27,590 suppliers (contractors) and 4,072 procuring entities have been registered on the public procurement web portal.

The main advantages of the electronic public procurement system are:

  • Unified procedure for the formation and placement of state orders;
  • Easy access to information;
  • Creation of equal conditions of competition among suppliers;
  • Reducing budgetary expenditures for the purchase of goods, works and services for state needs through increased competition;
  • Reducing the cost of conducting public procurement procedures, since procurement announcements are published free of charge;
  • Detailed statistics of the purchased goods, works and services (through the General Classifier of Public Procurements - OKGZ);
  • Significant reduction of paper workflow;
  • Increasing the transparency of public procurement procedures.

The portal provides the following functionality:

  1. Simplified registration of participants in the process;
  2. Open participation in competitions;
  3. Access to tender documents;
  4. Transparency of decision-making during procurement procedures;
  5. Online filing of complaints;
  6. Possibility of price monitoring;
  7. Open access to the regulatory framework;
  8. Available information about the winners of the competitions.

The Department of Public Procurement under the Ministry of Finance of the Kyrgyz Republic (hereinafter referred to as the Department) is taking measures to improve the public procurement system on an ongoing basis.

Based on the analysis and monitoring of ongoing public procurement, incoming complaints and appeals, in order to support domestic producers, simplify public procurement procedures, reduce corruption risks, measures are being taken to improve legislation in the field of public procurement. Also, work is underway to improve the functionality of the portal, bring it in line with the requirements of legislation and integrate with other information systems. Today, the portal is integrated:

  • with the system of the Central Treasury "IS Treasury Budget" for the purpose of reflecting the cost estimate, the amount of concluded contracts and accounting for the savings in the procurement of budgetary organizations;
  • with the database of the State Tax Service for automatic receipt of information on tax arrears and arrears of social benefits (2019);

In the medium term, it is planned to implement the following measures:

  • Implementation of an electronic signature (ES) to improve the security of personal accounts, harmonize and develop software for the mutual recognition of ES in the EAEU member states, as well as for holding tenders on the web portal of public procurement and signing documents using ES. A full transition to ES with authorization and identification of users of the public procurement web portal is planned to be carried out from January 1, 2021, after the acquisition of ES by all users of the public procurement web portal. From October to December 2020, time is provided for the purchase of electronic signature by users of the public procurement web portal.
  • Implementation of the module "consulting services" on the portal. At the moment, the module has been developed and preparatory work is being carried out in the test environment of the electronic public procurement system, after which pilot tenders for consulting services will be held. The work is scheduled to be completed by the end of 2020.
  • Ensuring transparency of the post-tender phase. Relevant changes are provided for in the draft law “On Amendments to the Law of the Kyrgyz Republic“ On Public Procurement ”. After the approval of the necessary amendments to the Law, it is necessary to improve the functionality of the portal by reflecting the post-tender phase (subject and purchase price, delivery schedule, payment terms) to ensure transparency of the processes occurring after the conclusion of the procurement contract.
  • Integration of the public procurement portal with the information systems of other government bodies for the effective exchange of the necessary data.
  • Introduce a mechanism for paid complaints of suppliers (contractors) to reduce the filing of unfounded complaints and stimulate the activities of the Independent Interdepartmental Complaints Commission (hereinafter referred to as the Commission). It should be noted that at present, the members of the Commission work on a voluntary basis (on a free basis). To ensure the sustainability of the established grievance mechanism, it is necessary to introduce a grievance fee. Corresponding changes have already been made to the Law and preparatory work is underway to include complaints handling services in the list of paid public services.
  • Creation of a database of suppliers (contractors), providing for the presence of a profile of participants in public procurement to prevent cases of fraud, supply of goods of inadequate quality and unfair fulfillment of contractual obligations. In turn, this will allow obtaining reliable and up-to-date information about suppliers (contractors), since it is planned to integrate the created Database of suppliers (contractors) with existing state information resources. This measure is underway as part of USAID's technical assistance provided at the request of the Department.
  • Creation of a tool for public monitoring through the development and implementation of appropriate software products.