Pre-trial procedure for challenging orders for inclusion in the RNU (register of unscrupulous participants in public procurement)

The objectives of administrative procedures are: the full realization of public rights, freedoms and interests of individuals and legal entities; achieving a balance of private and public interests in public relations; strengthening the rule of law in the public sphere.

If the law establishes a pre-trial dispute settlement procedure, an appeal to the court may be filed after observing this procedure (part 3 of Article 9 of the CPC).

               In accordance with paragraphs 1 and 5 of Article 91 of the CPC, a participant in an administrative procedure has the right to appeal an administrative act, an administrative action (inaction) not related to the adoption of an administrative act, in an administrative (pre-trial) manner.

               Unless otherwise provided by law, an appeal to the court is allowed after a pre-trial appeal.

               According to paragraph 6 of Article 12 of the GZ Law, if a potential supplier does not agree with the decision of the authorized body to recognize him as an unscrupulous participant in the GZ provided for in the second part of paragraph 5 of this article, then such a potential supplier has the right to apply to the conciliation commission no later than ten working days from the day when he became aware of the inclusion in the GZ commission in accordance with the procedure determined by the authorized body.

               The Conciliation Commission considers the application of a potential supplier who has evaded the conclusion of a GZ agreement and decides whether to exclude or refuse to exclude such a potential supplier from the RNU.

               If a decision is made to exclude a potential supplier from the RNU, the customer applies to the authorized body.

The authorized body makes a decision on the exclusion of a potential supplier from the RNU, taking into account the decision of the conciliation commission.

To date, the powers of the conciliation commission include reviewing appeals from potential suppliers and clarifying the circumstances and the validity of the reasons that served as the basis for issuing the order, which may further eliminate the need to file claims with the court.

By virtue of the requirements of part 5 of Article 91 of the CPC, unless otherwise provided by law, an appeal to the court is allowed after a pre-trial appeal.

By Order of the Minister of Finance of the Republic of Kazakhstan No. 176 dated February 17, 2022, the Model Regulation of the Conciliation Commission was approved.

               The deadline for applying to the conciliation commission is set at 60 calendar days from the date of recognition as an unscrupulous participant in the GZ.

               At the same time, there are cases when potential suppliers miss the deadline for applying to the conciliation commission and go to court, citing the loss of the possibility of a pre-trial settlement of the dispute.

               Missing the deadline for applying to the conciliation commission gives a potential supplier reason to believe that it is possible to go to court without necessarily settling the dispute in a pre-trial manner.

               The creation of such a practice may lead to potential suppliers abusing their right to judicial protection, as well as an increase in lawsuits, the Supreme Court of the Republic of Kazakhstan believes.

               Part 2 of Article 92 of the CPC provides for the right of a participant in an administrative procedure to file a petition with the body reviewing the complaint to restore the missed deadline for filing a complaint.

               In this case, the Supreme Court of the Republic of Kazakhstan proposes to amend the legislation on GZ, providing for the right of conciliation commissions to restore the deadline for a potential supplier to make substantive decisions. Thus, it is not the right, but the obligation of a potential supplier or supplier to apply to the conciliation commission that will strengthen the institution of pre-trial dispute resolution and eliminate costs, including timely disbursement of budgetary funds.

               In accordance with subparagraph 2) According to paragraph 4 of Article 12 of the Law, the register of unscrupulous participants in public procurement is a list of potential suppliers identified by the winners who evaded the conclusion of a public procurement contract.

               Paragraph 5 of the same article stipulates that the register of unscrupulous participants in public procurement provided for in subparagraph 2) The list of potential suppliers identified by the winners (potential suppliers who took second place) who evaded the conclusion of a public procurement contract is formed on the basis of a decision of the authorized body on recognizing potential suppliers as unfair participants in public procurement.

               According to part 3 of Article 43 of the Law, the draft public procurement contract must be certified by the winner of public procurement by means of a tender, auction, request for price proposals through an electronic digital signature within three working days from the date of receipt on the public procurement web portal of the notification with the attachment of the draft public procurement contract.

Paragraph 1 of Article 44 of the Law stipulates that if a potential supplier, recognized as the winner, has not submitted a signed public procurement contract to the customer within the time limits established by this Law or, having concluded a public procurement contract, has not provided security for the execution of the public procurement contract and (or) the amount in accordance with article 26 of this Law. (if any), such a potential supplier is deemed to have evaded the conclusion of a public procurement contract.

According to paragraph 22 of the "Rules for the formation and maintenance of registers in the field of public procurement", approved by Order of the Minister of Finance of the Republic of Kazakhstan dated December 28, 2015 No. 694, if a potential supplier recognized as the winner or runner-up, within the time limits established by Law, has not signed a public procurement contract through the web portal, such a potential The supplier is approved by the decision of the authorized body through the web portal in accordance with Appendix No. 5 to these Rules., It is automatically included in the register of unscrupulous participants in public procurement.

Thus, a potential supplier may be recognized as an unscrupulous participant in public procurement.:

1) if the GZ contract is not signed within three working days from the date of receipt of the notification on the web portal of public procurement with the attachment of the draft contract;

2) if, having concluded the GZ agreement, the potential supplier has not provided security for the execution of the agreement.

The order of the authorized body is an onerous administrative act.

The NPS clarifies that when considering administrative claims to appeal decisions of the authorized body on the registration of a potential supplier (supplier) in the RNU, in connection with evasion from concluding a public procurement contract, the courts should proceed from the requirements of paragraph 3 of Article 43 of the Law, which establishes the obligation of the winner of the procurement contract to sign the contract.

If the contract is not signed, the potential supplier must prove that he took all necessary measures to sign it, but due to objective circumstances beyond his control, he was unable to sign it.

It should be noted that according to Chapter 2 of the CPC, one of the principles of administrative procedures and administrative proceedings is the proportionality of an administrative act, administrative action (inaction).

In accordance with article 10 of the CPC, when exercising administrative discretion, the administrative body and the official ensure a fair balance of interests between the participant in the administrative procedure and the company. At the same time, an administrative act or an administrative action (inaction) must be proportionate, that is, appropriate, necessary and proportionate.

The provisions of paragraph 5 of Article 12 of the Law do not establish that the decision of the authorized body to recognize a potential supplier as having evaded the conclusion of a public procurement contract is made automatically.

The arguments about the automatic formation of the contested orders do not comply with the principles of administrative justice, such as fairness and proportionality.

The authorized body is obliged, while maintaining objectivity and impartiality, to provide a potential supplier with equal opportunities and conditions for the exercise of his rights to a comprehensive and complete investigation of the circumstances of the administrative case (Part 1 of Article 8 of the CPC).

The courts should take into account the degree of the supplier's guilt as the basis of civil liability in accordance with Article 359 of the Civil Code and the negative consequences for the customer, based on the criteria of fairness and reasonableness in accordance with part 5 of Article 6 of the CPC.

Negative consequences should be understood as causing such damage to a party to a contract that it has largely lost what it was entitled to expect when concluding the contract.

It is necessary to find out whether the actions of the potential supplier have caused any negative consequences for the customer of the GZ. Whether all possible measures have been taken by the winner of the competition to properly comply with the requirements of the legislation on the conclusion of the contract (whether all necessary permits and resources are available for the timely and proper execution of the contract, the full amount of contract enforcement has been paid).

Is it due to the inability to sign the contract due to circumstances beyond the control of the potential supplier (being on sick leave due to disability, departure of the head of the legal entity on a business trip, lack of electricity in the office, inability to connect from another access point)?

Whether the contract was not signed unintentionally; due to the fault of the responsible employee. Whether actual and legally significant actions were actually aimed at ensuring proper fulfillment of obligations under the concluded contract; whether actions aimed at evading the conclusion of the contract were committed. Is the potential supplier a domestic manufacturer, a bona fide entrepreneur, provides jobs, as well as for socially vulnerable segments of the population (disabled workers), has extensive work experience, labor and material resources to fulfill the contract, is a bona fide participant in public procurement (contracts executed, whether there are valid contracts).

Paragraph 11 of the NPA clarifies that, upon filing an administrative claim for the cancellation of the order of the authorized body to include a potential supplier in the register of unscrupulous participants in public procurement on the grounds of evading the conclusion of a public procurement contract, the customer, in accordance with subparagraph 1) According to the second part of Article 129 of the CPC, he is obliged to provide evidence of sending them a draft contract and notification of the need to sign a draft public procurement contract. The obligation to send the contract is considered to have been duly fulfilled by the customer or the single organizer if there is evidence that the potential supplier has received a notification on the need to sign a draft public procurement contract on the web portal (the contract approval log received from the web portal) or the reasons for his failure to fulfill the obligation to send a draft contract and (or) notification of the need signing of the draft public procurement contract within the time limit prescribed by law.

Failure by the customer to fulfill the obligation assigned to him to send to a potential supplier a draft GZ agreement and notification of the need to sign a draft public procurement agreement is the basis for satisfying an administrative claim to cancel the order of the authorized body to include the potential supplier in the RNU on the grounds of evading the conclusion of the contract.

Inconsistencies in the description of the characteristics of the purchased goods (works, services) indicated in the information posted on the public procurement web portal in accordance with paragraph 1 of Article 38 of the Law, with the actual terms of the draft contract submitted by the customer for conclusion (according to part 4 of paragraph 11 of the Regulatory Decree, this circumstance exempts the potential supplier from concluding the contract and excludes the inclusion of a potential supplier to the RNU on the grounds of evading the conclusion of a public procurement contract).

Recognition of a potential supplier as an unscrupulous participant in public procurement (if he was not previously on the register, this indicates the fair exercise of civil rights in accordance with Article 8 of the Civil Code).

However, it is necessary to take into account the onset of negative consequences for the customer, such as the late disbursement of significant amounts allocated from the budget for public procurement work, the importance of their timely completion in a certain time season planned by the customer; take into account that purchases are carried out to equip (provide) strategically important facilities.

According to article 26 of the Law, the dumping price is the price offered by a potential supplier, which is below the threshold value determined by the rules of public procurement.

REGULATORY LEGAL FRAMEWORK

- The Constitution of the Republic of Kazakhstan;

- The Civil Code of the Republic of Kazakhstan (CC);

- The Civil Procedure Code of the Republic of Kazakhstan (CC)

- Administrative Procedural Procedure Code of the Republic of Kazakhstan (APPK);

- Budget Code of the Republic of Kazakhstan;

- The Tax Code of the Republic of Kazakhstan; - The Law of the Republic of Kazakhstan "On Public Procurement" (the Law on Public Procurement);

- The Law of the Republic of Kazakhstan "On State Audit and Financial Control" (the Law on GAiFK);

- The Law of the Republic of Kazakhstan "On Legal Acts";

- The Law of the Republic of Kazakhstan "On the National Welfare Fund";

- The Law of the Republic of Kazakhstan "On Procurement of certain entities of the quasi-public sector";

- Rules for public procurement, approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated December 11, 2015 No. 648 (Rules No. 648);

- Rules for the formation and maintenance of registers in the field of public procurement, approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated December 28, 2015 No. 694 (Rules No. 694);

- The rules for conducting desk control, approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated November 30, 2015 No. 598 (Rules No. 598);

- Rules for conducting internal State audit and Financial control, approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated March 19, 2018 No. 392 (Rules No. 392);

- A special public procurement procedure approved by Resolution of the Government of the Republic of Kazakhstan dated March 20, 2020 No. 127 (valid until December 31, 2020)

- Rules for public procurement using a special procedure, approved by Resolution of the Government of Kazakhstan dated December 31, 2015 No. 1200 (Rules No. 1200);

- Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated April 21, 2022 No. 4 "On the application of Legislation on public Procurement by Courts" (NPWS No. 4);

- The Fund's Procurement Management Standard, approved by the decision of the Board of Directors of the Fund No. 31/19 dated September 3, 2019;

- other regulatory legal acts of the Republic of Kazakhstan.

GZ - public procurement;

RNU – register of unscrupulous participants in public procurement;

SMAS – specialized interdistrict Administrative Court;

SKAD – judicial board for administrative cases of the regional court;

SCAD of the Supreme Court of the Republic of Kazakhstan – Judicial Board for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;

SMEC – specialized interdistrict Economic Court;

Ministry of Finance - Ministry of Finance of the Republic of Kazakhstan;

Treasury – Treasury Committee of the Ministry of Finance of the Republic of Kazakhstan;

KVGA – Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan;

DVGA – Department of Internal State Audit of the Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan;

GAiFK – State audit and Financial control;

President    

Republic of Kazakhstan     

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