The notification must indicate the violations identified by the results of the in-house audit
According to Article 79 of the APC, an administrative act must be lawful and justified. It must be clear for understanding, ensure uniform application, and exhaustively determine the circle of persons to whom it applies.
In accordance with Part 3 of Article 129 of the APC, the defendant may refer only to those justifications that are mentioned in the administrative act.
In accordance with Appendix 2 of the Rules for Conducting In-House Audits, approved by Order No. 598 of the Minister of Finance of the Republic of Kazakhstan dated November 30, 2015 (hereinafter referred to as Rules 598), the notification shall indicate the violations identified as a result of the in-house audit.
The notification shall be sent with the attachment of the identified violations, where each fact of violation shall be recorded in a separate paragraph and numbered in a continuous order with an indication of the risk profile, a description of the nature of the violation with reference to the articles, paragraphs and subparagraphs of regulatory legal acts, the provisions of which have been violated.
In the description of the violation, reference is made to the details and names of the documents confirming the violations.
The court, within the framework of the administrative case considered on the claims of SA LLP and the Department of Assets and Public Procurement of the city of Astana to challenge the notification, established the following: the Organizer - Department conducted public procurement by means of an electronic tender "Expansion of the Intelligent Transport System of the city of Astana. (3rd stage of construction – Creation of a citywide adaptive traffic management system equipped with an ITS system). The customer is the Department of Transport and Road Infrastructure Development of the city of Astana.
On June 16, 2021, the results of the competition were summed up and SA LLP was determined as the winner of the lot. On June 23, 2021, a potential supplier of TI LLP filed a complaint with the Far Eastern State Administration in view of disagreement with the decision of the tender commission regarding the calculation of the work experience of a potential supplier of SA LLP.
As a result of the in-house control, a notification was sent to the organizer to eliminate the identified violations.
The organizer and customer of the tender filed an objection to the notification dated July 13, 2021 to the Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan (hereinafter referred to as the KVGA).
By the conclusion of the CAC dated August 13, 2021, taking into account the recommendation of the appeal commission, it was decided to dismiss the objection.
The plaintiffs argued that during the in-house audit, the information of potential suppliers was not sufficiently studied, as a result of which the criteria for work experience were erroneously formed.
The SIAC satisfied the claim by its decision, based on the fact that the DVGA violated the requirements for drawing up an administrative act - for notification.
SCUD left the decision unchanged. The conclusion of the local courts: in fact, the notification contains only a list of a number of provisions of the law and relevant rules and conclusions about violations, without their appropriate assessment and legal analysis, there are no criteria on which the Department proceeded when rejecting work experience, despite the fact that the burden of proof in the case under consideration lies directly with the defendant.
The Department tried to fill in the justifications and arguments already during the court session, which is inadmissible, the court cannot take them into account, since they are not mentioned in the administrative act.
The defendant does not describe the violations identified for each listed work experience with reference to the norms of the law, as well as the illegal application of the calculation of work experience by the tender commission, there is no justification for the claim.
Thus, the administrative act is not justified and clear for understanding, as required by Article 79 of the APC.
In support of the accepted notification, the defendant only in the SIAC in the response gave arguments for the non-acceptance of the plaintiff's work experience. Thus, the representative of the defendant explained that in the submitted documentation there are differences in the names of the objects in the acts of acceptance of objects for operation and in the act of work performed, in the information on qualifications, in the years of completion of work, and there are also partially no acts of acceptance for operation.
These violations by the defendant were not recorded in the notice. The disputed notification does not indicate the details and names of the documents confirming the violations.
According to Part 2 of Article 84 of the APC, an illegal administrative act may be canceled in whole or in part due to its non-compliance with the requirements of the APC, and the notification of the defendant cannot be lawful and reasonable, and, accordingly, it is subject to cancellation.
In court proceedings, in accordance with Part 3 of Article 129 of the APC, the defendant may not refer to new arguments and justifications that were not previously given in the administrative act – notification.
If the court establishes the fact of non-compliance of the administrative act – notification with the requirements of the Law on Civil Aviation and Physical Culture in terms of form and content, such an administrative act cannot be recognized as lawful and justified by virtue of Article 79 of the APC.
In this regard, the courts do not need to enter into a discussion of the correctness of the method of conducting public procurement in general, due to the incompleteness and non-compliance of the disputed notifications with the requirements of the law.
Pre-trial dispute resolution procedure
In accordance with paragraphs 6, 7 of Article 47 of the Law on Civil Defense, based on the results of consideration of a complaint received within the time limits established by paragraph 2 of this Article, the authorized body shall make a decision in accordance with subparagraph 6) of Article 16 of this Law or on refusal to satisfy the complaint.
In case of disagreement with the decision of the authorized body taken in accordance with paragraph 6 of this Article, the potential supplier shall have the right to appeal it to the appeal commission in the manner provided for by the legislation of the Republic of Kazakhstan on state audit and financial control.
It follows from the meaning of this provision of the Law that in case of disagreement of a potential supplier with the decision of the authorized body, when appealing against actions (inaction), decisions of the customer, public procurement organizer within five working days from the date of posting the protocol on the results of public procurement by means of a tender (auction), appealing against its decision to a higher body is the right of a potential supplier.
However, paragraph 9 of the Law regulates that the pre-trial dispute resolution procedure provided for by this article is mandatory.
According to paragraph 2 of Article 58-6 of the Law "On State Audit and Financial Control", appellate settlement of disputes in cases provided for by this Law is mandatory.
By virtue of Clause 33 of the Rules for In-House Audit, in case of disagreement with the decision of the department of the authorized body and (or) with the notification of the territorial subdivision sent in accordance with subparagraphs 2 and 3) of part two of Clause 26 of these Rules, the potential supplier who has submitted an application for participation in the relevant tender (auction) and (or) the object of state audit shall file a complaint with the Appeal Commission through publicly available information systems, including through the web portal in the form in accordance with Appendix 7 to these Rules, or apply to the court.
JURISDICTION OF ADMINISTRATIVE CASES
In accordance with Part 2 of Article 102 of the APC, the courts have jurisdiction over disputes arising from public law relations provided for by this Code in administrative proceedings.
Clause 2 of the NPVS No4 clarifies that the challenges to the results of the CD, the decisions of the authorized body on the inclusion of a potential supplier in the RPD, as well as the decisions, conclusions, instructions, notifications of the authorized body based on the results of the inspection of the PP are carried out in accordance with the procedure provided for by Part 3 of Article 106 of the CAPP, at the place of residence (location) of the claimant.
If the plaintiff, along with the claim to recognize the results of the tender as illegal, demands on this basis to recognize the concluded contract on civil defense as invalid, then such claims are subject to joint consideration in the SIAC taking into account the requirements of Part 3 of Article 84, Part 3 of Article 155, Part 2 of Article 156 of the APC.
NPVS No4 also provides that in this case, in the part of the claim for invalidation of the contract, the plaintiff is not required to comply with the procedure for pre-trial settlement of the dispute provided for by the contract.
Claims of a potential supplier against actions (inaction), decisions of the customer, organizer, single organizer of civil defense, commissions, expert, single operator in the field of civil defense, as well as actions (inaction), decisions of the authorized body and bodies of the State Aviation and Physical Culture are subject to consideration by the SMAS.
Claims of CD organizers, customers related to the application of subparagraphs 1) and 3) of part one of paragraph 4 of Article 12 of the Law on CD, as well as claims arising from the performance of CD contracts, are subject to consideration by the SIEC.
Claims to challenge the decision of the authorized body to recognize a potential supplier as an unscrupulous CD participant, recognized as such in accordance with subparagraph 2) of part one of paragraph 4 of Article 12 of the Law on CD, are subject to consideration by the SMAS.
PROCEDURAL TIME LIMITS IN COURTS
In accordance with Parts 1 and 2 of Article 9 of the CAPP, everyone has the right, in accordance with the procedure established by this Code, to apply to an administrative body, an official or a court for the protection of violated or disputed rights, freedoms or legitimate interests.
Waiver of the right to appeal to an administrative body, an official or a court is invalid. Participants of the CD have the right to apply to the court within the time limits established by the APPC.
Potential suppliers challenge the decisions of the authorized bodies, decisions, actions (inaction) of the customer, organizers of the tender in the field of public procurement in accordance with Article 132 of the CAPP.
At the same time, Article 136 of the APC establishes preclusive terms for filing a claim with the court.
Claims for contestation, for coercion are filed with the court within a month from the date of delivery of the decision of the body considering the complaint based on the results of the consideration of the complaint.
In the event that the law does not provide for a pre-trial procedure or there is no body considering the complaint, the claim shall be filed within one month from the date of delivery of the administrative act or from the date of notification in the manner established by this Code and the legislation of the Republic of Kazakhstan.
A missed deadline for filing a claim for a valid reason may be restored by the court in accordance with the rules of the Civil Procedure Code.
The reasons for missing the deadlines for filing a claim with the court and their importance for the correct resolution of the administrative case are clarified by the court at the preliminary hearing.
Failure to meet the deadline for filing a claim with the court without a valid reason, as well as the impossibility of restoring the missed deadline for filing a claim with the court, are grounds for returning the claim.
The court finds out the reasons for missing the deadline at the preliminary hearing and resolves the issue of restoring the missed deadline.
In case of refusal to restore the missed deadline by the court, the claim is returned.
REGULATORY FRAMEWORK
- Constitution of the Republic of Kazakhstan;
- Civil Code of the Republic of Kazakhstan (CC);
- Civil Procedure Code of the Republic of Kazakhstan (CC)
- Administrative Procedural Code of the Republic of Kazakhstan (APPC); - Budget Code of the Republic of Kazakhstan;
- Tax Code of the Republic of Kazakhstan;
- Law of the Republic of Kazakhstan "On Public Procurement" (Law on Civil Procurement);
- Law of the Republic of Kazakhstan "On State Audit and Financial Control" (Law on State Audit and Financial Control);
- Law of the Republic of Kazakhstan "On Legal Acts";
- Law of the Republic of Kazakhstan "On the National Welfare Fund";
- Law of the Republic of Kazakhstan "On Procurement of Certain Entities of the Quasi-Public Sector";
- Rules for public procurement, approved by Order No. 648 of the Minister of Finance of the Republic of Kazakhstan dated December 11, 2015 (Rules No648);
- Rules for the Formation and Maintenance of Registers in the Field of Public Procurement, approved by Order No. 694 of the Minister of Finance of the Republic of Kazakhstan dated December 28, 2015 (Rules No694);
- Rules for conducting in-house audits, approved by Order No. 598 of the Minister of Finance of the Republic of Kazakhstan dated November 30, 2015 (Rules No598);
- Rules for Internal State Audit and Financial Control, approved by Order No. 392 of the Minister of Finance of the Republic of Kazakhstan dated March 19, 2018 (Rules No. 392);
- Special Procedure for Public Procurement, approved by the Decree of the Government of the Republic of Kazakhstan dated March 20, 2020 No127 (valid until December 31, 2020)
- Rules for public procurement using a special procedure, approved by the Decree of the Government of Kazakhstan dated December 31, 2015 No1200 (Rules No1200);
- Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated April 21, 2022 No4 "On the Application of Public Procurement Legislation by the Courts" (NPVS No4);
- Procurement Management Standard of the Fund, approved by the decision of the Board of Directors of the Fund No31/19 dated September 3, 2019; - other regulatory legal acts of the Republic of Kazakhstan.
REDUCE
admakt – administrative act
CD - public procurement;
RPD – Register of Unscrupulous Participants in Public Procurement;
SIAS – Specialized Inter-District Administrative Court;
SCAD – Judicial Chamber for Administrative Cases of the Regional Court;
SCAD of the Supreme Court of the Republic of Kazakhstan – Judicial Chamber for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;
SIEC – Specialized Inter-District Economic Court;
Ministry of Finance - Ministry of Finance of the Republic of Kazakhstan;
Treasury – the 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;
State Audit and Financial Control;
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