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The provisions have been updated of the Code of Administrative Offences and Criminal Code in the field of procurement

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Pepeliaev Group advises that, on 20 December 2024, the Federation Council approved the Lawhttps://sozd.duma.gov.ru/bill/594965-8 amending the Code of Administrative Offences to the extent of administrative liability for a breach of Russian procurement legislation. At the same time, the corresponding amendmentshttps://sozd.duma.gov.ru/bill/594966-8 have been made to the Criminal Code.

The Law has become necessary owing to the fact that the process of the optimisation of purchasing procedures that has been actively pursued in recent years has resulted in most administrative offences no longer being relevant.

The provisions of the Law take effect on 1 March 2025.

Let us examine the main new developments.

1. Optimisation of the structure of the Russian Code of Administrative Offences

It is proposed that all elements of administrative offences that are connected with public procurement and compulsory bids be set out in a single block of 6 articles. The Code, therefore, is supplemented by articles 7.30.1 - 7.30.6.

The elements of administrative offences are brought into compliance with the amended industry-based legislation. Some of articles are taken out. Larger fines are established for a number of offences. Provision is made for warnings to be issued and for the disqualification of officers for repeat offences.

1.1. Amendments to amounts of fines for breaches of Law No. 44-FZFederal Law No. 44-FZ “On the contractual system in the area of the procurement of goods, work and services to provide for state and municipal needs” dated 5 April 2013. and 223-FZFederal Law No. 223-FZ “On the procurement of goods, work or services by certain types of legal entities” dated 18 July 2011.

More stringent liability is established for certain violations of Laws Nos. 44-FZ and 223-FZ, for instance:


 Violation Before Now
     

Law No. 44-FZ

Incorrect choice of the procurement method RUB 30,000 between RUB 30,000 and RUB 50,000
Failure to comply with the volume of purchases from small and medium-sized enterprises and socially oriented non-commercial organisations  RUB 50,000 between RUB 40,000 and RUB 60,000
Violation of the deadline for entering into a contract RUB 50,000 between RUB 5,000 and RUB 30,000
Violations in the field of amendments to terms of contracts

 RUB 20,000 for a company's officers

RUB 200,000 for legal entities

between RUB 10,000 and RUB 50,000 for a company's officers
between RUB 100,000 and RUB 300,000 for legal entities
Violations during the justification of the maximum starting price of a contract RUB 10,000

1% of the maximum starting price of the contract, but no less than RUB 10,000 and no more than RUB 50,000

Law No. 223-FZ

Establishing unlawful requirements for participants in public procurement between RUB 2,000 and RUB 3,000 for a company's officers
between RUB 5,000 and RUB 10,000 for legal entities 
between RUB 5,000 and RUB 30,000 for a company's officersAt the same time, in these situations, officers may have a warning issued instead of a fine
between RUB 10,000 and RUB 30,000 for legal entities


1.2. Introducing a warning and a disqualification

For the first time, in a number of situations it is permitted to issue warnings to offenders: 

Violation Sanction:
   

Law No. 44-FZ

Violation of the procedure of forming and approving schedules A warning or a fine between RUB 5,000 and RUB 10,000 for a company's officers
Violation of requirements for the content of documents formed during purchases A warning or a fine between RUB 3,000 and RUB 10,000 for a company's officers
Violation of requirements for examining and assessing applications or an unlawful rejection of a request or the removal of a participant in the procurement process  A warning or a fine for officers in the amount of 1% of the maximum starting price of a contract, but no less than RUB 5,000 and no more than RUB 30,000.
Violation of the procedure for terminating a contract in the event of a unilateral refusal to perform the contract A warning or a fine between RUB 10,000 and RUB 50,000 for a company's officers
for legal entities - between RUB 100,000 and RUB 200,000.
   

Law No. 223-FZ

Violation of requirements for the content of documents formed during purchases A warning or a fine of RUB 3,000 to RUB 10,000 for a company's officers
for legal entities - between RUB 10,000 and RUB 30,000
Violation of requirements for the procedure or timeframe for placing information and documents or for sending them to be placed in registers A warning or a fine between RUB 10,000 and RUB 20,000 for a company's officers
for legal entities - between RUB 30,000 and RUB 50,000

For certain types of offences a repeat breach by an officer of a company results in his or her disqualification for a period from 1 to 2 years, for instance:
  • for a repeat acceptance of deliverables at an individual stage of a contract being performance, goods being supplied, work being performed or a service being rendered, if they do not meet the terms and conditions of the contract;
  • for a repeat breach of the deadline or procedure for payment for an individual stage of a contract (its results) being performed, goods being supplied, work (or results of such work) being performed or a service being rendered, including the failure to perform an obligation to ensure an advance payment stipulated by the contract.

1.3. New fines

New fines are established:

 Violation Sanction
   

Law No. 44-FZ

Violation of requirements for documenting acceptance of deliverables at an individual stage of a contract being performed, goods being supplied, work being performed or a service being rendered, or the terms of such acceptance; A fine from RUB 10,000 to RUB 20,000 for company's officers

Law No. 223-FZ

Violation of the volume of purchases from small and medium-sized enterprises and socially oriented non-commercial organisations  A fine from RUB 30,000 to RUB 50,000 for a company's officers
RUB 50,000 - RUB 100,000 for legal entities 
Violation of the procedure or deadlines for entering into a contract  A fine from RUB 5,000 to RUB 30,000 for a company's officers
RUB 30,000 - RUB 50,000 for legal entities

1.4 Introducing penalty sanctions for banks and credit institutions

Since 2022, banks have been full-fledged subjects of control in the field of public procurement, given that they perform legally significant actions aimed at ensuring that legal entities, individuals and individual entrepreneurs participate in the public procurement process. Taking account of the above, the Code of Administrative Offences is supplemented with provisions regarding banks being held liable for a violation of procurement legislation: 

Violation Sanction
Violation of requirements for the procedure or timeframe for placing information and documents or for sending them to be placed in registers Fine between RUB 30,000 and RUB 50,000 
Non-performance by a competent bank of the obligations established by Russian legislation in the event of banking support being provided with regard to a transaction A warning or a fine between RUB 30,000 and RUB 50,000
Performance by a competent bank of transactions on an account opened for the main service provider or service provider for settlements under a state defence order, if such transactions are not allowed on such an account  A fine between RUB 100,000 and RUB 1,000,000.
Violation of the procedure for freezing and unfreezing funds on the bank account of a participant in procurement A warning or fine in the amount of 1% of the funds that are subject to freezing or unfreezing, but not less than RUB 5,000 and not more than RUB 30,000.

1.5. Changing amounts of fines for breaches of compulsory bidding procedures

Orders of administrative offences connected with a breach of the compulsory bidding procedure, or the sale of state or municipal property, will also be changed and set out in article 7.30.5 of the Code of Administrative Offences.

Violation Sanction
Violation of requirements for the procedure and/or deadline for placing information about bids being conducted A fine between RUB 30,000 and RUB 40,000 for a company's officers

between RUB 40,000 and RUB 50,000 for individual entrepreneurs

between RUB 50,000 and RUB 100,000 for legal entities
Violation of the procedure for determining the form of conducting compulsory trades A fine between RUB 30,000 and RUB 40,000 for a company's officers

between RUB 40,000 and RUB 50,000 for individual entrepreneurs

between RUB 50,000 and RUB 100,000 for legal entities
Violation of the procedure for providing documentation regarding compulsory bidding, clarifying such documentation, accepting applications to participate in compulsory bidding or determining the winner A fine between RUB 20,000 and RUB 30,000 for a company's officers

between RUB 30,000 and RUB 40,000 for individual entrepreneurs

between RUB 40,000 and RUB 50,000 for legal entities
Violation of the deadlines for entering into agreements A fine between RUB 30,000 and RUB 40,000 for a company's officers
between RUB 30,000 and RUB 50,000 for legal entities
Amending by agreement of the parties or unilaterally the terms and conditions of a contract when it is concluded or performed, if such an amendment is prohibited under a federal law A fine between RUB 2,000 and RUB 3,000 for individuals

between RUB 20,000 and RUB 30,000 for a company's officers

between RUB 50,000 and RUB 300,000 for legal entities

Pepeliaev Group’s comment

We believe that these new developments are quite logical and are aimed at bringing the provisions of the Code of Administrative Offences in line with the current provisions of Russian legislation and at enforcing control over compliance with procurement legislation.

What to think about and what to do

We recommend reading the text of the Law and taking account of its provisions when carrying out professional activities.

Help from your adviser

Pepeliaev Group’s lawyers have significant experience of providing legal support to clients in the field of antitrust regulation. This includes arranging and conducting state and municipal procurement for Russian and foreign companies.
We will be happy to provide any legal support to clients in their dealings with the antimonopoly service.

Moreover, our lawyers continually monitor changes in antitrust legislation and are ready to offer prompt advice on any legal aspects that arise in connection with the new provisions being adopted.

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