On 8 march new measures came into effect aimed at supporting suppliers under state and municipal contracts when sanctions are in force
Pepeliaev Group advises that a number of amendments have been introduced in legislation which are aimed at optimising procedures for the procurement of goods, work and services to provide for municipal and state needs, as well as state control procedures.
The Russian President has signed Federal Law No. 46-FZ “On amending certain items of legislation of the Russian Federation” dated 8 March 2022 (the “Law”), which was developed for the purposes of protecting Russian national interests in connection with hostile actions of foreign states and international organisations.
The Law was prepared in view of the need to implement a set of social and economic measures for Russian individuals and companies. For the same purpose, the Law contains a number of provisions aimed, among other things, at expanding the Russian Government's powers.
The Law came into force on 8 March 2022, on the day when it was signed.
Let us consider the new developments adopted.
1. A moratorium on audits of small businesses
We would like to remind you that according to article 25.1(1) of Federal Law No. 135-FZ “On protecting competition” dated 26 July 2006, for the purposes of performing supervision over how antimonopoly legislation is complied with, the antimonopoly authority has a right to conduct scheduled and unscheduled audits, including audits of the activities of individual entrepreneurs and small and medium-sized businesses.
The adopted Law introduces a moratorium until the end of 2022 on scheduled audits of individual entrepreneurs and small and medium-sized businesses[1].
Since the provisions of Law No. 294-FZ stipulating the procedures for organising and conducting audits apply, among other things, to activities connected with control over compliance with antimonopoly legislation, the moratorium also applies to scheduled audits conducted by the antimonopoly authority.
The only exceptions to these provisions are cases when risks exist for people’s life and health (for example, in the spheres of the use of nuclear energy, radiation safety, protection of state secrets and so on).
At the same time, IT companies having state accreditation will not be subject to scheduled audits until 31 December 2024.
2. Changing material terms and conditions under existing state procurement contracts
The law provides for a possibility to change, by agreement of the parties, material terms and conditions (the subject matter, price, timeframe, payment procedure and so on) of contracts in the sphere of state and municipal procurement if any circumstances independent of the parties have arisen during the performance of such contract which entail it not being possible to perform the contract.
We would like to remind you that these changes supplement the existing provisions in article 112(65) of Federal Law No. 44-FZ “On the contractual system in the area of the procurement of goods, work and services for state and municipal needs” dated 4 April 2013 (“Law No. 44-FZ”) about it being possible to change material terms and conditions of state contracts by agreement of the parties if any circumstances independent of the parties have arisen during the performance of such contracts which entail it not being possible to perform the contracts.
3. Other powers of the Russian Government with respect to the procurement of goods for state and municipal needs
The Law also provides that the Government may establish cases when it is possible to write off, together with a procedure for doing so, the amounts of penalties (fines and default interest) assessed for a supplier (a contractor or service provider) in connection with the failure to discharge or properly discharge contractual obligations which have not been written off by the customer.
In addition, the Government now may establish additional cases when goods, work and services are purchased from a sole supplier (a contractor or service provider), as well as the procedure for such purchases to be carried out during the period until 31 December 2022 inclusive (a similar right is granted to the supreme state executive bodies of the Russian Federation).
4. Changes with respect to the procurement of medicines and medical devices for state and municipal needs
4.1. Changes to Law No. 44-FZ
According to the Law, article 93 of Law No. 44-FZ is supplemented by the provisions detailing the procedure for the procurement of medicines and medical devices to be carried out from a sole supplier.
Thus, customers are granted the right to purchase from a sole supplier medicines, medical devices and consumables produced by the sole producer in Russia or in foreign states which have not imposed restrictive economic measures on Russia. However, the annual volume of such purchases must not exceed RUB 50 million with respect to medicines and consumables, and RUB 250 million with respect to medical devices.
In addition, medicines and medical devices which do not have a Russian equivalent may be purchased from a sole supplier provided that the sole producer is not from a country which has imposed sanctions.
The Law also allows the Social Insurance Fund to purchase technical tools for rehabilitation and services by purchasing them from the sole supplier (the specified products or services should be produced (provided) in Russia or in foreign states which have not introduced restrictive economic measures against Russia).
The new grounds for purchasing from a sole supplier will be in force within 2 years from the date when the Law is officially published.
In addition, the Law provides that the maximum amount of the purchase of medicines from a sole supplier for such medicine to be prescribed for one patient in accordance with a decision of a medical board is to be increased from RUB 1 million to RUB 1.5 million.
The procurement procedures for medical devices have been simplified
The Russian Government is still taking additional measures to increase the stability of the market of goods of social significance which is affected by the consequences of external sanctions.
Thus, in accordance with Resolution No. 297 of the Russian Government dated 6 March 2022 “On establishing the amount of the starting (maximum) contract price and the annual purchase volume for individual nomenclatures of medical devices to be purchased through quotations being requested electronically” the procurement procedures for medical devices have been simplified.
The above applies to the procurement of medical equipment, relevant consumables and technical tools for the rehabilitation of disabled people. From 8 March 2022 medical institutions will be able to purchase more such devices in accordance with a simplified scheme, i.e. by requesting quotations electronically, which will allow the purchase timeframes to be significantly reduced.
The starting contract price which allows the simplified system to be used increases from RUB 3 million to RUB 50 million. The annual purchase volume of medical devices to be purchased in accordance with the simplified scheme is also increased from RUB 100 million to RUB 750 million.
Customers will be allowed to use the simplified system until 1 August 2022.
Customers to which the sanctions apply are allowed not to publish information about state procurement in the unified informational system
The Russian Ministry of Finance has developed a document whereby the information about procurement in accordance with Federal Law No. 223-FZ dated 18 July 2011 “On the procurement of goods, work and services by certain types of legal entities” by customers subject to foreign sanctions will not be placed in the unified informational system in the area of procurement (the “UIS”).
According to adopted Resolution No.301 of the Russian Government dated 6 March 2022 “On the grounds for not placing data on the procurement of goods, work and services and information about suppliers (contractors and service providers) with which contracts are concluded in the unified information system in the area of the procurement of goods, work and services with a view to securing the state and municipal needs”, data on the procurement by customers subject to political and economic sanctions (or other restrictive measures) of hostile states, as well as the information about suppliers with which such customers concluded contracts will no longer be placed in the UIS and will become confidential starting from 7 March 2022.
Customers will be able to perform closed competition-based procurement (including in electronic form on a specialised electronic site).
What to think about and what to do
Owing to the Law coming into force, companies should communicate to the persons responsible for holding and participating in procurement procedures information about the new procurement procedure for state and municipal needs. In view of the changing regulation, the specified measures will allow participants in procurement to continue to show good faith.
Help from your adviser
Pepeliaev Group's lawyers have considerable experience of providing legal support to clients with regard to antimonopoly regulation and the legislation on the contractual system.
Our specialists are ready to provide the necessary legal support to companies on issues relating to the application of the new procurement procedures.
[1] Federal Law No. 294-FZ “On protecting rights of legal entities and individual entrepreneurs during state (supervisory) and municipal control” dated 26 December 2008 (“Law No. 294-FZ”) has been supplemented with provisions to this effect.