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The advantage will be given to 15% more expensive EaEU commodities in the state procurements

February 03,2015 17:35

Yesterday, the government issues a decree, which seems to be left out of the public attention. The majority of the public, yesterday, was more fascinated by the merchants’ protest, with which they demanded to suspend the decree on the turnover tax. But the experts did not miss the government’s yesterday’s decree on state procurement. The government decided to revoke the February 10, 2011 N 168-N decree, and introduced new provisions in this quite extensive decree, of which the state procurement is more remarkable. It was agreed to the Eurasian Economic Union’s requirements.

Pursuant to the government decree, in particular, it is defined, “If the sum of the maximum price and the quantity required for the purchase of given commodity presented by the bid shall not exceed the 70-fold of the base unit of procurements, then during the evaluation and comparison of the bids for this procurement, the participants who offer commodities of the Eurasian Economic Union member countries produce, have a 15 percent price advantage.” Artak Manukyan, public procurement expert for the “Transparency International” Anti-corruption center, assessed this Government decree negative.

In the interview with “Aravot”, Mr. Manukyan said that there is a serious risk in this decree, in addition, the expert reminded that Armenia was still on the way to accession to the Eurasian Economic Union (EaEU), many experts argued that by becoming a member of the Union, Russia Federal legislation will become a priority, which clearly states that in case of procurement, a 15% priority is given to the domestic producers. “At that time, our government was saying, there is no such a thing. Now, the government denied itself, although there is no word about EaEU in the reference of the decree.” To say in a simple way, under this government decree, the commodities of the EaEU countries, albeit more expensive, but for our government they would be more preferred during the procurement. During the public procurement, as detailed expert Artak Manukyan, in case of a 70 million dram offer, if a company is registered in the EaEU member country and present an EaEU country commodity whose price is 15% more expensive than the European or American commodity offered by another company, then our government will give the preference to the commodity produced in the Eurasian Economic Union, which is 15 % more expensive.

Note that local companies participate in 99.9% of the cases of the state procurement in Armenia, which basically are the EaEU member country companies. Under this government decree, the following will happen: if 2 local companies participate in, let’s say, the tender of procurement of  new tires for the president’s staff vehicles, and if one of the companies presents tires of the European production, and the other – Russian, and the Russian be 15% higher by the price bid, then the presidency will procure the expensive Russian one.

Note that the standard of winning in the state procurement tender in our country is to offer an affordable price, which vanishes by the government decree issues yesterday. “Here, there is a “casus”, as we are a member of the World Trade Organization and we have assumed an obligation that the principle of an “open hand” shall function, in other words, equal approaches to all. The government decree is contrary to this principle. I see something more dangerous: this decree will cause prices to rise, and is not a precondition to create competitive conditions,” said Mr. Manukyan. Artak Manukyan raises a question and then answers to this question, why the government has defined this option of bidding, eventually, if the commodity is good and competitive, then let it win the tender, why we should give the preference to the Eurasian commodity.

But let’s consider that the Russian legislation underlies all EaEU type of legislations, and as mentioned by Mr. Manukyan, Russia, in addition to our government decree, maintains its domestic production commodity indirectly, and promotes as defined by its legislation. Mr. Manukyan does not rule out the corruption risks in this government decree. As presented by the expert, a country certificate on origin of the commodity should be presented. “But, I can say that our certification system is well developed. I will bring a simple example. It is not excluded that one European commodity will be introduced in the state procurement tender, but through using an intermediary company, most likely correlated with the authorities, will be registered in the EaEU, for example, in Armenia, and he will supply it as an Armenian-origin commodity and 15 % expensive and win the tender.”

To save the state budget procurements, the expert recommends that the state buys the commodities of wide consumption, as well as social and military-strategic commodities, such as grain and petroleum, from the international commodity exchanges. “The law should define this kind of procedures for procurement, but so far it is not implemented. We are not saying that only the state should purchase these commodities, but it should also be a part of it, first, it will keep these procurements under control, there will be no abuses, and will be cheaper, and not as it is now, 4 companies that “pass to each other.”

 Nelly BABAYAN

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