Government procurement in Russia relates to the public procurement in Russia by all governmental, regional and local authorities. The government procurement in Russia represents a big segment of the budgetary expenses. The volume of government purchases makes about 25 trillion rubles in 2015 and 30 trillion rubles in 2016. The government purchases system is constantly modernized due to changes in legislation, technical components and information.
Introduction Government procurement facilitates the supply of goods, fulfillment of works and provision of services to meet government needs. Procurement contracts are made via auctions, tenders or by using similar procedures, and through direct awards to suppliers. Government procurements can be contracted with a producer of a good as well as with an intermediary (dealer, distributor). Any legal entity (from an intercontinental holding to an individual entrepreneur) can be a supplier.
Resources of any state institutions are always limited. Therefore during budgeting it is advisable to take into account priority directions, which represent strategic goals and tasks of a state budget policy. Also a very important thing is a balance of national and regional budgets. For these purposes a government procurement is often used. It allows to implement a competition in a realization of government spending.
Government procurements are characterized primarily by that these purchases and deliveries are paid by money of taxpayers. These money are concentrated in appropriate budgets and extrabudgetary funds. According to the current legislature, government procurements include needs of federal public authorities (federal ministries, federal offices, federal agencies etc.) as well as needs of public authorities of state subjects and regions.
Characteristics Government procurements are financed by budget or extrabudgetary funds of government institution; There are provided special services, whose aim is to ensure state needs and generally needs of people; Meaning of government procurements consists in assignment of work to another people; Proposal comes from a state authority (government agency).
Purposes The goal of a system of government procurements is to satisfy interests of its participants:
supplier - a work in healthy competitive ambiance and provision of sales market; state authority (here it is in the role of customer or client) - budget savings, purchase of quality goods, elimination of corruption; society (in the role of end-user) - satisfaction of public needs through consumption of quality goods for acceptable price.
The main goal of efficiency of government procurements is a reasonable and purposeful spending of state budget and extrabudgetary funds during government purchases of industrial goods, fulfillment of a work or obtaining a services for national purposes.
The goal of formation of government contract system of government procurements is a provision of fulfillment of public commitments of the government during effective using of its resources and through realization of government procurements.
Functions One of the main functions of a national authority is a provision of socially significant goods and services to the population. During fulfillment of this important task, the authority needs to act in the interest of the entire population of the country and to use resources of all budgets of appropriate levels. The basic way of realization of authority's service functions is a formation and placing a government and municipal procurements. The formation and placing are carried out publicly in strict accordance with the state law.
During the formation of a government procurement there are taken into account real needs of a government agency of executive power, state institution and the society on the whole. Government procurements are applied for organization and realization of long-term government targeted programs (including supply of goods for federal government needs).
From the standpoint of the state, government procurements have the following functions:
important element of support of domestic producers (because most goods, services and works, which are included in the system of government procurements, are goods (services, works) which are produced by domestic organizations); development of government procurement's system allows to expand a real solvent demand for goods, what then leads to creating favorable motivational conditions for growth of domestic production; competitive basis of a placing of government procurements expands the field for development of healthy competition between domestic producers. As a consequence of this, there are created conditions for production more quality output. In addition, more effective using of budget is possible; through government procurements the government ensures arrival of products, which are necessary for provision of state needs.
The system of government procurement is the set of legal, organizational and economic measures, which are directed to the provision of national and municipal needs in goods, works and services by means of realization of interconnected phases:
forecasting and planning of provision of national and municipal needs, including the planning of budget allocations for government procurements (forecasting the demand, justification of priority areas) and asset management; procurement of goods, works and services for national and municipal needs; monitoring, control and audit.
Russia is not a member of the World Trade Organization's Government Procurement Agreement. A decree issued by the Ministry of Economic Development in December 2008 allows Russian purchasing bodies to offer preferential treatment to national products and services as long as they cost no more than 15% above alternative suppliers' prices. In 2009, "Buy Russian" provisions were introduced.European Economic and Social Committee (EU), Third country state-owned enterprises in EU public procurement markets, page 5, adopted on 4 May 2011, accessed on 26 March 2026
History Public procurement is a subject of interest for the public sector, government, and private sector. Development of the public procurement system involves the study of previous practices and historical periods within the field.
The first period from 1992 to 1997. During this period, a big number of documents were adopted, among them 826-UP and 53-FZ. These documents were designed to become the legal basis for regulating the public procurement. Nonetheless, at this stage it was not required to hold a tender when placing a procurement order. This was successfully used by economic agents for personal gain (see Corruption), and thus further additions to the legal base were necessary.
The second period from 1997 to 2006. During this period, legal documents 305-UP and 97-FZ were adopted, which were to become the basis for the formation of the modern system for regulating public procurements. The aforementioned legal documents regulated only the actions of federal customers and were not able to build an appropriate system of placing order process.
The third period from 2006 to 2014. The beginning of the next stage in the formation of the government procurement system is associated with the passing of the federal law 94-FZ. This law brought many changes in the process of procurement order placing, for example, the introduction of the electronic auction, exclusion of the two-stage procedure, introduction of the concept of initial (maximum) contract price. Closed procurement procedures were prohibited, with the exclusion of the orders constituting state secrets. A finite list of situations was created, outlining when an order could be placed with a single source. The use of qualification criteria was limited, along with other changes.
The fourth period from 1 January 2014–present. Federal law 44-FZ comes into force. 44-Fechnology Z regulates the procedures related to the forecasting and planning of public needs, including goods, services, procurement, monitoring, and audit.
Selection of a supplier Selection of a supplier (contractor) - a set of actions, which are implemented by clients according to the order established in the Federal Law of the Russian Federation No. 44-ФЗ "About the contract system in the field of procurement of goods, works, services for state and municipal needs". This process starts with placing an announcement about procurement of goods, works, services for provision of state needs (federal needs, needs of a subject of Russia) or municipal needs; or, in specified by 44-ФЗ cases, it starts with invitation to participate in selection of a supplier. The process ends with a contract negotiation.
Methods for selection of a supplier 1) competitive:
competitions (open competition, limited competition, two-stage competition, closed competition, closed limited competition, closed two-stage competition); auctions (electronic auction, closed auction); request for financial quotes; request for offers;
2) noncompetitive:
purchase from a single supplier.
The main distinction between a competition and an auction
competition is a method for selection of a supplier, where the winner is a participant who offered the best conditions of a contract execution; auction - is a method for selection of a supplier, where the winner is a participant who offered the lowest contract price.
Characteristics of the methods
open competition: information about procurement is reported by a client to unlimited group of persons and there are unified requirements for participants of the procurement ; limited competition: information about procurement is reported by a client to unlimited group of persons, there are unified and additional requirements for participants of the procurement and the winner of this competition is selected from participants of the procurement, who passed the pre-qualify; two-stage competition: information about procurement is reported by a client to unlimited group of persons, there are unified or unified and additional requirements for participants of the procurement and the winner of this competition is a participant of the two-stage competition who participated in both stages of the competition (including the passing of pre-qualify at the first stage in the case of determination of additional requirements for participants) and offered the best conditions of a contract execution according to the results of the second stage of the competition; electronic auction: information about procurement is reported by a client to unlimited group of persons, there are unified and additional requirements for participants of the procurement; conducting this auction is provided on the electronic platform by its operator; request for financial quotes: information about procurement is reported by a client to unlimited group of persons; the winner is a participant who offered the lowest contract price; request for offers: information about procurement is reported by a client to unlimited group of persons; the winner is a participant whose final offer is the most corresponding to the requirements of a client; closed methods (closed competition, closed limited competition, closed two-stage competition, closed auction): information about procurement is reported by a client (through invitation to participate in closed selection of suppliers) to a limited group of persons, who meets the requirements of 44-ФЗ; purchase from a single supplier: according to clause 93 44-ФЗ.
Electronic procurement