Review of the Law on Public Procurement

The Law “On Public Procurement” No. 684 dated 22 April 2021 [https://lex.uz/docs/5382983]   (hereinafter – the “Law”), introduces a set of regulations to the public procurement procedure.

Purpose:

In line with Article 2 of the Law, the following procurements fall within the scope of the law:

1. on implementation of projects established by the Investment Program of the Republic of Uzbekistan and decrees of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan;
2. in the conduct of business activities of state customers;

• • financed from the budget of the Republic of Uzbekistan and other funds established in budgetary organizations;

1. funded by foreign grants and donations provided under agreements concluded by the President of the Republic of Uzbekistan and the Cabinet of Ministers of the Republic of Uzbekistan with foreign donors, as well as foreign loans provided to the Republic of Uzbekistan by foreign donors, unless another procurement procedure is determined by foreign donors;
2. funded by financial, humanitarian, charitable, and other donations, unless another procurement procedure is determined by the terms of the donation.

It is relevant to note that regardless of the procurement procedures in the last two cases (iv, v), the results of public procurement shall be announced on a special information portal [http://xarid.uz/]. 

Subjects:

Following the provisions of the Law, the state consumer legal entity carrying out public procurement is seen in two categories:

1. Budget consumers (state organs, budget organizations, state trust funds);
2. Corporate consumers (state enterprises, legal entities with a state share in their authorized capital (authorized capital) of 50 percent or more). (Article 19)

The State Assets Management Agency of the Republic of Uzbekistan maintains the list of corporate customers and is formed on a particular information portal through information exchange.

While participating in procurement procedures – an individual or legal entity that is a resident or non-resident of the Republic of Uzbekistan participates in the procurement procedure as a bidder for public procurement. Subsequently, in case of affiliation with another entity, any participant is prevented to participate in the same lot of electronic store, auction, and selection of best offers and tender. In this regard, as per Article 36 of the Law, such participants shall meet the following criteria

• must have the necessary technical, financial, material, and human resources to execute the contract;
• contractual capacity;
• no debts on taxes and other fees;
• no bankruptcy procedures should be initiated against them;
• they should not be registered as unscrupulous performers.

Types of public procurement:

According to the law the public procurement process can be carried out via electronic store, auction on lowering the starting price, selection of best offers, and tender with two additional ways: direct contracts and single supplier contracts.

Electronic Store.

• Requirements:
  • for goods worth up to 25 000 BEA[1](for budget customers - up to 2 500 BEA);
  • for services up to 100 BEA (for budget customers 50 BEA).
• Other specific features:
  • The limit for goods is 10 000 BEA and for services 500 BEA for an annual year.

Auction on lowering the starting price.

• Requirements:
  • Goods should have standard features;
  • there should be no need for comparison of the technical, operational, and other characteristics of the goods;
  • price of the goods should be worth up to 25 000 BEA (for budget customers 6 000 BEA).
• Other specific features:
  • Services and works cannot be objects of auction.

Selection of Best Offers.

• Requirements:
  • Goods (works, services) should have monetary, quantitative, and qualitative value;
  • Goods worth under 25 000 BEA (for budget customers 6 000 BEA).
• Other specific features:
  • The selection of the best offer is evaluated by the Commission of Procurement consisting of five members of which the quorum is two-thirds.

Tender

• Requirements:
  • Goods (works, services) should have monetary, quantitative, and qualitative value;
  • price of goods (work, service) is more than 25 000 BEA (for budget customers – 6 000 BEA);
  • If the reserve winner is determined, the right to conclude the contract and fulfill obligations under it passes to the reserve winner and the deposit of the initial winner is non-refundable.

Direct Contracts.

• Requirements:
  • public procurement of goods (works, services) from a single supplier included in the Register of single suppliers;
  • if there is a relevant decree of the President of the Republic of Uzbekistan or the Cabinet of Ministers;
  • procurement is necessary to meet State needs in order to eliminate emergency situations;
  • public procurement related to the appointment of a lawyer (representative) to participate in court proceedings;
  • public procurement of the intellectual property from the only person who has an exclusive right to the intellectual property object in question; and
  • public procurement of goods (works, services), and prices (tariffs) which are regulated by the state.
• Other specific features:
  • Contract and post-Contract documents must be checked by expert organizations in case of approval by the President and Cabinet of Ministers.

Single Supplier Contracts.

• Requirements:
  • no alternative suppliers in the market;
  • acquisition of cultural property;
  • public procurement from entities defined as single suppliers in decrees and resolutions of the President or resolutions of the Cabinet of Ministers of the Republic of Uzbekistan;
  • public procurement of goods (works, services) of a subject of natural monopoly.
• Other specific features:
  • The list of single suppliers will be formed in Register by the Ministry of Finance.

[1] BEA = 330 000 UZS (approx. 29 USD)

Tendering process

STAGE-1. Announcement

First of all, according to the art. 66 of the Law, state customer announces a tender and posts procurement documents for the tender (a draft contract is attached to the procurement documents) at the same time via an electronic system of public procurement through a special information portal, not less than twelve business days and not more than thirty business days before the deadline for receipt of proposals from bidders.

It is important to note that announcement of the tender is placed only after receiving a positive conclusion from the Center of Comprehensive Expertise on the procurement documents for the tender.

  The following shall be specified in the announcement:

• the form of the tender;
• detailed description and starting price of the goods (works, services);
• address of the place of the tender;
• the requirements for bidders;
• contact information of the state customer's employees;
• date and time of the deadline for submission of proposals;
• requirements for the design of the tender proposal (art. 66 of the Law).

STAGE-2. Submission and evaluation of proposals

Next, bidders shall submit their proposals in a way prescribed in the announcement and procurement documents of the tender, in sealed envelopes, to the address specified in the announcement of the tender. Also, the bidder has the right to withdraw or make changes to the submitted proposal before the deadline for submission. Once accepting of proposals is closed the procurement commission, which consists of at least 7 members, must review and evaluate the bidders’ proposals within 45 business days.

To determine the winner of the tender on the basis of the criteria specified in the procurement documents of the tender, the procurement committee evaluates the proposals in two stages. The first stage is the evaluation of the technical part of the bidder's proposal, while in the second stage of the tender, the evaluation of the price part of the proposal is carried out.

It is noteworthy that depending on the technical characteristics of the purchased goods (works, services), the tender may be held in one stage.

STAGE-3. Conclusion of contract

 Consequently, the winner shall be the bidder who offered the best contract terms based on the criteria specified in the procurement documents for the tender and the proposal. Under Article 70 of the Law and par. 161 of the “Regulations on the Procedure for Organizing and Conducting Procurement Procedures”, approved by order of the Resolution of the Cabinet of Ministers dated 20.05.2022 No. 276 (hereinafter the Regulation) [https://lex.uz/uz/docs/6026646] state customer and tender winner conclude a contract within 10 days from the announcement of the winner on the terms specified in the procurement documents for the tender and the proposal submitted by the bidder. In case the winner refuses to conclude the contract, the right to conclude the contract goes to the reserve winner. If the reserve winner also refuses to conclude the contract or there is no reserve winner, then the state customer holds a new tender.

Furthermore, the information about the concluded contract shall be posted by the state customer on a special information portal no later than three business days from the date of its conclusion.

Also, it shall be noted that according to the Resolution of the Cabinet of Ministers “On measures to support domestic producers” No. 41 dated 29.01.2021 [https://lex.uz/docs/5248243#5250415] if, along with foreign bidders, there are two or more domestic participants, these domestic producers are given price preference of 15%.

Dispute settlement

For fair, prompt, and efficient consideration of complaints, the authorized body creates a permanent Commission for the consideration of complaints in the field of public procurement, which consists of representatives of the relevant state bodies, operators of electronic public procurement systems, and the public and is approved by the Cabinet of Ministers of the Republic of Uzbekistan. (Article 78)

The procedure for considering complaints received by the Commission for the consideration of complaints in the field of public procurement is determined by the authorized body which is the Commission for the review of complaints in the field of public procurement.