BOFIT Weekly Review 2015/36
Government wants to increase competition but also restrictions on public sector procurements
A recent economy ministry report notes that there is still plenty of room for increasing competition and transparency in the procurement processes of public-sector-owned companies. The report stated that procurements in recent years have concentrated increasingly on small pool of suppliers, with only a small share of procurement awards based on open bidding or auction. Procurement announcements were also often obscure and award processes poorly documented.
Russia’s new law on public-sector-owned companies’ procurements entered into force in 2012 and was amended last time in the summer. Public-sector-owned companies are now required to register online and announce all procurements exceeding a specified ruble amount on the website. Nearly 80,000 firms have registered, and the total value of announced procurement contracts corresponds to almost a quarter of Russian GDP. A handful of large firms make most of the procurements (e.g. Rosneft, Gazprom and the national railways RZD). The new law aims at increasing transparency, competitiveness and efficiency in procurements.
On the other hand the current objective of import substitution has resulted in several government proposals which could rather have opposite effects. The government is seeking e.g. a greater say in supplier selection in large procurements, limits on the use of imported goods and services, and minimum quotas on the share of innovative products in procurements.