A law was adopted with measures against conflict of interest in public procurement and procurement of state-owned companies

The State Duma of the Russian Federation adopted amendments to the laws “On the contract system” (44-FZ) and “On the procurement of goods, works, services by certain types of legal entities” (223-FZ), aimed at eliminating conflicts of interest in public procurement and procurement of state-owned companies.

These amendments clarify the conditions under which such a conflict of interest may arise, expand the list of persons who must take measures to prevent and resolve conflicts of interest, clarify the list of persons who cannot be members of competition commissions, etc. In addition, the document harmonizes the terms and definitions used in the “conflicting” provisions of 44-FZ with similar terminology of the Civil Code of the Russian Federation and other laws.

As for the procurement of state-owned companies, the law introduces a requirement for their management and members of tender commissions to take measures to prevent and resolve conflicts of interest. The law also establishes a list of individuals who cannot be members of procurement commissions under 223-FZ.

In addition, the amendments supplement 44-FZ and 223-FZ with provisions obliging customers to take additional measures to eliminate conflicts of interest in procurement. In particular, we are talking about the fact that customers will receive information about all co-executors and subcontractors who have entered into an agreement or agreements with a supplier, the price of which or the total price of which is more than 10% of the contract price. Taking into account this information, customers will have to take measures to prevent and resolve conflicts of interest in the event that subcontractors are involved in the execution of contracts from among legal entities controlled by the head of the customer, his deputy, a member of the procurement commission, the head of the contract service of the customer, the contract manager, as well as spouses, close relatives and in-laws.

The issue of eliminating conflicts of interest in procurement, primarily of state-owned companies, was raised back in 2017. Then the Ministry of Finance prepared amendments to 223-FZ, providing for a ban on attracting affiliated legal entities and individuals by customers.

In 2019, the Accounts Chamber of the Russian Federation proposed adding provisions to the law on procurement of state-owned companies aimed at preventing manifestations of corruption – in particular, on establishing a ban on a conflict of interest between a customer and a procurement participant.

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