Suppliers: Case 1. Analysis of Competitor Business Activities in Government Procurement
Instructions
Suppliers
In the Kazakhstan procurement system, suppliers can be:
- Individuals engaged in entrepreneurial activities;
- Legal entities (excluding state institutions unless otherwise provided for them by the laws of the Republic of Kazakhstan);
- Temporary consortiums of legal entities aiming to enter into a procurement contract and to supply goods, work, or services to the customers.
Suppliers can range from local and international companies to individuals with the appropriate qualifications, experience, and resources to meet the requirements of a specific purchase.
To participate in public procurements in Kazakhstan, suppliers must be registered on the portal www.goszakup.gov.kz and comply with regulatory acts in the field of procurement.
They also must provide all necessary documentation, including licenses and certificates, to demonstrate their eligibility to participate in procurement for a particular project.
Once selected, the supplier is responsible for delivering the goods, carrying out the work, or providing the service to the customer with whom the contract is concluded.
Suppliers must adhere to the terms of the contract, including deadlines, quality requirements, and price agreements. Failure to fulfill these obligations can result in civil liability according to the concluded contract and inclusion in the Register of Dishonest Participants of State Procurements (for example, possible disqualification from participating in procurements for 2 years).
Responsible institutions
Vendor Requirements
Functions and tasks
According to Article 9 of the Law on Public Procurements, potential vendors must meet the following qualification requirements:
- Possess legal capacity (for legal entities) or civil competence (for individuals);
- Be financially stable and have no tax liabilities exceeding six times the monthly calculated index set for the respective fiscal year by the law on the republican budget;
- Not be subject to bankruptcy or liquidation procedures;
- Have adequate material, labor, and financial resources to fulfill obligations under the public procurement contract;
- Possess relevant work experience (except in cases where the subject of public procurement requires the vendor to have a license and/or permit).
According to the Order of the Ministry of Finance of the Republic of Kazakhstan dated February 28, 2019, No. 155 “On the Approval of the List of Specific Goods, Works, Services for Which Additional Requirements May Be Imposed on Potential Vendors and Vendors,” specific additional requirements may apply to a range of goods, works, and services listed in the order. This may include, among other things, geographical location and prior experience in the service area.
Potential vendors should review the list and ensure that they meet all additional requirements applicable to specific goods, works, or services that are the subject of public procurement.
Criteria for Conditional Discounts
In accordance with the Order of the Ministry of Finance of the Republic of Kazakhstan dated March 1, 2023, No. 225 “On Amendments and Additions to the Order of the Minister of Finance of the Republic of Kazakhstan dated December 11, 2015, No. 648 ‘On Approval of the Rules for Public Procurement‘,” the following criteria affecting the competitive pricing proposal (conditional discounts) are considered when conducting public procurements through a competitive bidding process:
- The experience of the potential vendor in the market for works or services that are the subject of the public procurement;
- The indicator of taxes paid;
- Financial stability index, calculated when conditional pricing of competitive bids are equal;
- Functional, technical, qualitative, and operational characteristics of goods and/or costs related to the operation, maintenance, and repair of the procured goods;
- The location of the potential vendor within the relevant administrative-territorial unit within the boundaries of the regions, cities of republican significance, and the capital where the works are to be performed;
If the budget allocated for public procurement does not exceed four hundred thousand times the monthly calculated index set for the respective fiscal year, and the potential vendor is located within the relevant administrative-territorial unit, such a potential vendor is granted a conditional discount of one percent (1%).
6. Negative values.
If a potential vendor has a contract in execution that was concluded in the current fiscal year, the web portal automatically subtracts one-tenth of a percent (0.1%) from the total sum of the conditional discount criteria affecting the competitive pricing proposal for each such contract.
Registry of Disqualified Vendors
Functions and tasks
The Registry of Disqualified Participants in Public Procurement (or Debarment List, to use U.S. terminology) is a list of vendors who are not eligible to participate in public procurement processes. The Public Procurement Law outlines the reasons for inclusion in the Debarment List:
- Potential vendors or vendors who have provided false information regarding qualification requirements and/or documents affecting competitive bid pricing;
- Potential vendors identified as winners who have avoided entering into a government procurement contract;
- Vendors who have either failed to fulfill or improperly fulfilled their contractual obligations under government procurement contracts.
Inclusion in the Debarment List can be automatic, by decision of an authorized body, or by court order. Vendors listed in the Registry are disqualified from participating in public procurement for a specified period, as determined by legislation.
To be removed from the Debarment List, one must either contest the decision for inclusion through an arbitration committee and/or in court, or wait for 24 months.