Unjustified Use of Non-Competitive Procurement Methods that Limit Competition
Unwarranted sole-source procurement instead of utilizing competitive procedures (e.g., competitive bidding, Request for Proposals, etc.) has been an issue.
As of January 1, 2022, amendments to the “Public Procurement Law” of the Republic of Kazakhstan have come into effect. According to the new version of Article 41(1) of the Law, sole-source procurement by direct contract based on the justifications outlined in Article 39(3) of the Law are permitted only in exceptional cases where other procurement methods, as listed in Article 13(1) subsections 1, 2, 3, 5, and 6, are unfeasible.
Exemptions to this general requirement are provided under Article 41(6) of the Law. This article states that the sole-source procurement by direct contract does not apply to procurements which constitute state secrets according to the legislation of the Republic of Kazakhstan or contain restricted use official information as determined by the Government of the Republic of Kazakhstan, as well as other cases outlined in Article 39(3) under subsections 4, 9, 17, 18, 20, 21, 23, 26, 31, 32, 35, 40, 41, and 46.
Within the framework of the public module “Analysis of Kazakhstan Public Procurement Data,” identifying such violations requires studying the procurement plans of organizations to detect procurements planned to be done through sole-source methods by direct contract and then comparing them with the actual procurement methods in executed contracts.
- To do this, open the main vertical menu on the left and in the “Procurement Plan Items Table” section, filter the data by the procurement method of “sole-source through direct contract,” the current fiscal year, and the presence of an executed contract number.
- After forming this selection, return to the main vertical menu on the left and navigate to the “Report Builder” section, where you can supplement the data for the selected procurement plan items by adding the “Justification for Procurement Method” metric.
- From the obtained results, exclude justifications based on subsections 4, 9, 17, 18, 20, 21, 23, 26, 31, 32, 35, 40, 41, and 46 of Article 39(3) of the Public Procurement Law.
- As a result, you will have a list of contracts procured from a single source without preliminary competitive procurement methods.
For more details on using the business analytics module for public monitoring, you can refer to the webinar materials on “Public Monitoring of Kazakhstan Public Procurements,” (instruction on the module from 1:52:02 to 2:16:00).
Internal Government Audit Committee of the Ministry of Finance of the Republic of Kazakhstan (IGAC)
Oversight of Compliance with the Republic of Kazakhstan’s Procurement Legislation, including Desk Audits
010000, Nur-Sultan city, Zhenis Avenue, 11.gov.kz/memleket/entities/kvga/about/structure/departments/leadership/1188/1?lang=ru
Regional Internal Audit Departments of the Republic of Kazakhstan (RIADs)
Territorial Divisions of the Internal Government Audit Committee of the Ministry of Finance of the Republic of Kazakhstan
Conducting Scheduled On-Site Audits
010000, Nur-Sultan city, Zhenis Ave, 11.gov.kz/memleket/entities/kvga/about/structure/100/1?lang=ru
Office of the Attorney General
010000, Nur-Sultan, Mangilik El Avenue, 14.gov.kz/memleket/entities/prokuror/contacts?lang=ru
Anti-Corruption Agency of the Republic of Kazakhstan
Prevention, detection, suppression, disclosure, and investigation of economic and financial offenses.
010000, Nur-Sultan city, S. Seifullin street, 37.gov.kz/memleket/entities/anticorruption/contacts?lang=ru
Selection of Incorrect Procurement Justification
"Indeed, it was found that in February and March 2022, several government agencies in the West Kazakhstan Region entered into sole-source contracts with service providers. This was justified based on Subparagraph 50 of Paragraph 3, Article 39 of the 'Law on Public Procurements' relating to the acquisition of services. According to the law, sole-source acquisition is permissible when there is an immediate need to meet daily and/or weekly operational requirements for a period not exceeding two months until the completion of formal competitive procurement processes. Such non-competitive procurements are stipulated to occur within the first month of the fiscal year. However, the contracts were executed not in January, but in February and March 2022. This indicates that the procurement officials unjustifiably selected the sole-source acquisition method through direct contracting."