Pepeliaev Group advises that on 1 June 2014, Order No.155 of the Ministry of Economic Development dated 25 March 2014 ‘On the conditions for releasing goods originating from foreign states for the purposes of purchasing goods, work and services to meet state and municipal needs’ (the Conditions) has entered into force. 

The Conditions set the regime under which access will be granted to foreign goods, notably medicines and medical devices, to take part in state and municipal procurement.   

The document has been adopted in furtherance of article 14(4) of Federal Law No. 44-FZ dated 5 April 2013 ‘On a contract system in the area of purchasing goods, work and services to meet state and municipal needs’ (Law No. 44-FZ), which concerns the application of a national regime when purchases are made. 

The document will have effect until 31 December 2015.

A summary of the main points of the Conditions: 

These conditions are not a new departure for legislation and, on the whole, they do not change the existing concept of foreign goods being admitted to be purchased. This concept was developed over recent years when Federal Law No. 94-FZ was in force. The mechanism for benefits to be granted has remained practically unchanged. When goods are purchased through a competitive process being held and the bids to take part contain proposals for goods to be supplied from Russia and Belarus, benefits of 15% are granted in relation to the contract price under the procedure stipulated by the Conditions.

Nonetheless, the following principal features of the document need to be borne in mind: 

As well as the Russian Federation and the Republic of Belarus, the Republic of Kazakhstan is now included as a country to the goods of which the benefits extend. 

In comparison with Order No. 211 of the Russian Ministry of Economic Development dated 17 April 2013, the Conditions enact an expanded list of foreign goods for the purposes of being admitted for procurement. It is important for the industry that the list has retained the references to pharmaceutical preparations, medical, chemical and medicinal herbal products, medical devices, including surgical equipment and orthopedic appliances. 

Provision is also made for benefits to be granted for a new method of determining a supplier – requesting proposals. Examining and assessing bids to take part in a request for proposals and the final proposals that contain proposals to supply goods which the list provides for, from the above three countries will take place with, in relation to the “contract price” criterion, a coefficient applied to reduce by 15% the contract price proposed in bids. 

It is established that if the winner of an auction did not declare in its bid to take part in the auction the ratios of the proportion of goods of Russian (Belarus or Kazakh) origin and of foreign origin, then such proportion of goods is calculated at the price for a unit of the goods received when the initial (maximum) contract price is substantiated. 

If the winner of an auction is recognised as having avoided entering into a contract, the customer will enter into a contract with a participant in such auction which proposed the same contract price as the winner of the auction, or whose proposal with regard to the contract price contains the best terms with regard to the contract price apart from the terms proposed by the winner of the auction, with a benefit being granted in relation to the contract price of such participant in the auction. 

As before, for criteria for establishing the country of origin of goods, reference is made to the customs legislation of the Customs Union. Thus, the country of origin of goods is regarded as the country where the goods were produced in full or where they underwent sufficient processing (treatment) in accordance with the criteria stated above. 

Points to consider, actions to take

In connection with the new developments, we recommend that companies: 

Take into account the provisions of this document when they devise their strategy for taking part in public procurement exercises, assessing whether they can make use of the benefits granted.