On 16 April, 2019, a discussion on “Participation of Business and Civil Society Representatives in the Implementation of Procurement Legislation Reforms” organized in the scope of “Capacity Building of the Armenian Business Coalition” sub-grant project ” Project, implemented in the framework of the EU funded “Commitment to Constructive Dialogue” Project took place.
Mr. Gagik Vardanyan, Director of the Civic Development and Partnership Foundation, Secretary of the Armenian Business Coalition noted in his welcoming speech that the purpose of the meeting is to draft a legislative amendment to the recently-actively debated procurement legislation.
First Deputy Minister of Finance Mr. Karen Brutyan noted that meetings with representatives of the public and business sector are being held for the purpose of legislative reforms; as a result, it is expected to diagnose and raise all issues.
According to Mr Karen Zadoyan, CCD Project Manager, President of the Armenian Lawyers’ Association, businesses and civil society organizations respond when laws and draft laws are adopted and rules of the game are set. “There is now a unique opportunity to participate in the revelation of these issues. Serious diagnosis must be made in order for the treatment to be properly organized afterwards,”he said.
Further, Mr. Sergey Shahnazaryan, Head of the State Procurement Policy Department of the Ministry of Finance, presented the main provisions of the draft amendments to the legislation on procurement, followed by an effective working discussion: Business and civil society organizations respond when laws and draft laws are adopted and rules of the game are established. “There is now a unique opportunity to participate in the revelation of these issues. Serious diagnosis must be made in order for the treatment to be properly organized afterwards, ”he said. Afterwards, Sergey Shahnazaryan, Head of the State Procurement Policy Department of the Ministry of Finance, presented the main provisions of the draft amendments to the legislation on procurement, followed by an effective working discussion: Business and civil society organizations respond when laws and draft laws are adopted and rules of the game are established. “There is now a unique opportunity to participate in the revelation of these issues. Serious diagnosis must be made in order for the treatment to be properly organized afterwards, ”he said. Afterwards, Sergey Shahnazaryan, Head of the State Procurement Policy Department of the Ministry of Finance, presented the main provisions of the draft amendments to the legislation on procurement, followed by an effective working discussion: https://armla.am/en/4495.html.
Following the discussion, the Armenian Business Coalition collected proposals from business organizations participating in the discussion, and the Armenian Lawyers’ Association summarized the proposals of the Armenian Business Coalition and other CSOs and sent these proposals in an official letter to the Minister of Finance of Armenia to improve public procurement policies.
Deputy Minister of Finance Karen Brutyan in his response on 20.12.19 No. 01.1 / 26-1 / 21153-2019 response to the letter of the President of the Armenian Lawyers’ Association, Karen Zadoyan informed.
- The Ministry of Finance, for its part, submitted the recommendations to the public administration bodies, as a result of which the proposals considered acceptable (see summary statement ) were incorporated i in the draft package on Making Amendments and Addenda to Decision of 04.05.2017, 526-N of the Government. At the same time, the aforementioned draft was approved by the Government on 10.10.2019. 1422-N (entered into force on 02.11.2019) [1] .
- The following recommendations have been considered as acceptable and accepted:
- Compliance with technical specifications and other standards for invitations to tender for specific organizations to ensure the victory of those organizations, resulting in permanent contracts with the same organizations. As a solution, it was suggested to develop standards of basic technical specifications. The terms of the Offer are provided in Government Decision 04/05/2017, N 526-N, Sub-point 25 of point 32, and sub-point 1 of point 43 of the approved order.
- It was suggested that arrangements should be made for bids with obviously low, unreasonable bids not to be considered or rejected. The terms of the Offer are provided in Government Decision 04/05/2017, N 526-N, Sub-point (c) of point 32 of the approved order,
- It was proposed to conduct audit on procurement not exceeding the threshold of 20 million AMD, on selective basis. The proposal is regulated by the Minister of Finance on 17/02/2012. 23.1 of the annex approved by the order N 143-N, by which 20 mln. According to which at least 30% of purchases not exceeding 20mln dram should be audited;
- To address the low level of awareness of businesses, it was suggested to provide information, advisory and other necessary assistance to SMEs within the framework of state support programs to acquire the skills needed to participate in procurement processes. In response, the MoF suggested that, jointly with interested CSOs and the Ministry of Economy; consider the possibility of organizing one such event at a specific time, involving representatives from the Authorized Body. At the same time, in order to raise awareness of the participation in the procurement process, relevant animated videos have been prepared by the MoF (see procurement.am website).
- It was proposed to set clear standards and maximum prices for basic goods, services and works acquired for the needs of the State. As procurement plans are drawn up on the basis of the relevant figures provided in the budgets, it has been suggested to hold discussions with specialized civil society representatives and journalists on the budget planning stage. In response, it was announced that a new module will be introduced in the process of developing new e-procurement software, which will enable the automated collection of information.
- It was proposed to replace the phrase “every person” referred to in Article 46 of the RA Law on Procurement with the word “interested person”. An interested person is a person whose rights are allegedly infringed or may have been infringed. In response, it has been stated that the reform of the government-financed public finance management system is intended to have only a judicial system of appeal, setting out an expedited procedure for making special decisions.
- It was suggested to train not only the procurement coordinators but also the members of the responsible divisions and evaluation committees. If this proposal fails, introduce a new Procurement Coordinators’ Training Module – Training of trainers (ToT), when the Procurement Coordinator will have the responsibility to train the members of the responsible unit and evaluation committee after training. This offer has been accepted in its entirety and unconditionally,
- It was suggested that they also be trained in professionalism to detect abuses in the procurement plan phase, which comes from budget planning, so the proposal to hold consultations with CSOs and the journalistic community at the budget planning stage also applies;
- There is no system of rating and monitoring of procurement participants in the Republic of Armenia, and the contracting parties often fail to meet their obligations. It was proposed to evaluate bids not only by price criteria, but also by a qualitative multifaceted process, in particular by publishing audited financial statements, introducing corporate governance systems, publishing corporate governance reports, adopting anti-corruption compliance procedures, and reviewing corporate compliance procedures. As well as to take into account the final evaluation of applications. In this regard, a response was received that it is possible to discuss the proposed system when it is implemented,
- Filing in of the documents in two stages creates unnecessary burden for the business. It was proposed to include the qualification in bids at the time of the request for quotation, including Annex 6.1. in Annex 5 as well. The recommendation was accepted, the terms of the proposal are set out in Government Decision 04/05/2017, N 526-N, point 32 of the approved order.
Thus, we can state that within the framework of the “Commitment to Constructive Dialogue” project, another successful collaboration – the CSO-Ministry of Finance can be considered, which has resulted in the improving of public procurement policy by the Armenian Business Coalition and the ALA.
[1] See https://www.e-gov.am/gov-decrees/item/32719/.