How to avoid being included in the register of unscrupulous participants in public procurement

Recognition of a potential supplier as an unscrupulous participant in public procurement and its inclusion in the register

The register of unscrupulous participants in public procurement sounds scary for any entrepreneur, but this is on one condition, if you are really an unscrupulous entity. For a conscientious entrepreneur, there are many ways to avoid being included in the register with the skillful application of current public procurement legislation and knowledge of their rights.

In accordance with paragraph 4 of Art. 12 of the Public Procurement Law in the register of unscrupulous participants in public procurement is a list of:

  • suppliers with whom customers unilaterally terminated public procurement contracts, during the execution of which it was established that the supplier does not meet the qualification requirements and requirements of the tender documentation (auction documentation) or provided false information about its compliance with such requirements, which allowed him to become the winner of the competition (auction), as a result of which such an agreement was concluded;
  • Potential suppliers identified as winners (potential runner-up suppliers) who avoided entering into a public procurement contract
  • suppliers who have not fulfilled or improperly fulfilled their obligations under public procurement contracts concluded with them.

The register of unscrupulous participants in public procurement is formed on the basis of a court decision that has entered into force.

From the analysis of Article 12 of the Law, it follows that the legislator imposes an obligation on the customer no later than thirty calendar days from the date when he became aware of the fact of a violation by a potential supplier to apply to the court within the same period with a claim in compliance with all norms of the Civil Procedure Code of the Republic of Kazakhstan.

This requirement of the Law is imperative, failure to comply with the deadlines for filing a claim with the court entails a refusal of the claim.

That is, to put it simply, if the Customer, represented by a state body or another subject of public procurement, has not filed a claim for inclusion in the list of unscrupulous participants in public procurement, then this circumstance is an unconditional basis for refusing to satisfy the claims.

Let’s consider another case.

If you became the winner in public procurement, concluded a public procurement contract, started work under the concluded contract, but for some reason could not fulfill your obligations under the contract on time, in connection with which the Customer files a claim against your organization to the court for recognition as an unfair participant in public procurement.

The question arises what to do?

If we are talking about construction work, then there may be cases when the Customer could not provide a formalized site for the start of construction, thus, construction was not started on time, for “safety net” it is necessary to write letters to the Customer to eliminate violations. During construction work, situations may arise when it is necessary to replace materials and work that were included in the design and estimate documentation due to the fact that building materials cannot be used in the performance of work, which raises a question for the design organization to agree on the replacement of materials and making changes to the design and estimate documentation.

This takes time and for this you need to be supported by evidence in the form of appropriate correspondence with the design organization, which allows you to fix the timing of sending letters and receiving appropriate answers to them, which gives you additional “trump cards” in court when protecting your interests, since in case of delay in fulfillment of obligations under the public procurement contract You can justify your delay with the available written evidence.

In accordance with clause 5 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated December 14, 2012 No. 5 “On the application of the legislation on public procurement by the courts”, when considering claims for recognition of suppliers as having improperly fulfilled their obligations under public procurement contracts, courts must take into account the fault of the supplier as grounds for civil liability in accordance with Art. 359 of the Civil Code of the Republic of Kazakhstan, as well as the resulting negative consequences for the customer, based on the criteria of fairness and reasonableness in accordance with part 6 of Art. 6 Code of Civil Procedure of the Republic of Kazakhstan. Negative consequences should be understood as the infliction of such damage to the party to the contract that it has largely lost what it was entitled to count on when concluding the contract.

Thus, if your actions do not constitute guilty actions on your part and there is no damage caused to state interests, in connection with which there are no grounds for recognizing your organization as an unscrupulous participant in public procurement.