Court supported FAS in a concession dispute with the Ministry of Construction of the Astrakhan region

A requirement on “financing experience” unlawfully restricted the number of bidders.

Moscow Arbitration Court confirmed legitimacy of FAS decision and injunction with regard to the Ministry of Construction and Public Roads of the Astrakhan region.

The Ministry organized a concession tender for creating and operating systems of photo- and video registration of traffic violations in the region. The antimonopoly body established that the ordering party had set unreasonably requirements for procurement participants, therefore, restricting the number of bidders.

For instance, only those organizations were allowed to take part in the tender that earlier had already financed developing facilities, aimed at road traffic safety support, under concessions or similar arrangements. The scope of financing, as stated in the concession documentation, should be at least 600 million RUB.

Deputy Head of FAS Rachik Petrosyan said: “The requirement to prove “financing experience” is unlawful and unreasonable because a significant number of companies do not fall under it, although they have experience of carrying out similar works under public procurement that are not prefunded from the budget but are initially performed by means of proprietary and borrowed funds. Also, previous “financing experience” does not replace the need of financing today and does not indicate that a participant has sufficient funds at this particular moment”.

Based on it, the Antimonopoly Service found that the Ministry of Construction of the Astrakhan region violated Article 23 of the Law on concession agreements and issued an injunction to the tender organizer to exclude unlawful requirements to the bidders form the tender documentation. The ordering party disagreed with the decision and injunction of the antimonopoly body and filed a lawsuit. The Court, however, dismissed the claim of the Ministry of Construction of the Astrakhan region, supporting the FAS position.

“Such violations emerge due to imperfect current concession legislation. Pinpointed changes that have been made to it throughout many years, cannot fully eliminate the existing gaps, as a result of which concession tenders are often conducted to suit a particular bidder”, continued Rachik Petrosyan.