PROCURER CANNOT ACT AT HIS OWN SUBJECTIVE DISCRETION WITH THE SOLE BIDDER

Such situations are unacceptable in the procurement documentation, including the procurement regulations

The Moscow Regional OFAS revealed violations of the Procurement Law*. The procurer conducted an electronic auction for the right to conclude a contract on the performance of cleaning work. Only one relevant application was allowed to participate in the tender and the procurer decided to declare the auction invalid. At the same time, there was no imperative condition in the procurement regulations on the need for a repeat purchase if it was declared invalid. The participant who submitted the only application filed a complaint with the antimonopoly authority. The Moscow Regional OFAS issued remedies to the procurer to complete the procurement procedure.

The procurer did not agree with the decision and appealed to the court. However, the Arbitration Court of Moscow, the appellate and cassation courts, as well as the Supreme Court of the Russian Federation supported the position of the Moscow Regional OFAS and recognized the ruling and the remedies as legitimate. The courts referred to the fact that the final result of even failed auctions, provided that the application of the sole participant meets the requirements of the procurement documentation, is the conclusion of a contract with this participant.

The procurer appealed to the Constitutional Court of the Russian Federation. He considered that the provisions of the Civil Code of the Russian Federation ** and the Procurement Law restrict the freedom to conclude a contract and also constitute interference of the subject of control in business and economic activities.

Having considered the case on the merits, the Constitutional Court of the Russian Federation came to the conclusion that, in its legal meaning, the provisions of the Civil Code of the Russian Federation and the Procurement Law do not oblige the procurer (the organizer of the auction) to conclude a contract with the sole bidder in case they are declared invalid ***. However, there may be situations when such a solution to the issue is not provided for in the procurement regulations or the arbitrary discretion of the procurer (the organizer of the auction) is allowed. In this case, the recognition of the auction as failed does not entail the refusal to conclude an agreement with the sole bidder. At the same time, there should be no other objective obstacles to concluding a contract with this participant.

The Constitutional Court of the Russian Federation in its decision stressed that conditions should not be created to restrict competition, as well as arbitrary discretion. This can generate corruption risks, among other things. There should be no prescriptions in the procurement regulations that create conditions for discrimination of the bidder and violation of his rights. Thus, it is unacceptable for the customer to act in relations with the sole participant of the purchase at his own arbitrary, subjective discretion.

* Federal Law No. 223-FZ of 18.07.2011 "On Procurement of Goods, Works, Services by Certain Types of Legal Entities"

** Paragraph 2 of Article 432, Paragraph 1 of Article 438, Paragraph 4 of Article 445, Paragraph 5 of Article 447 and Paragraph 4 of Article 448 of the Civil Code of the Russian Federation

*** If the provision on the purchase, it is expressly provided that the failed auctions are held repeatedly