Legal news in state procurements. February 2015

The Russian Government prepared a draft Federal Law “On introducing amendments to Federal Law ‘On contract system in the field of goods, works and services procurement for the state and municipal needs’” establishing the procedure for providing guarantees of the Russian Federation when concluding contracts in the field of state procurement for federal needs.

Pursuant to the draft, a regulatory act of the Russian Government in relation to certain procurement for meeting federal needs can provide guarantees of the Russian Federation for a supplier (contractor, operator) of goods, subject to simultaneously all of the following conditions:

• The initial (maximum) price of the contract concluded with a sole supplier exceeds 10 billion rubles;
• The contract term exceeds 3 years but is no longer than 7 years;
• The contract contains the supplier’s obligations to invest in the Russian Federation in the form of capital investments, including, where necessary, to provide transfer of technologies and equipment supply for purposes of localizing in Russia the product manufacture, supply of which is the subject matter of the contract, according to the contract performance schedule.

The guarantees of the Russian Federation are provided by a regulatory act of the Russian Government determining the list of material terms and conditions of the contract, the invariance or non-deterioration of which is guaranteed to the supplier in the course of performing the contract.

Pursuant to the draft, the guarantees of the Russian Federation can provide for invariance of the number of goods to be supplied, timeframes and periods for delivery, non-decrease of the price per unit of goods and/or non-deterioration of other rights of the supplier acquired or exercised according to the state contract.

A guarantee of the Russian Federation can be suspended or cancelled only by decision of a federal court in the event the supplier fails to perform obligations or in the event the contract is terminated by a court decision. It is also established that the contract in relation to which the supplier is provided the guarantee of the Russian Federation cannot be terminated due to unilateral repudiation by one party of the contract.

Draft Federal Law “On introducing amendments to Federal Law ‘On contract system in the field of goods, works and services procurement for state and municipal needs’”

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Pavel Karpunin or Rimma Leshceva, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.