State Procurement System in the Republic of Kazakhstan

1. State Procurement System in the Republic of Kazakhstan Ms. Kakimova G.K., Head of Department, Committee on Financial Control and State Procurements of the Ministry of Finance of the Republic of Kazakhstan Mr.Eshtaev S.K.,Head of Department for Coordination of State Procurements of the Ministry of Finance of the Republic of Kazakhstan 25-28 April, 2005 Tashkent

2. Presentation Plan • Law of the Republic of Kazakhstan “On State Procurements” of 1998 • Concept of development of state procurements system in the Republic of Kazakhstan for 2001-2004 • Program of development of state procurements systems in the Republic of Kazakhstan for 2001-2004 • Law of the Republic of Kazakhstan “On State Procurements” of 2002 • Law of the Republic of Kazakhstan “On State Procurements” of 2004 • Objectives of the authorized agency for state procurements in 2005 • Monitoring of state procurements in the period between 2002 and 2004 • Training in the field of state procurements

3. First steps towards formation of state procurements system • Staring from 1996 – first methods of state procurement procedure for goods, works and services • 1997 – budget funds saving in the amount of 210 million tenge ($) was achieved at bidding procedures for the total amount of 9 billion tenge ($) • 1998 – Government of the Republic of Kazakhstan issued a resolution on approval of procedure of state procurement of goods, works and services

4. Enactment of the first Law of the Republic of Kazakhstan “On State Procurements” • The first Law of the Republic of Kazakhstan “On State Procurements” was enacted on 1 January, 1998 • The law was developed in collaboration with both local and foreign consultants based on international experience • The law regulated the relations in the sphere of state procurements for the account of republican and local budgets and off-budget funds, and a jurisdiction of state bodies in the field of state procurements was established.

5. Shortcomings of the previous Law“On State Procurements” • Provisions, which provides for assignment of an authorized state agency for regulating state procurements process as an organizer of bids in respect to highly significant and specially large procurements. • Auction for price reduction for procured goods, works and services as a form of bid was abolished, and contract enforcement was introduced. • Imperfection of the legislation on state procurements

6. Further steps in formation of sate procurements system • With a view to improve administration in the field of state procurements, an authorized agency for state procurements was established in 1998 • Creating in 1999 of structural subdivisions responsible for state procurements at all government agencies and government institutions financed from the republican and local budgets • By a resolution of the Government of the Republic of Kazakhstan, force of the law was extended to economic entities

7. Program of development of state procurements system in the Republic of Kazakhstan • In 2001, Concept for development of state procurements system was approved • This Concept defined the main paths of development of the state procurement system, which must ensure optimal and efficient spending of state budget funds • In 2001, Program of development of state procurement system for 2001-2004 was adopted

8. Program of development of state procurements system in the Republic of Kazakhstan Objectives of the Program: • improvement of the regulatory framework and institutional strengthening of the authorized body • introduction of information technologies in state procurements process • training of personnel, raising of the level of skills and responsibilities of specialists in the field of state procurements • improvement of planning of state procurements by customers and possibility of quick obtaining of such information by potential suppliers

9. Adoption in 2002 of the new Law “On State Procurements” • Force of the new law covered republican enterprises and stock companies with a controlling stake held by the government • The new law significantly expanded functions of the authorized agency, especially in a part of control of compliance with the legislation on state procurements • A new regulation was introduced on advertising the information about state procurements by the authorized agency in accessible telecommunication networks (Internet)

10. Adoption in 2002 of the new Law “On State Procurements” • The law established new qualification requirements to potential suppliers • One of the basic provisions of the new law is that it does not contain restrictions for participation of foreign potential suppliers • The new law retains all fundamental principals of state procurements

11. Introduction of changes and supplements to the Law “On State Procurements” • In July 2004, changes and supplements were introduced to the Law aimed at raising efficiency of state procurements and certain simplification of their procedures • Introduction of the State Registry of entities that are obliged to make procurements of goods, works and services in compliance with the law • Fore the first time the Law introduced the concept of dumping price of bids • All announcements about bids are published in a single printed matter called “Bulletin of State Procurements”

12. Introduction of changes and supplements to the Law “On State Procurements” • Revisions took account of procedure of execution of long-term contracts for state procurements • In order for customers to select goods with the best qualitative characteristics in timely manner and from qualified suppliers, criteria of awarding a contract were modified • Для защиты заказчиков от «фирм-однодневок» появилось требование о наличии опыта работы не менее года на определенном рынке товаров, работ и услуг, соответствующем предмету конкурса

13. Reorganization of structure of state procurements system Today: • The Ministry of Finance of the Republic of Kazakhstan is assigned strategic functions that provide development of government policy in the field of state procurements • Implementation of government policy in the sphere of regulation of state procurements process in the Republic of Kazakhstan is carried out by the Committee on Financial Control and State Procurements of the Ministry of Finance of the Republic of Kazakhstan established in 2004 as a result of merger of two governmental agencies – Committee for financial control and the Agency for state procurements

14. Current activity in the field of state procurements • State Program for development of state procurements system up to 2007 is being developed • Work on improvement of legislation on state procurements is being conducted • Creation of the system of electronic state procurements • International cooperation • Raising of skills of specialists involved in state procurements

15. Planning and monitoring of state procurements • Entities of state procurements approve an annual plan of state procurements where they indicate intended range of goods, works and services and terms of state procurement procedures • Creation of comprehensive monitoring of the state procurements process is based on introduction of modern information systems • Introduction of modern technologies will enhance openness of the state procurement process

16. Volume of state procurements at the expense of state budget funds

17. Prospects of establishment of specialized training center • Establishment of training center in the field of electronic commerce • Improvement of legislation provides for periodic approval of certificates for the right to train specialists on state procurements • Rendering practical and methodological assistance to participants of the state procurements process • Functions of organization of such raining center are entrusted with the “Center of Electronic Commerce”

18. Thank you for your attention