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In Which Case Tender Can Be Run Again

17 September 2020
Kirill Shcherbakov
Partner
Corporate Practice
Litigation & Arbitration. Bankruptcy
In which case can one hold different tenders for two identical items to be procured? I found two absolutely identical items to be purchased but under different numbers. One purchase was closed four days before opening the second one; in both cases, a sealed-bid auction was held. Question: how can this be explained and what are the options?
I found this question which arouse a big discussion at one of the website where auctions and bidding are held. Here’s my opinion.

In the field of procurement of goods, work and services for state and municipal needs, there are certain rules regulating such purchases carried out through bidding, auctions (both open and closed), requests for quotations, requests for offers, purchases from a sole supplier. These issues are regulated by Federal Law No. 44-FZ of 05/04/2013 On the Contract System for Procurement of Goods, Work and Services for State and Municipal Needs (hereinafter referred to as "Law No. 44-FZ").
When an auction or a tender is held, there may be situations when the tender can be declared failed or void for various reasons. In this case, the customer who needs certain goods or services has the right to repeat the tender to meet their needs.

Article 92 of Law No. 44-FZ establishes the right of the customer to make a new purchase if based on the results of the sealed-bid auction, they failed to determine the supplier (service provider or contractor). By implication of the above article of the Law, when exercising this right, the customer shall amend the procurement documentation which is confidential information by virtue of Part 3, Article 86 of Law No. 44-FZ. Since the documentation of the sealed-bid auction is known only to the customer and direct bidders, it may seem from the outside that the purchases are absolutely identical to each other.

The reasons for declaring a sealed-bid auction invalid may be different.

1) If based on the results of reviewing the bids to the sealed-bid auction, it has been decided to refuse to admit all bidders to the sealed-bid auction or to recognize only one bidder as the participant of the sealed-bid auction.

2) If the participant of the sealed-bid auction who has made the last but one offer on the contract price refuses to conclude the contract, the customer shall declare the sealed-bid auction failed.

3) If upon expiry of the period for submitting the bids to the sealed-bid auction, only one bid has been submitted or no such bids have been submitted.

For the foregoing reasons, the customer (state or municipal) has the right to repeat the tender or purchase from the sole supplier if the conditions provided for by Law No. 44-FZ are in place.
Kirill Shcherbakov
Partner
Corporate Practice
Litigation & Arbitration. Bankruptcy
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