Ministry of Finance of the Republic of Kazakhstan Part I Public Procurement System in the Republic of Kazakhstan ASTANA-2016 1
OVERVIEW Legislation: 1. The Law of the Republic of Kazakhstan as of December 4, 2015 , “ON PUBLIC PROCUREMENT “ 2. By-laws and regulations of the Republic of Kazakhstan (around 30) The authorized agency (policy development): Ministry of Finance of the Republic of Kazakhstan The authorized agency (control): Financial Control Committee under the Ministry of Finance of the Republic of Kazakhstan Public procurement coverage: - Budget units (state organizations) - State enterprises - JSC, LLP with state share (excluding national companies) Annual value (in average): 2.5 – 3 trillion KZT (around $9 bln USD) Number of contracting agencies (clients): more than 19,000 Number of potential suppliers: around 70,000 2
Achievements 1. The new Law “On Public Procurement” was adopted on December 4, 2015 2. The new “Public Procurement Rules” were approved on December 11, 2015 3. The new platform of public procurement web- portal was commenced on January 1, 2016 3
Full automation of public procurement system Before Now - Paper format - Electronic format 4
Progressive norms of the new Law 1. Preliminary annual plan 2. Preliminary discussion of technical specifications The mandatory condition for approving This allows for the contracting agencies not technical specifications is their preliminary awaiting for budget approval and based on the discussion. It provides an opportunity for positive opinion of budget commission to start potential suppliers to review the tech.specs in procurement procedures. advance and in case of having any comments to appeal them. 4. Reciprocal bids review process 3. Preliminary Minutes of access Reciprocal bids review ensures transparency This allows for potential suppliers to finalize and allows for evaluating the objectiveness of their bids within 3 days period the decisions made by contracting agencies 5. Time lag before contract award (5 business 5. Purely electronic format days) of public procurement In case of receiving a complaint during these 5 All public procurement processes, starting days the contract award is stayed for 10 from planning and up to the payment are business days during which the complaint is done electronically being considered 5
Preliminary outcomes AVERAGE NUMBER OF BIDDERS PER COMPETITIVE CONDITIONAL SAVINGS BIDDING 5,8 25 BLN 2 TIMES MORE 5 TIMES MORE 13 BLN 1,2 3 MONTHS OF 2015 3 MONTHS OF 2016 3 мес. 2015г. 3 мес. 2016г. 3 мес. 2015г. 3 MONTHS OF 2015 3 MONTHS OF 2016 3 мес.2016г. Note: Maximum number of bidders per lot reaches 51 6
Outcomes of in-house audit The audit is performed Without visits to the objects of control!!! 7
PREVENTIVENESS 2015 Total value of 9.2 NUMBER OF CALLS FOR violations RESPONSIBILITY THOU 232 bln kzt - Violations identified EX POST FACTO 3 moths of 2016 356 0 4.6 Total value of NUMBER OF THOSE FREED FROM violations thou RESPONSIBILITY 116 bln KZT Number of persons who corrected violations - Violations identified AT EARLY STAGE following notifications after in-house audit 8
Ministry of Finance of the Republic of Kazakhstan Part II Enhancing the function of procurement professionalization in Kazakhstan ASTANA-2016 9
Current situation with improving professionalization Existing regulatory framework: The Rules of retraining and advancing qualification of public procurement staff were approved (Order of the Ministry of Finance of the Republic of Kazakhstan as of December 30,2015, #697) According to the Rules the training is conducted by educational facilities compliant with the educational programs approved Problems: No control over quality of education 2. Insufficient competence of the tutors 10
The Strategy of sustainable development of procurement professionalization system • Development of academic educational programs with the testing system of certifying knowledge and skills • Introduction of mandatory certification for procurement specialists • Close collaboration with the international institutions (the World Bank, ADB, IDB) to study the advance practice • Expanding online training programs of the Center for E- Commerce • Involvement of universities in the process of training to develop qualified procurement specialists.
The structure of procuring entities The number of contracting agencies registered on the portal : 19 755 11
Structure of educational facilities Structure of health care facilities Hospitals, policlinics Adaptation and rehabilitation centers Narcological, psycho, cancer hospitals etc. Other camps, boarding schools et 12
Proposed tools to boost professionalization Problem: Based on the analysis above it is evident that significant part of procuring entities belong to educational and health care sector (schools, kindergartens, hospitals and policlinics). At the same time the aforementioned organizations do not have structural subdivisions responsible for public procurement function which accountants responsible for that. Solutions: The new Law provides for establishment of Single Purchaser Organizations on republican, oblast and rayon levels. In this regard currently there is an ongoing work to develop the legislative framework for centralization of procurement for educational and health care facilities meaning to free these facilities from public procurement function by transferring this function to the single purchaser organizations. 13
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