March 24, 2022

Tenders in Uzbekistan

Content:

1. When tenders are held

2. Supervisory authority

3. Requirements for participants

4. The modalities for the tender

5. Decision on the winner

6. Conclusion of the contract on the result of the tender

7. Disclosure of information

8. Electronic tender

9. Procurement without a tender

10. Measures to support domestic producers and dispute resolution

Note: By the end of July 2021 a new Law of the Republic of Uzbekistan (hereinafter referred to as «RUz») «On State Procurement» from 22.04.2021 No. LRU-684 will enter into force. This Memorandum has been amended to reflect the provisions of the new Law.

Main normative legal acts

1. Law of the Republic of Uzbekistan dated 09.04.18 No. ZRU-472 22.04.21 No. LRU-684 “On Public Procurement”;

2. Decree of the President of the Republic of Uzbekistan dated 07.07.2020 No. UP-6019 “On Additional Measures to Further Develop the Competitive Environment and Reduce State Participation in the Economy”;

3. Resolution of the President of the Republic of Uzbekistan No. PP-4812 dated 21.08.2020 “On Additional Measures to Support Domestic Producers”;

4. Resolution of the Cabinet of Ministers of the Republic of Uzbekistan dated 21.11.00 No. 456 “On Measures to Improve the Organization of Tenders” “Resolution of the Cabinet of Ministers of the Republic of Uzbekistan dated 26 January 2021 No. LRU-684 On measures to further improve the procurement process in public procurement using information and communication technologies”;

5. Annex to the Order of the Director of NAPU dated 15.05.18 No. 185, registered by the Ministry of Justice “Regulations on the Procedure for Organizing and Conducting Procurement Procedures”.

A tender is one of the ways to determine the performer of an order for goods, works and services through competitive public procurement procedures in 2 stages. The winner of the tender is the participant who bids the best conditions for the performance of the contract (Article 58 of the Law of 09.04.18 No. 472) a competition that provides a procedure for determining the executor of public procurement through a competitive public procurement procedure, the results of which are awarded to the bidder in the procurement process, Proposed the best conditions for the execution of a public procurement contract (Article 4 of the Laf of 22.04.2021 No. LRU-684).

When tenders are held

Public procurement through a tender is carried out if the following conditions are met simultaneously:

• The criteria for determining the winner are not only monetary, but also quantitative and qualitative assessment of goods (works, services);
• For corporate customers, the cost of goods (works, services) is more than 25,000 times the basic estimated value (BRV) (1 BRV since 1 February 2021 is equal to UZS 245’000 or to approx. USD 23.15) per contract;
• For budget customers, purchases must be in excess of 6 thousand BRV sizes per contract.

Also, when purchasing raw materials, materials, components and equipment imported and produced in the Republic of Uzbekistan, financed from the budgets of the Republic of Uzbekistan, other extra-budgetary funds, foreign grants, foreign loans under the guarantee of the Republic of Uzbekistan, tenders are held for deliveries in excess of the equivalent of $100,000 under one contract (Annex to the Resolution of the CM of the Republic of Uzbekistan dated 21.11.00 No. 456).

Supervisory authority

To conduct a tender, the customer forms a tender procurement Commission, always consisting of an odd number of members (at least 7 people). Depending on the purchased product, the amount of Commission may vary. However, representatives of the Ministry of investment and foreign trade of the Republic of Uzbekistan, as well as representatives of the project Institute “UzEngineering” under the Cabinet of Ministers of the Republic of Uzbekistan shall be always present in the tender procurement Commission (Annex to Order No. 185 of 15.05.18). In turn, the customer is a legal entity that performs public procurement (for example, the state. bodies, budget organizations, state-owned enterprises, legal entities with a state-owned share of 50% or more).

The Ministry of Finance, the Ministry of Justice of the Republic of Uzbekistan and other interested organizations will ensure that the new Law «On State Procurement» of 22.04.2021 No. LRU-684 is implemented, communicated to the executors and explained to the public on its content and significance.

Requirements for participants

Participants who meet the following criteria can participate in the tender (paragraph 163 of the Annex to Order No. 185 of 15.05.18):

• Must have the necessary technical, financial, material and human resources to execute the contract;
• Participants must be eligible to enter into contracts;
• They should not be in arrears in paying taxes and other mandatory payments;
• They should not have any bankruptcy procedures imposed on them;
• They should not be registered as unscrupulous performers in the Unified register.

The modalities for the tender

First of all, the customer makes an announcement about the tender on a special information portal at least 30 days and no more than 45 days before the deadline for accepting bids from participants. The announcement shall specify:

• Description and price of the goods (works, services);
• Location of the tender;
• Requirements for participants;
• Details of several officials of the customer (contact persons);
• Clarifications on the tender documentation and request form;
• Date and time of the deadline for submitting bids, as well as requirements for bids;
• Other information (article 61 of Law No. 472 of 09.04.18) (article 66 of Law No. LRU-684 of 22.04.21).

Along with the announcement, the tender documentation is placed. It is noteworthy that the customer can specify in the tender documentation that each product (work, service) is considered as separate units, and therefore the customer can enter into contracts with several participants. It is to the tender documentation that the draft contract under which the purchase will be made is attached.

The draft tender documentation is first considered by the tender procurement Commission and only after its approval, the Commission makes a decision on holding the tender. The customer can make changes to the tender documentation no later than 3 days before the deadline for submitting bids, and the period of submitting an bid must be extended for at least 10 days from the date of making changes. Changes to goods (works, services) are not allowed (Article 62 of the Law of 09.04.18 No. 472) (article 67 of Law No. LRU-684 of 22.04.21).

Next, the bidder sends the bid in the order specified in the tender announcement, in a sealed envelope. The participant can send only one bid, containing in separate envelopes the technical bid (technical, financial, human resources), as well as the commercial bid. (point 154 of the Annex to Order No. 185 of 15.05.18). The tender is valid if at least two bids are received (Article 63 of the Law of 09.04.18 No. 472) (article 68 of Law No. LRU-684 of 22.04.21).

The deadline for consideration and analysis of participants ‘ bids may not exceed sixty days from the end of submission of bids. The Commission evaluates the bids in two stages. At the first stage, technical criteria for the bids are considered, and at the second stage, the commercial part is evaluated. The winners of the first stage are allowed to enter the second stage. During this process, a video is recorded. If only one bid meets the requirements of the tender documentation, such tender is considered invalid. The winner is the one who bided the best conditions for the performance of the contract in accordance with the criteria stipulated in the tender documentation (Paragraph 6 of Chapter 4 of the Annex to Order No. 185 of 15.05.18).

Decision on the winner

The decision is made by a majority vote in the Commission. The results of consideration of bids and their evaluation are recorded in the Protocol, an extract from which must be published on the portal within three working days from the date of its signing. After the publication of the results, bidders have the right to send a request to the customer for clarification of the results. The customer must provide explanations within three business days.

Conclusion of the contract on the result of the tender

Within one business day, the customer decides to accept the winning bid. Prior to such acceptance, the customer has the right to cancel the tender at any time with the publication of justified reasons on the portal. The customer is not responsible for the cancellation of the tender, only if the cancellation is the result of illegal actions (omissions) of the customer (Paragraph 7 of Chapter 4 of the Annex to Order No. 185 of 15.05.18).

The winning bid can only be accepted if:

• State purchases are not canceled;
• The participant who submitted the winning bid is not excluded;
• There are no violations of the tender procedure.

A contract is concluded no later than ten days after the winner is announced.

Disclosure of information

Executors of state and strategic procurement are required to disclose information about their owners, who directly or indirectly own 25% or more of their shares (participant interest), on a special information portal. In addition, they must constantly post information on the status of fulfillment of obligations under the contract concluded as a result of the tender and bidding, the procedure for selecting the best proposals, as well as direct negotiations, on their official website and a special information portal. (Presidential Decree No. UP-6019 dated 07.07.2020).

Electronic tender

An electronic tender differs from an attendance-based tender in that the customer opens a personal account for Commission members to perform their functions. All procedures are carried out on the Internet. The electronic system provides communication to members of the Commission via a private chat.

Submission of bids for participation in the tender is carried out in the form of electronic envelopes through the personal account of the portal. An electronic document that is part of an electronic bid must be in the specified format, as well as approved by an electronic digital signature (hereinafter referred to as “EDS») of participant.

According To the Tax Code of the Republic of Uzbekistan, access to the taxpayer’s personal account is carried out through an EDS and it is provided to the taxpayer by the state services Center. In turn, taxpayers are legal entities, individuals, and foreign legal entities. However, given the fact that foreign legal entities. operate in the territory of the Republic of Uzbekistan through representative offices or permanent institutions, and those, in turn, are tax residents of the Republic of Uzbekistan, then permanent institutions and representative offices must receive an EDS in order to log in to their personal account and send tax reports. Thus, representative offices and permanent institutions can and should receive an EDS, which is practically obtained in the name of an individual, namely the authorized head of a permanent institution or representative office.

The contract based on the results of an electronic tender is also concluded in electronic form, according to the same procedure as in the case of attendance-based tenders. It is signed by the EDS of the parties and is also entered in the register of contracts (point 204-64 of the Annex to Order No. 185 of 15.05.18).

The requirement for electronic procurement procedures for the selection of best bids and tenders is effective as of 1 January 2022.

Procurement without a tender

If by decrees and decisions of the President of the Republic of Uzbekistan, the Cabinet of Ministers of the Republic of Uzbekistan, it is granted to State customers the right to make purchases without conducting a tender and the procurement procedure is carried out by means of the selection process, regardless of the amount of the public procurement, and the announcement of the selection is placed only after receiving a positive opinion on the technical assignment for the public procurement of the Centre of Comprehensive Expertise.

The advertisement itself shall be placed in the electronic system of public procurement through a special information portal and, at the request of the State client, on its official website or on the official website of its parent body, as well as in the media at least 5 working days before the deadline for acceptance of proposals. If the specific characteristics or characteristics of the goods purchased so require (works, services), the State customer is entitled to advertise the selection for a longer period of time.

According to the Annex to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan dated 21.11.00 No. 456, which regulates the mechanism for conducting tenders for purchases of raw materials, materials, components and equipment imported and produced in the Republic of Uzbekistan, contracts are concluded without a tender in the following cases:

• Supply of goods belongs to the sphere of activity of subjects of natural monopolies;
• Supply of cultural property, such as paintings, sculptures, including Museum items, rare and valuable publications that are protected by the state;
• Purchase of goods that are available only from one supplier;
• Changes to the contract for the purpose of performing additional work for an amount not exceeding 20% of the original contract price;
• Performing works and services that can only be performed by government agencies;
• The emergence of the need for budget organizations in goods that are necessary to eliminate the consequences of force majeure;
• If the tender held by the budget organization is declared invalid, if the customer is located in remote areas and there is only one supplier in the territory of the customer’s operation.

Also, according to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 456 dated 21.11.00, tenders are not held in the following cases:

• If the purchase is made in accordance with the decisions of the President and the Cabinet of Ministers of the Republic of Uzbekistan;
• If donor countries, international foreign organizations or conditions for granting foreign loans under the state guarantee of the Republic of Uzbekistan determine a different procurement procedure.

Measures to support domestic producers

To support domestic producers, the State has taken a number of the following measures in relation to tenders:

1. From 1 November 2020 for legal entities with the state share in the authorized Fund (capital) in the amount of 50 percent or more, and legal persons in the statutory Fund (capital) of which 50% or more belongs to a legal entity with state share of 50 percent or more is entered the order before you make the purchase of imported goods worth over 50 BRV, the appropriateness of such purchases is subject to mandatory review by the Supervisory Board (General meeting of shareholders) with the approval of the list on a quarterly basis;
2. From November 1, 2020, a temporary ban and restrictions on admission to public procurement of certain goods (works, services) of foreign origin will be introduced;
3. For products not included in the list of those referred to in the previous paragraph, preference is granted when evaluating the proposals of bidders in the amount of no more than 15 percent of the price of CIP (Uzbekistan) for imported goods;
4. Tender Commission for public procurement at the expense of the budget of the Republic of Karakalpakstan, local budgets of provinces and Tashkent city, budgets of districts and cities and the total cost of which under one contract exceeds 2 500 BRV must include assistant to the Chairman of the Council of Ministers of the Republic of Karakalpakstan, hokims of regions and Tashkent city on issues of localization of production and expansion of cooperation ties in industry;
5. From January 1, 2021, separate procedures for the purchase of goods will be abolished for business entities and enterprises of strategic importance with the introduction of internal procurement rules.

It is important to note that the provisions referred to in paragraphs 1 to 4 of this chapter do not apply to the following contracts and procurement procedures:

1. Financed by international financial institutions and foreign governmental financial organizations;
2. Prisoners in accordance with separate decisions of the President and the Cabinet of Ministers;
3. Carried out in order to ensure the country’s defense and security (Resolution of the President of the Republic of Uzbekistan No. PP-4812 of 21.08.2020).