Auction for the right to conclude a contract under 44-FZ: what kind of auction is this and what are its features?

Participants in public procurement face many dangers at every stage. Any mistake, even one that seems easily correctable at first glance, can have serious consequences. In today’s publication we will talk about missing the deadline for signing a contract by the winner of the electronic procedure under No. 44-FZ.

Please note right away that this article is not about how to avoid signing a contract in principle. We talk about how to minimize the negative consequences for your organization if you missed, forgot, or were unable to sign a contract due to some technical reason.

For those who do not have the desire or time to read a long text, we present a compact schematic algorithm that should be followed in such a situation:

We study the government contract and its provisions

When deciding to participate in a procurement, you should first thoroughly study all the documentation, as they say “from cover to cover,” without missing the slightest detail. What may seem insignificant at first can later lead to unforeseen problems and unaccounted for additional costs.

It is also necessary to check whether the draft contract complies with the conditions provided for concluding a contract under 44-FZ. If inconsistencies with the law are detected, the situation can be influenced only before the deadline for submitting applications. It is no longer possible to agree on other conditions when concluding a government contract, different from its draft, after winning the procurement according to the law on the contract system. Depending on the procurement method, you must either send the customer a request for clarification indicating that the draft contract does not comply with the law, or send a complaint about the provisions of the procurement documentation to the territorial OFAS. You should also request clarification of contract provisions that are ambiguous or contradictory, or that do not comply with the terms of reference. Perhaps the draft contract does not contain essential conditions mandatory for a particular type of contract. All this must be established before the deadline for submitting purchase applications.

Next, we check the clauses of the contract regarding the responsibility of the Contractor and the Customer. Do they comply with the requirements of the law and Government Decree No. 1063 of November 25, 2013. The amounts of fines for improper fulfillment of the terms of the contract, as well as penalties for violation of deadlines, cannot exceed the amounts established by Government Decree No. 1063. This concerns the responsibility of both parties.

Typically, the most important points for the contractor are the terms of delivery (work completion) and acceptance of work (whether stage-by-stage acceptance is also possible), as well as payment terms (advance payment, stage-by-stage payment, or payment after acceptance in full).

Delivery dates (work, services), intermediate stages must be precisely specified in the contract. The deadlines must be realistic and the possibility of fulfilling the contract without violating them must be accurately calculated.

Payment terms are very important when concluding a contract under 44-FZ. If an advance is provided, its exact amount and payment deadline must be indicated. There are, for example, the following wording in a contract: “an advance payment of up to 30% of the contract price is provided.” However, the deadline for its transfer is not specified. Under such conditions, it will be difficult to count on receiving an advance and to receive it in the event of a dispute. All interim payments (if any), their terms and conditions, as well as the timing of final payment must be specifically stated in the contract.

It is in the interests of the supplier to study the terms of the contract on the procedure for accepting goods (works, services), the timing of signing closing documents (acts of completion of work, services, invoices), and other documents transferred to the customer after fulfillment of obligations. In case of controversial situations and unjustified refusal to accept work, these deadlines will be important in determining the amount of delay by the customer in its obligations.

The final payment must either be agreed with the date of fulfillment of all obligations by the supplier, or indicated by a specific date, and not tied to other circumstances (especially to the availability of funds for payment from the customer). If the conclusion of a contract under 44-FZ is provided for with a small business entity, the payment period should not exceed 30 days. The contract price must correspond to the price proposed by the winner of the purchase and specified in the protocol.

Liability for failure to fulfill obligations under the new rules

In case of failure to fulfill obligations under the contract, procurement participants face penalties in the form of penalties or fines (Resolution of the Government of the Russian Federation dated August 2, 2019 No. 1011). Therefore, when preparing a draft contract, it is important to take into account new conditions and reflect them in contracts.

Penalty

Penalties are accrued if the supplier fails to meet the deadlines established for the fulfillment of obligations.

The amount of penalties for late obligations in all cases is calculated at the key rate of the Central Bank of the Russian Federation of 1/300 for each day of delay:

Penalties = number of days of delay * contract price * (refinancing rate * 1/300)

If the deadline for fulfilling obligations under the contract expired on September 10, 2019, and in reality the obligations were fulfilled on September 19, 2019, then with a contract value of 100,000 rubles. The penalty calculation will be as follows:

9 * 100,000 * (0.07 * 1/300) = 210 rub.

All penalties are calculated at the key rate of 1/300, unless there is additional legislative regulation. Exceptions apply to cases where other laws establish other penalty rates. For example, MTPL contracts are subject to a separate rate.

Electricity supply is paid at a rate of 1/130

In a situation where the customer does not pay for electricity transmission services in full or on time, he pays the company a penalty in the amount of 1/130 of the refinancing rate of the Central Bank of the Russian Federation of the required amount for each day of delay.

Fines

Fines apply to violations that are not related to deadlines. They rather depend on the status of the supplier and are triggered if he neglects the terms of the contract.

Previously, the customer had to indicate in the contract, in addition to the fixed percentage of the fine, its amount. Since the customer could not foresee how the initial maximum contract price would decrease as a result of the bidding, he did not know the fixed amount of the fine until the end of the procurement and left an empty column to calculate the amount of the fine from the contract price when it became known.

Now the extent of the parties' liability for non-compliance with obligations no longer needs to be specified as a fixed amount. It is enough to show the percentage of the contract price, determined in accordance with Decree of the Government of the Russian Federation of August 30, 2017 No. 1042.

This is what the contract provisions related to the fine will now look like:

• If the contract price does not exceed the amount of 3 million rubles, the fine is 3% of the contract price.
• If the contract price varies from 3 to 10 million rubles, the fine is 2% of the contract price.

Fines for small and social businesses

The same amount of fines is established for non-fulfillment (improper fulfillment) by the counterparty of its obligations, if the purchase was only for SMP and SONKO:

• 1% of the price of the contract or its stage;
• not less than 1,000 rub. and no more than 5,000 rubles.

Enforcing the contract

The conclusion of a contract under 44-FZ involves the provision of security for its execution if this is provided for in the documentation. In some cases, the customer is obliged to establish this condition in the documentation, in others he has the right to do so.

The procedure for concluding a government contract, defined by law, provides for the sending of documents to ensure the execution of the contract by the supplier in one package of documents with the draft contract. Signing documents without attaching a security document is equivalent to avoiding concluding a contract. The same consequences await if the security document does not meet the requirements imposed on it. That is, concluding a contract under 44-FZ is impossible without providing security for its execution, if this is provided for in the documentation.

Requirements for ensuring the fulfillment of obligations by the supplier are established by the procurement documentation. The right to choose between providing cash and a bank guarantee is given to the supplier. Depending on his financial situation and other obligations assumed, he independently determines the method of ensuring the fulfillment of his obligations. It is necessary to carefully calculate your financial resources so that there are enough funds for all upcoming expenses. Choosing a bank guarantee allows you not to withdraw quite impressive amounts from the company’s turnover.

The requirements for a bank guarantee are established by Art. 45 of the contract system law. The guarantee must be irrevocable and obtained from a bank on the list of credit institutions of the Ministry of Finance. The guarantee must contain all the mandatory conditions listed in the law on the contract system. It would be a good idea to familiarize yourself with all the requirements for a bank guarantee in the procurement documentation.

Providing a bank guarantee that does not meet the customer’s requirements is a reason to consider that the winner is avoiding concluding a contract.

It will take time to obtain a guarantee, so you need to apply for pre-approval for issuing a bank guarantee in advance. There is no need to wait for a summary protocol or to receive a draft contract from the customer. You may not have time to receive a guarantee within the terms of concluding a contract under 44-FZ, since they are very limited.

It should be noted that if the initial maximum price of the contract is reduced, you will need to either document your good faith or provide security for the fulfillment of obligations in the amount of one and a half times.

Before sending a bank guarantee, it is advisable to coordinate it with the customer and check the availability of information about it in the appropriate register on the website of the Unified Information System. Typically, information about a bank guarantee appears in the register within 24 hours from the date of its issue.

To summarize: mistakes that the auction winner should avoid

Before deciding to participate in the procurement, you should carefully read all the documentation and especially carefully study the draft contract. Concluding a contract under 44-FZ is a very responsible process, since errors can greatly affect the company’s activities.

When choosing a bank guarantee as security for the fulfillment of obligations, it is necessary to verify its compliance with the requirements of the law and documentation. It is advisable to pre-coordinate the draft bank guarantee with the customer.

Strictly comply with the procedure for concluding a contract according to 44-FZ. Be very responsible about the timing of the contract. All necessary actions to provide security for the execution of the contract and its signing must be carried out in advance.

Responsibility in procurement under 44-FZ and the updated Code of Administrative Offenses

44-FZ carefully regulates the liability of parties for failure to fulfill obligations and requires that the consequences of offenses be spelled out in the texts of government contracts. This is necessary because this approach:

• disciplines suppliers (performers). Money to pay for government orders comes from the budget, and not only the customer, but also society as a whole is interested in receiving a quality service. Under no circumstances should poor quality work be ignored;
• motivates customers to strictly monitor all stages of contract execution, consider each condition and promptly call unscrupulous performers to account.

On January 30, 2021, the Ministry of Finance posted a draft of the new Code of Administrative Offenses and Procedural Code on the website of draft regulations. They will take legal effect from January 1, 2021. In a separate chapter. No. 28 of the new Code of Administrative Offenses talks about violations within the framework of government orders under 44-FZ, procurement by certain types of legal entities and state defense orders. The maximum fines for each violation under 44-FZ, 223-FZ and 275-FZ will not change. Customers will pay up to 500 thousand rubles, and officials - up to 50 thousand rubles.

Important point! Warnings will apply to minor offenses.

The table systematizes violations under the new Code of Administrative Offenses from 2021.