Disputes about public procurement conclusion of a contract using a single-source method
RSE on the right of economic management "National Nuclear Center of the Republic of Kazakhstan" of the Ministry of Energy of the Republic of Kazakhstan (hereinafter referred to as the Enterprise) filed a lawsuit against K LLP (hereinafter referred to as the Partnership) for recognition as an unfair participant in public procurement and recovery of a penalty in the amount of 2,420 tenge. By the decision of the specialized interdistrict Economic Court of Pavlodar region dated May 11, 2017, the Company's claim was satisfied. The Partnership has been recognized as an unscrupulous participant in public procurement. A penalty in the amount of 2,420 tenge was collected from the Partnership in favor of the Company, and the cost of paying the state duty in the amount of 1,208 tenge. By the decision of the judicial Board for Civil Cases of the Pavlodar Regional Court dated November 7, 2017, the decision of the court of first instance remained unchanged. In the petition, the Partnership asks for the annulment of the judicial acts that took place and for a new decision to dismiss the claim, citing violations of substantive and procedural law by the courts, and inconsistency between the conclusions of the courts and the circumstances of the case. In its response to the petition, the Company requests that the judicial acts remain in force. The Judicial Board for Civil Cases of the Supreme Court overturned the judicial acts of local courts and issued a new decision in the case to dismiss the Company's claim against K LLP for recognition as an unfair participant in public procurement and recovery of penalties on the following grounds.
Disputes about public procurement conclusion of a contract using a single-source method
It follows from the case file that, on the basis of subparagraph 2) of paragraph 3 of Article 39 of the Law of the Republic of Kazakhstan "On Public Procurement" (hereinafter referred to as the Law), a single–source contract was concluded on March 3, 2017 between the Enterprise (customer) and the Partnership (supplier) on public procurement of services No. 02-19/54 under the terms of which the supplier undertook to carry out an expert examination on the working draft "01-09/538-2016 Metal pipe for flue gas discharge of the boiler house of the IRBE RSE NNC RK", and the customer accepted the service and paid. The deadline for the provision of the service is set within 30 calendar days from the date of signing the contract, the cost of the service is 220,000 tenge. On March 30, 2017, the Partnership sent a letter to the Enterprise requesting the return of documents on the working draft without consideration and a request to terminate the contract, since the customer incorrectly indicated the level of responsibility of the facility in the technical specification as belonging to category II, technically not difficult, whereas during the inspection it turned out that the examination of the project belongs to the state monopoly.. Since the Partnership has not fulfilled its obligations under the agreement, the Company has filed this lawsuit with the court. The courts, satisfying the claim, proceeded from the requirements of Articles 272 and 273 of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code) on the fulfillment of obligations properly in accordance with the terms of the obligation and the requirements of the law, the inadmissibility of unilateral refusal to fulfill obligations and changes in its terms.
Since the Partnership, participating in public procurement, agreed to provide the services provided for in the draft agreement and, having concluded the public procurement agreement, assumed the relevant obligations that it did not fulfill, the courts concluded that the claim was justified, recognizing the Partnership in accordance with subparagraph 3) paragraph 4 of Article 12 of the Law by an unscrupulous participant in public procurement and by collecting a contractual penalty. The position of the local courts is not based on the law and the circumstances relevant to the case. According to the technical specification, which is Annex No. 2 to the public procurement contract, the customer, based on the Rules for Determining the general Procedure for Classifying Buildings and Structures as Technically and (or) Technologically Complex Facilities, approved by Order No. 165 of the Minister of National Economy of the Republic of Kazakhstan dated February 29, 2015 (hereinafter referred to as the Rules), established the level of responsibility of the facility – II categories, technically not difficult. It has been established that the Partnership has contractually assumed the obligation to conduct an expert examination of a work project to replace a metal boiler pipe with a height of 21.375 meters. Chimneys up to 100 meters high in accordance with subparagraph 2) Paragraph 9 of the Rules relate to objects of the II (normal) level of responsibility. It follows from paragraph 7 of the Rules that technically complex facilities (complexes) include all buildings and structures of the I (elevated) and II (normal) levels of responsibility, with the exception of the facilities specified in subparagraph 3) of paragraph 9 of these Rules. In accordance with subparagraph 2) paragraph 1 and paragraph 2 of Article 64-4 of the Law of the Republic of Kazakhstan "On Architectural, Urban Planning and construction activities in the Republic of Kazakhstan" the state monopoly includes a comprehensive non-departmental examination of projects (feasibility studies and design estimates) for reconstruction, expansion, modernization, technical re-equipment and major repairs of existing facilities financed from the budget funds and other forms of public investment classified as potentially dangerous, technically and/or technologically complex. A comprehensive non-departmental expertise related to a state monopoly is carried out by a state expert organization that is not authorized to engage in any other activity. Subparagraph 39-1) of Article 1 of the above-mentioned Law establishes that a comprehensive non-departmental expertise on projects for the construction of facilities (feasibility studies and design estimates) classified as a state monopoly is carried out by a state expert organization established by decision of the Government of the Republic of Kazakhstan in the organizational and legal form of a republican state enterprise on the right of economic management. By Decree of the Government of the Republic of Kazakhstan dated January 24, 1996 No. 88 "On improving architectural and urban planning control in the Republic of Kazakhstan", the Republican State Enterprise "State Non-departmental Expertise of Projects" (RSE "Gosexpertiza") was established Committee on Construction, Housing and Communal Services and Land Management of the Ministry of National Economy of the Republic of Kazakhstan. Thus, the direct conclusion of a public procurement contract between the parties using a single-source method in the case when legislative acts provide for a different procedure for the purchase of services from another supplier indicates the unreasonableness of the claim brought by the Enterprise arising from the legislation on public procurement, which is not applicable to disputed legal relations.
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