On the recognition of illegal regulations on the elimination of violations
No. 6001-23-00-6ap/382 dated 07/14/2023
The plaintiff: State Institution "City Education Department"
Respondent: RSU "Department of Internal State Audit of the City of the Committee of Internal State Audit of the Ministry of Finance of the Republic of Kazakhstan" (hereinafter – the Department)
The subject of the dispute is the recognition of the unlawful regulation on the elimination of violations No. 98 dated September 19, 2022.
Review of the defendant's cassation appeal.
PLOT: The Department of Education concluded public procurement contracts with IT LLP using a single source: on March 12, 2021 and January 26, 2022 on the acquisition of the information service of the INDIGO system - automation of processes in the field of preschool education and public services related to preschool education (electronic kindergarten) (hereinafter referred to as the Indigo program); on March 29, 2022, for the purchase of cloud service services "MINDAL" - an electronic system of additional education (hereinafter referred to as the program - Mindal).
The Department conducted an audit of the conclusion of these public procurement contracts based on the appeals of LLP "P" and LLP "I", the period under review is from January 1, 2021 to April 1, 2022.
Based on the results of the state audit, audit report No. 109 dated May 27, 2022 was compiled. On September 19, 2022, an audit report was issued based on the results of the electronic internal state audit.
On September 19, 2022, an order was submitted to the Department of Education to eliminate the identified violations and consider the issue of liability of those who committed them (hereinafter referred to as the appealed order).
Judicial acts:
1st instance: the claim was denied.
Appeal: the court's decision was overturned with a new decision on the satisfaction of the claim.
It was decided: Decree No. 98 dated September 19, 2022, issued to the Department of Education, should be canceled.
Cassation: the decision of the appeal is overturned, the court's decision is upheld. Conclusions: The Court of First Instance, rejecting the claim, pointed out that the INDIGO software package is not the only object of intellectual property, there are other persons who have registered rights to information systems designed to automate the processes of preschool education and public services related to preschool education.
The Court of Appeal, overturning the court's decision and satisfying the claim, argued that the Department of Education had complied with the requirements of the Law when determining the method of purchasing services from a single source. The stated conclusion of the court of appeal does not comply with the circumstances and requirements of the law established in the case.
By virtue of article 4 of the Law of the Republic of Kazakhstan "On Public Procurement" (hereinafter referred to as the Law), public procurement is based on the principles of: optimal and efficient spending of money used for public procurement; providing potential suppliers with equal opportunities to participate in the public procurement procedure, except in cases provided for by this Law; fair competition among potential suppliers preventing collusion between procurement participants; openness and transparency of the public procurement process, including with respect for the legitimate rights of suppliers to trade secrets (before summarizing the results of public procurement); providing support to domestic manufacturers of goods, as well as domestic suppliers of works and services to the extent that this does not contradict international treaties ratified by the Republic of Kazakhstan; responsibility of participants in public procurement; prevention of corruption; acquisition of innovative and high-tech goods, works, and services; compliance with the intellectual property rights contained in the purchased goods. According to subparagraph 3) of paragraph 3 of Article 39 of the Law, public procurement from a single source through the direct conclusion of a public procurement contract is carried out in cases of acquisition of goods and services that are objects of intellectual property from a person who has exclusive rights in respect of the purchased goods and services.
In accordance with article 41 of the Law, public procurement of goods, works, and services using a single source method by directly concluding a public procurement contract on the grounds provided for in paragraph 3 of Article 39 of this Law is carried out in exceptional cases when it is impossible to purchase such goods, works, and services by other means specified in subparagraphs 1), 2), 3), 5) and 6) of paragraph 1 of Article 13 of this Law (tender; auction; request for price proposals; commodity exchange; electronic store).
The conducted audit activities have established and confirmed by the case materials that the INDIGO software package is not the only object of intellectual property in this area.
In the relevant service market, there are other persons who have registered rights to information systems designed to automate the processes of the preschool education system, including queuing preschool children for referral to preschool organizations; accepting documents and enrolling children in preschool educational organizations.
Thus, IT LLP is not the only supplier with exclusive rights in relation to the services purchased. Consequently, the plaintiff's arguments about the validity of conducting public procurement using a single-source method do not correspond to the above circumstances and legal norms.
The procedure for conducting and completing an audit is regulated by the Law of the Republic of Kazakhstan "On State Audit and Financial Control" (hereinafter referred to as the Audit Law) and the Rules for Conducting Internal State Audit and Financial Control by the authorized body for Internal State Audit and Financial Control, approved by Order of the Minister of Finance of the Republic of Kazakhstan dated March 19, 2018 No. 392 (hereinafter referred to as the Rules).
According to paragraph 107 of the Rules, the person responsible for conducting the audit event forms an audit opinion based on the results of the internal state audit in accordance with annex 13 to these Rules.
When violations of the legislation of the Republic of Kazakhstan are detected, as well as acts of quasi-public sector entities adopted for their implementation, the state auditor forms an order to eliminate the identified violations and to consider the responsibility of those who committed them, which is a mandatory document for the subject of state audit, in accordance with Appendix 15 to these Rules.
In accordance with paragraph 109 of the Rules, the audit report summarizes, systematizes and summarizes the established facts of violations, deficiencies indicated in the audit report or the audit report on financial statements, confirmed by documents and quality control, as well as the results of expert opinions (if any). All violations identified
They are reflected in the audit report and the audit report, with reference to documents related to the disputed public procurement. At the same time, the Department only gave a legal assessment of the conformity of the method of conducting public procurement.
The order is drawn up in accordance with the appendix to the Rules, and its form and content comply with the requirements of the law. Violation of the principles of administrative procedures and administrative proceedings, depending on its nature and materiality, in accordance with the requirements of part four of Article 6 of the CPC, entails the cancellation of the judicial act.
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