Journal on Policy and Complex Systems
ent . However , this is not happening in Russia today : local officials are more likely to be interested in entering into contracts with " friendly " firms that will personally share part of their profits in exchange for the opportunity to get a contract at a high price .
Context of the Russian Procurement System
The total volume of purchases
for state and municipal needs in Russia exceeds $ 125 billion per year . Purchases are made through competitive procedures — most often these are electronic auctions . They are held incognito ; the contract is given to the company that has offered the lowest price for the execution of works or the delivery of goods . There are other forms of procurement applied in strictly defined cases — quotation requests , contests , direct purchases . Conflict of interest invariably arises at the point where it is profitable for the state / national budget to purchase at the lowest price , and a particular official wants to get as much reward as possible for securing a contract from a particular company , which he will give preferences as a result of legal manipulations and loopholes available to him . To do this , he needs to maximize the purchase price , and in addition to prevent anyone to a competitive procedure except the “ friendly ” company . This is the essence of the paradoxical restriction of competition in practice .
According to Antirutina ’ s 2018 calculations , budget losses from unfair overpricing just in the open area are 16 % on average , 21 % for food , 17 % for maintenance and property management , 27 % for office equipment , 29 % for educational services , in health care and construction it sometimes reaches 40 % ( Antirutina , 2018 ; Kommersant , 2018 ). At the same time , the 2018 calculations of Antirutina did not take into consideration the overestimation of the tricks of customers to restrict competition .
The system of state order of Russia is governed mainly by the special Federal Law No . 44-FZ of April 5 , 2013 ( SMB , 2016a ). It states : “ On the contract system in the field of procurement of goods , works , services for state and municipal needs ”. As an independent branch of law , the public procurement industry is based on a number of principles . The principle of ensuring competition is enshrined in Art . 8 of the Law 44 . It reads : “ 1 . The procurement contract system is aimed at creating equal conditions for ensuring competition between procurement participants . Any interested person has the opportunity in accordance with the legislation of the Russian Federation and other regulatory legal acts on the contractual system in the field of procurement to become a supplier ( contractor , performer ).”
From the outside , the 44 th Law looks very regulated and describes in detail every step of all participants of the process . From the outside , it seems that there is no place for corruption at all . However , in practice , everything is different .
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