Bill on signing contracts without tender discussed
Parliament reviewed a draft amendment to the Law on Procurement of Goods, Works and Services with State and Local Funds during its plenary session on April 14.
During the session, although the majority of lawmakers did not support it, the Mongolian People’s Party caucus in Parliament took a five-day adjournment.
Bill initiators reported that in order to ensure the implementation of Parliamentary Resolution No. 106 of 2021 on the approval of the New Revival Policy, the new bill was developed to simplify the participation of citizens and businesses in public procurement and reduce costs for small and medium enterprises.
In accordance with the amendments, projects and tasks on the list of development projects to be implemented as part of the New Revival Policy will be carried out after contracts are signed. The bill states that the law will not apply if less than 30 percent of the funding for a project is provided by a state-owned or state-controlled enterprise.
It has become possible to make procurement arrangements online and retrieve necessary information from state databases. Therefore, the proposed amendment also includes the reduction of the timeframe for clients to make a decision and establish a contract from 30 days to 15 days.
In some cases, the budgeted cost rises beyond the control of clients or contractors for some longterm projects and actions. In this regard, the draft amendment enables to increase the contracted price if the budgeted price has been revised.
If the bill is approved, clients will be able to establish a contract with a term of up to three years upon reaching an agreement on the price per unit and other terms for the procurement of goods and products in constant demand. To reduce the financial burdens on bidding individuals and companies, a reduction of the tender guarantee amount was also proposed.
During the session, lawmaker B.Enkhbayar commented, “Article 34.1 of this draft law reflects a new regulation on concluding and resolving contracts without the need of tender bidding. In other words, a total of 20 billion USD or 50 to 60 trillion MNT worth of projects and activities have been proposed to be carried out without tenders. The Law on Procurement of Goods, Works and Services with State and Local Funds, commonly referred to as the Tender Law, is enforced to prevent corruption. However, if the bill is approved, it will be the same as repealing this law.”
Minister of Finance B.Javkhlan explained that there are about 90 projects worth over 180 trillion MNT approved within the framework of the New Revival Policy and that not all of them will be funded by the state budget. According to the survey, more than 10 percent of the projects will be funded by the state budget. The Tender Law will regulate these. Meanwhile, the rest will be implemented under the Law on Foreign Investment and the Law on
Public-Private Partnership, he said.
Parliamentarian T.Dorjkhand pointed out, “In 2000, we drafted the Law on Procurement of Goods, Works and Services with State and Local Funds or the Law on Tenders. Parliament approved the law in order to improve budget efficiency and control public procurement. This bill has been drafted to eliminate tenders if a state-owned company finances less than 30 percent of the project. There is no such standard in the world.”
The draft amendment will make tenders more open and transparent, bill initiators claimed. A direct contract will be made on a more negotiable basis and will be open to the public in accordance with the bill. Moving to such a principle is not a setback, Minister B.Javkhlan responded.
Legislator Ts.Iderbat expressed, “We need to have a standard design for our state-funded projects. Secondly, in practice, companies no longer participate in tender selections worth 60 million to 100 million MNT. However, there are many local maintenance workers. These people are capable of making small repairs. However, the law stipulates that it must be done by a business entity. Therefore, if the law is amended to address this issue, it will be possible to support unemployed youth in rural areas.”
Member of the working group in charge of drafting the law Ts.Batzul said that under the draft law, it is possible for individuals to carry out works and services worth up to 20 million MNT financed by the soum.