PUBLIC PROCUREMENT IN UZBEKISTAN

1. PUBLIC PROCUREMENT IN UZBEKISTAN

2. KEY DOCUMENTS REGULATING PUBLIC PROCUREMENT IN UZBEKISTAN Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 On Measures to Improve Tenders Uzbekistan Cabinet of Ministers Resolution # 302 dated 03.07.2003 On Measures to improve competitive bidding system in capital construction Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 On Enhancement of Public Procurement System and Promoting Involvement of Small Business Entities Uzbekistan Cabinet of Ministers Resolution # 100 dated 01.04.2011 г. On Enhancement of legal framework for public procurement

3. KEY DOCUMENTS REGULATING PUBLIC PROCUREMENT IN UZBEKISTAN Uzbekistan Cabinet of Ministers Resolution # 302 dated 03.07.2003 approved Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 approved Regulation for conducting tenders for procurement of raw materials, supplies, component parts and equipment Regulation for competitive bidding for capital construction in Uzbekistan

4. KEY DOCUMENTS REGULATING PUBLIC PROCUREMENT IN UZBEKISTAN Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 approved Uzbekistan Cabinet of Ministers Resolution # 100 dated 01.04.2011 г. approved Composition of the Government Committee for public procurement Regulation for the working body of Government Committee for public procurement Regulation for arranging and conducting e-auctions to reduce the starting price t the Uzbek National Commodity Exchange. Resolution on Government Committee for public procurement The list of goods (works, services) to meet public needs that are mostly procured from small business entities.

5. Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 The key message of the Resolution is the requirement to use the bidding procedures for procurement of raw material, supplies, components and equipment with the estimated value of over USD 100,000 in equivalent. Main types of procedures for procurement of raw materials, supplies, components and equipment Tenders Selection of best proposals E-auctions Direct contracting

6. Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 Tenders Procurements to the amount over USD 100,000, the successful bidder is selected by decision of the Tender Committee . In case the procurement package is over USD 1 mln. the composition of the Tender Committee should be agreed with the Cabinet of Minister of the Republic of Uzbekistan. open limited (as per decision of the Cabinet of Ministers)

7. Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 Procurements to the amount over USD 300 up to USD 100,000 are conducted without tender by decision of a special committee set up by the client; the committee selects the best proposals . This selection procedure is not applied in case the goods, works and services are from the list that is specified by the Government Committee for public procurement Selection of best proposals Procurement of special types of goods, works and services from the list that is specified by the Government Committee for public procurement E-auctions

8. Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 • goods manufactured by natural monopolies, • procurements through Exchange, • procurement of goods amounting less than USD 300 equivalent, • procurement of cultural, • procurement from supplier that has exclusive rights for sale, • contract amendments to the amount not exceeding 20% of the initial contract amount, • works or services provided by public authorities and administrations; • procurement of goods needed to eliminate (prevent) the effects of force-majeure (as agreed with finance authorities), • in case the tender (competitive selection) fails (as agreed with finance authorities). Direct contracting

9. Uzbekistan Cabinet of Ministers Resolution #№ 456 dated 21.11.2000 • The Resolution reflects: • fiscal liability for initiating the procurements; • procurement procedures patters, • types of biddings; • bidding documents; • evaluation of bidders qualification; • submission, receipt, opening and evaluation of bids, • bid and performance security; • review of contracts and responsibility of civil servants and bidders for violation of procurement procedures; • contractual liabilities performance monitoring.

10. Regulation for tenders for procurement of raw materials, supplies, components and equipment, approved by the Resolution of the Cabinet of Ministers #456 dated 21.11.2000 THE ARRANGMENT OF TENDER Decision to conduct the tender, determine the maximum price for the goods, set the date of tender, set the Bidding Committee, assist the Bidding Committee, control the performance of the working body Client define tender procedure and its execution; arrange development of bidding documents; publication of announcement in mass media and/or distribution of invitations; coordinate the performance of involved experts and consultants; familiarize bidders with bidding documents; accept bids, register and ensure their security and confidentiality. Working body (client or other special agency is to act as a working body) define procedures and regulations for Bidding Committee; conduct pre-qualification; bid opening and evaluation; select the successful bidder. Bidding Committee contract with successful bidder; provide information on monitoring of contractual liabilities implementation to client’s servicing bank.

11. Uzbekistan Cabinet of Ministers Resolution 302 dated 03.07.2003 regulates the procedure for procurement of works and services package, procurement of goods, equipment related to construction, expansion, reconstruction, modernization, and upgrade of enterprises, capital repair, including design and survey works, funded from the state budget, public authorities and public enterprises, and extra-budgetary funds of budgetary organizations Main types of procurement in capital construction Competitive bidding (one-stage, two-stage, with and without prequalification) Shopping Direct contracting open Limited

12. Uzbekistan Cabinet of Ministers Resolution # 302 dated 03.07.2003 • The Resolution stipulates: • fiscal liability for initiating the procurement, • key functions, rights and responsibilities of all participants of the procurement, • key qualification requirements for bidders, • basic types of competitive bidding, content of the bidding documents, • procedure for invitation to bid, arrangement of competitive bidding and selection of successful bidder, • the priority of open biddings and conditions for limited biddings, • bid and performance security, • review of the bidding documents, • presence of the authorized representative from the State Committee for Architecture and Construction in competitive bidding, • agreement of competitive bidding results with the State Committee for Architecture and Construction, • monitoring of contractual liabilities implementation.

13. Uzbekistan Cabinet of Ministers Resolution # 302 dated 03.07.2003 Shopping Procurement package is less than USD 50,000 equivalent minimum amount of the procurement package for which the competitive bidding is required is USD 50,000 equivalent. Competitive bidding Direct contracting as per decision of the Cabinet of Minister of the Republic of Uzbekistan

14. Uzbekistan Cabinet of Ministers Resolution # 302 dated 03.07.2003 Shopping is conducted though requestsent to potential bidders, specifying the nature, quantity of goods, works and services to be procured, due date and destination for goods, then comparing of prices and characteristics proposed by suppliers and vendors. In shopping the supplier is selected by the Evaluation Committee. The Evaluation Committee is set by the client and comprise not less than 5 competent specialists.

15. GENERAL ORGANIZATION SCHEME FOR COMPETITIVE BIDDING IN CONTRACTION

16. Specifics of competitive biddings in construction Bidding organizers In line with the Resolution of the Cabinet of Ministers #538 dated 28.12.2003 On Improving the performance of State Committee for Architecture and Construction, Regional Consulting Centers for competitive bidding were established in each regional branch of the Committee. These Consulting Centers develop the bidding documents and arrange the competitive bidding. Regional Consulting Centers are public organizations legally subordinated to State Committee for Architecture and Construction, but in fact they are self-supporting organizations (they receive payment for development of bidding documents, arranging and conducting competitive biddings). Besides, there are other consulting organizations, including those under ministries and departments that are licensed to develop bidding documents for construction and engaged in similar activities.

17. Specifics of competitive biddings in construction Review of bidding documents • Once the bidding documents are developed and agreed with the client, they are submitted to the State Committee for Architecture and Construction for review. The review of the bidding documents shall be completed in 10 days in line with the Regulation on Procedures for Review Bidding Documents for Construction, Reconstruction, Upgrade, Design, Procurement of material and equipment for construction sites by the State Committee for Architecture and Construction approved by the Regulation of the Committee # 9 dated 27.11.2007 (registration number issued by Ministry of Justice #9 dated 09.01.2008). • The State Committee for Architecture and Construction reviews the bidding documents subject to following: • completeness of bidding documentation, • the presence of all permits authorizing to conduct competitive bidding (source of financing, administrative documentof the Client approving the composition of the Evaluation Committee, rule and procedures of work of the Evaluation Committeeand minutes of the preliminary meeting, etc.), • Review bidding documents subject to compliance with the active legislation and issue respective conclusion, • consistency of terminology and its interpretation, • compliance of requirements to bidders (work experience, financial capacity, technical capacity, etc.), • objectivity of criteria for financial and technical evaluation of the bids and their relevancy. • The positive results of the review are the basis for publication of announcement in mass-media and distribution of invitations to bid (in case of limited bidding).

18. Specifics of competitive biddings in construction Content of the bidding document • The general part contains: • Invitation to bid, • General contract conditions, • Bid submission form, instructions to bidders. • Instructions to bidders contain criteria for evaluation of qualification and financial proposals, describe the procedures for preparing, submission and evaluation of bids and selection of successful bidder, and other relevant documents. General part • The financial part of the bidding documents contain: • the starting price of the items to be procured, • works performance conditions, • sources and conditions of financing, • due date of the items in bidding, • draft contract. Financial part The content of the technical part depends on the items in bidding (contract works, procurement of equipment, design works) and are developed as per requirements of the Regulation on Procedures for Reviewing the bidding documents for construction, reconstruction, upgrade, design, procurement of materials and equipment for construction sites by the State Committee for Architecture and Construction, approved by the Resolution of Committee #9 dated 27.11.2007 (Ministry of Justice reg. #1757 dated 09.01.2008). Technical part

19. Specifics of competitive biddings in construction The State Committee for Architecture and Construction developed the standard bidding documents for biddings to select the supplier and general design engineer (consultant). The bidders prepare bids according to the bidding documents and submit them to the organizer of bidding. As a rule, the minimum due date should allow for 30 days for preparation of bids since the date of publication of announcement in mass media or 35 days since the date of distribution of invitation to bid to potential bidders.

20. Specifics of competitive biddings in construction Bid submission and opening Bids are submitted in a double sealed envelope. An outer envelope should contain documents confirming competency of bidder. Financial proposal should be in an inner envelope. After bidding deadline, bids are opened in a meeting of Bidding Committee. Representatives of bidders have right to attend bid opening procedure. First, outer envelopes are opened and studied which have information about technical competency of bidders. After studying the outer envelopes, the inner envelopes (with financial proposals) of qualified bidders are opened and reviewed. The bids are reviewed and evaluated by the Bidding Committee without participation of bidders.Meanwhile, Bidding Committee has right to create Evaluation Team and/or hire independent experts. The functions of Evaluation Team is regulated by Methodological Recommendations on Procedures of Establishing, Functions and Tasks of the Evaluation Team to review qualification and prices of bids approved by the Order of State Committee for Architecture and Construction #31 dated 27.06.2005.

21. Specifics of competitive biddings in construction Evaluation of bids Evaluation of bids conducted using merit point system. During the evaluation, depending on procuring items bids are assessed by several parameters which are given some points (from 0 to 100 points).Then the points are multiplied by specific ratio of each corresponding parameter. Each member of the Bidding Committee fills out and sings evaluation sheet by himself. The vote of Bidding Committee is regarded positive if total points multiplied by corresponding ratios exceed the minimum passing limit determined by Bidding Committee. The maximum points get an bidder who offers the most favorable proposition. The points gathered by evaluation are taken into account in overall assessment with ratios. After the evaluation the successful bidder is determined who is awarded a contract within 10 days.

22. Specifics of competitive biddings in construction Authorized representative of State Committee for Architecture and Construction Authorized representative of State Committee for Architecture and Construction attends all meetings of Bidding Committee related to bids opening and evaluation whose task is monitoring of bidding procedures compliance with current legislation. Functions of the authorized representative are regulated by the Statue on Activities of Authorized Representative of State Committee for Architecture and Construction of the Republic of Uzbekistanapproved by the Resolution of State Committee for Architecture and Construction #4 dated 01.07.2009. The authorized representative submits the results of his work to senior staff of State Committee for Architecture and Construction in a form of report.

23. Specifics of competitive biddings in construction Agreement of Client’s Evaluation Report, monitoring fulfillment of contractual obligations After bidding and contract award, the client submits the Evaluation Report to the State Committee for Architecture and Construction for agreement. Once the Report is cleared, the Ministry of Finance of Uzbekistan starts financing the construction. In case of refusal of the report, State Committee for Architecture and Construction recommends rebidding. After bidding the client must provide the Regional Consulting Centers with information on monitoring of contractual obligations fulfillment. Regional Consulting Centers systematize the information and submit to State Committee for Architecture and Construction . State Committee for Architecture and Construction reports to the Cabinet of Ministers on contractual obligations fulfillment quarterly.

24. In 2006-2010 121.7 billion Uzbek sums were saved by competitive biddings DYNAMICS OF FUNDS SAVINGS THROUGH COMPETITIVE BIDDINGS

25. Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 • efficient use of state budget funds, • encourage active and large scale participation of small business enterprises in public procurement, • optimization of public procurement process, • development of business competition, • transparency in public procurement. The Resolution objectives

26. Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 • Activity of the specialized body, Government Commission for Public Procurement, • Preferences for small business enterprises in public procurement biddings, • Advertisements on specialized information portal, • Procuring some goods by e-bidding, • The list of goods and services for public needs where small business enterprises have preferences, • Establishing the Center for Promotion of Goods and Services provided by Small Business Enterprises, • Establishing an organization to control tenders for public procurement The followings are reflected in the Resolution

27. Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 • controls proper and efficient use of budget funds and other centralized funds, • monitors compliance with public procurement legislation, • monitors performance of public procurement, • takes actions to improve public procurement system, • contributes to better conditions for small business enterprises participation in public procurement Government Commission for Public Procurement Working authority of Government Commission for Public Procurement is the Treasury of the Ministry of Finance

28. Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 Preferences for SME • In public procurement bidding, inter alia, small business enterprises must be preferred, • Contractors for construction and rehabilitation works costing up to 500 million Uzbek sums and financed by centralized fund sources should only be selected among small business enterprises.

29. Uzbekistan Cabinet of Ministers Resolution # 100 dated 01.04.2011 The followings are reflected in the Resolution • Activity of working authority of the Government Commission for Public Procurement and its main tasks, functions and rights. • E-bidding procedures of some groups of goods with price ranging from USD 300 to USD 100,000

30. Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 The tasks of working authority • Creation and updating of public procurement information database • Preparation of draft resolutions of Government Commission for Public Procurement • Monitoring and analysis of public procurement process and meeting the quota allocated to small business enterprises • Participation in developing of draft government regulations on public procurement and law change proposals.

31. Resolution of the President of Uzbekistan # PP-1475 dated 07.02.2011 Scheme of e-auction

32. Conclusions Despite the lack of Public Procurement Law, in general, public procurement system of Uzbekistan functioning in accordance with Uzbekistan Cabinet of Ministers Resolutions #456 dated 21.11.2000, #302 dated 03.07.2003and #100 dated 01.04.2011, and the Resolution of the President of Uzbekistan #PP-1475 dated 07.02.2011 meets requirements of the government economic policy and has all necessary methodological tools. . Whereas the public procurement system in construction covers the whole sector, the State Committee for Architecture and Construction provides necessary methodological tools for bidding, oversees the bidding documents quality and bidding procedures, monitors fulfillment of contractual obligations which in turn facilitates accounting of government expenditures on procurement in capital construction and allows to analyze the dynamics of budget savings of allocated funds in capital construction.