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Public Procurement in Kazakhstan


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This is a presentation of Linkage & Mind law firm on a webinar on 21 January 2011.

Published in: Investor Relations, Business
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Public Procurement in Kazakhstan

  1. 1. Regulation of Public Procurements in Kazakhstan
  2. 2. Key Stages of Procurement Procedure Public procurement is the process by which government departments or agencies purchase goods and services from the private sector. It takes place at both a national and regional level.  Publication of procurement announcement (web-site, mass media) Submission of bid by suppliers, within terms specified in announcement Review of the bids, sizing up of Procurement Signing the Contract with the Supplier
  3. 3. <ul><li>Public Procurement (PP) in Kazakhstan is regulated by the Law on Public Procurement (LPP), dated 21 July 2007. </li></ul><ul><li>State bodies (hereafter “customers”) which are required to apply the rules on Public Procurement (PP): </li></ul><ul><li>government agencies </li></ul><ul><li>state controlled enterprises </li></ul><ul><li>private legal entities where the state holds at least 50% or more of shares (participant interest) </li></ul><ul><li>affiliates of abovementioned entities </li></ul><ul><li>The entities which are not subject to LPP regulation: </li></ul><ul><li>national management holding companies </li></ul><ul><li>national holding companies </li></ul><ul><li>national management companies </li></ul><ul><li>national companies </li></ul><ul><li>affiliates of abovementioned entities </li></ul><ul><li>The second type of entities, are subject to their own Rules on procurement regulation. These Rules are slightly differing from LPP </li></ul>
  4. 4. <ul><li>General qualification requirements: </li></ul><ul><li>shall not overdue tax liability for a period exceeding three months </li></ul><ul><li>shall not be subject to bankruptcy or liquidation </li></ul><ul><li>Special qualification requirements: </li></ul><ul><li>Special qualification requirements shall be established by a certain customer in each certain case. They include terms on possession of material, financial and human resources sufficient to fulfill the obligations, etc. </li></ul><ul><li>Potential non-resident supplier should comply with the qualification requirements established by LPP, submit the same documents as the residents of the Republic of Kazakhstan, without any exceptions or additions. </li></ul><ul><li>DOCUMENTS SUBMITTED BY NON-RESIDENT MUST BE NOTARIZED AND APOSTILLED (OR LEGALIZED) IN THE HOME COUNTRY. ANY DOCUMENTS SUBMITTED IN A LANGUAGE OTHER THAN KAZAKH OR RUSSIAN MUST BE ACCOMPANIED BY A NOTARIZED TRANSLATION INTO KAZAKH OR RUSSIAN. </li></ul>
  5. 5. <ul><li>LPP permits several methods of PP: </li></ul><ul><li>Tender (preferred method) </li></ul><ul><li>Price quotation query </li></ul><ul><li>Single-source procurement (available in certain cases, e.g. when tender declared void) </li></ul><ul><li>Open commodity market </li></ul><ul><li>Organized electronic trade </li></ul><ul><li>A customer chooses the method of PP independently, without any coordination with state bodies. </li></ul><ul><li>Kazakhstan is currently setting up an electronic procurement system, and such methods of PP as tender and single-source procurement may be conducted in e-procurement system. </li></ul><ul><li>The great majority of PP is conducted by means of tender. </li></ul>
  6. 6. <ul><li>Tender </li></ul><ul><li>The tenders are organized by a special commission formed by a customer. When participating in the tender, Kazakhstani companies have priority over foreign companies. </li></ul><ul><li>The primary criterion is price, although LPP lists other factors that may also be considered. </li></ul><ul><li>Tender stages: </li></ul><ul><li>publication of a tender announcement (announcement available on a customer’s web-sites) </li></ul><ul><li>publication of required tender documentation (in paper or electronic form) </li></ul><ul><li>submission of bids by suppliers (according to LPP) </li></ul><ul><li>deposit in the amount of 1% of the tender </li></ul><ul><li>review of the bids </li></ul><ul><li>closing of the tender </li></ul><ul><li>Tender is considered failed in following cases: </li></ul><ul><li>where fewer than two suppliers participated in a tender </li></ul><ul><li>winner of the tender cancelled the conclusion of the agreement with the customer </li></ul><ul><li>In case of a failure, the tender can be opened again with corrected requirements. If all bids do not qualify again, a single-source procurement may be used. </li></ul>
  7. 7. <ul><li>Price quotation query </li></ul><ul><li>Public procurements conducted by means of price quotation query are carried out on goods, works and services, the specification and distinguish features of which have no significant value for a customer, because the primary criterion is the price. </li></ul><ul><li>Potential supplier shall submit only one price quotation, additions and (or) amendments of which are not allowed. </li></ul><ul><li>The LPP provide the comprehensive list of cases, when price quotation of the potential supplier must be rejected: </li></ul><ul><li>it exceeds the amount allocated for the purchase of such goods, works and services </li></ul><ul><li>the provisions of the agreement were amended or some additions to the agreement were made </li></ul><ul><li>the potential supplier has submitted more than one price quotation </li></ul><ul><li>If a potential supplier cancel the conclusion of the agreement on public procurement, it will be included in the list of unfair public procurement suppliers, i.e. “black list”. </li></ul><ul><li>     </li></ul>
  8. 8. <ul><li>Single-source procurement </li></ul><ul><li>Public procurements by virtue of single-source procurement can be held in the following cases: </li></ul><ul><li>the customer purchased goods, works and services from a supplier, and now needs to procure from the same supplier for the unification, standardization and for ensuring of compatibility with previously purchased goods, equipment, technologies, works or services </li></ul><ul><li>public procurement by means of tender was invalidated </li></ul><ul><li>there is a need for daily (or) weekly supplies </li></ul><ul><li>In case of single-source procurement, the customer shall dispatch an invitation in written to the supplier to participate in the public procurement. </li></ul><ul><li>Potential supplier must submit the following information to the customer in specified period : </li></ul><ul><li>a description of goods, works and services offered </li></ul><ul><li>documents confirming the compliance with the qualification requirements </li></ul><ul><li>a written explanation of the price for the offered goods, works and services </li></ul><ul><li>     </li></ul>
  10. 10. MADINA SYPATAYEVA, LLM, MBA Managing PARTNER T   + 7 7272 596 260, 597 560 F   + 7 7272 596 260 M  + 7 701 522 7051 E     [email_address]   DR.KARL-HEINZ DERNOSCHEG, MBA PARTNER T   + 7 7272 596 260, 597 560 F   + 7 7272 596 260 E [email_address] FIRM MANAGEMENT ALMATY 188 Dostyk avenue 050000, Kazakhstan  T   + 7 7272 596 260, 597 560 F   + 7 7272 596 260 [email_address] ASTANA 7 Imanova Street 010000, Kazakhstan T   + 7 7172 200 701, 200 703 F   + 7 7172 200 705 [email_address] AKTAU 4 Micro district 130000 Kazakhstan  T   + 7 7292 336 757 F   + 7 7292 336 757 [email_address] ARNUR AMIRGALIYEV, MSc BUSINESS DEVELOPMENT PARTNER T   + 7 7172 200 701/703 F    + 7 7172 200 705 M   + 7 701 208 9984 E [email_address]