Dark Aspects of Public Procurement Tenders

For a successful outcome of the tender, there should be a reliable person at the top, according to the investigation of Radio Azadlig concerning tenders for public procurement.

After its own investigation in the field, the radio said that tenders are often won by the same companies.

The investigation revealed that the companies that win tenders are essentially new and have no experience in this area.

‘The law blocks the way to unprofessional companies. The law ‘On public procurement,’ as well as instructions for conducting surveys quoted the basic conditions are indicators of potential and skills,’ the investigation of the radio says.

The economist Rashad Hasanov believes these standards meet the international practice and contribute to preventing public funds falling ‘into random hands.’

‘However, according to my own observations, as well as publications in the media, it can be said that tenders are increasingly won by newly formed companies,’ said the expert.

 As an example, results in several radio companies.

Thus, created on 4 March 2016, LLC Contact-F and JSC Star Construction-12 in the first half of 2016 in total won 55 tenders (28 and 27 respectively - Ed.) At the same time these companies participated in tenders in sync. LLC Contact-F in the framework of tenders won 28 contracts totaling 17 million 199 thousand 829 manats, and LLC Star Construction-12 within 27 tenders won contracts totaling 4 million 983 thousand 944 manats.

‘The question whether these companies comply with the requirements is an open question,’ noted the radio.

As another example, the radio shows Stell Ltd. officially registered on June 29, 2016. Within 22 days after the registration, namely July 21, the company became the winner of the quotation poll conducted by the state-run Sumgait Chemical Industry Park (SCIP).

‘It is surprising how an inexperienced company with suspicious financial capabilities was able to get ahead of the rivals. The Ministry of Economy was unable to explain Radio Azadlig this phenomenon,’ the investigation stated.

It is noted that this is not the first time of SCIP cooperation with inexperienced companies.

Prior to that, the administration of the industrial park on July 19 for the development of design and estimate documents for the overhaul of a three-story office building and the construction of the fence of the park and a checkpoint chose LLC AZIN Construction, which was created in February 2016, among the competitors. This is their first contract since the establishment.

The economist Zohrab Ismayil said the level of public trust of tender is very low and companies unknown until now are leaders in tenders where hundred-million public funds are used.

The radio in its investigation draws attention to the dubious bank guarantees for companies that won the tender.

One of the requirements for participation in tenders for public procurement is a bank guarantee in the amount of 1-5% of the proposals in the tender.

‘New companies somehow get reliable bank guarantees. The audit reports of the Accounts Chamber in several cases indicate that among the documents submitted for participation in the tender, they could not find a bank guarantee,’ the investigation said.

In addition, the investigation indicated some other questionable points in the ads on the tender.

‘Despite the fact that the requirements include an item to prevent the participation of companies with tax and other debts on obligatory payments, there is no information about the test for the presence of such a debt. In addition, the applicants are not asked about the existence of a legal ban on professional activity, or the presence of a criminal record in connection with procurement.

Despite the fact that the ads in the tender indicate the need for the participant to have the necessary financial and technical capabilities, the companies are really not required to provide the necessary documents as proof.

An often occurring violation of the law is incomplete announcement on the tender. The announcement does not mention the name of the purchased goods, the quantity, the place of delivery, especially the planned activities, or the review of services.

‘Experts believe this incompleteness is a basis for agreements behind the scenes,’ the investigation stated.

The economist Zohrab Ismayil said experience shows frequent violation of the law in this area.

‘However, since the entry into force of the law in 2001 no one - neither the members of tender commissions, nor any member of the winning companies - has ever been prosecuted on suspicion of abuse of office and bribery of officials,’ said Ismayil. -----72B