On the conclusion of contracts in construction
September 16, 2024
Currently, procurement procedures for goods (works, services) in construction for facilities financed by budgetary funds and (or) state non-budgetary funds are carried out in accordance with the legislation on public procurement (Law of the Republic of Belarus No. 419-3 of July 13, 2012 "On Public Procurement of Goods (Works, Services)" (hereinafter referred to as the Law).
According to the second part of Article 1 of the Law, public procurement is defined as the acquisition of goods (works, services) fully or partially at the expense of budgetary funds and (or) state non-budgetary funds by recipients of such funds, as well as relations related to the execution of a public procurement contract.
In this regard, if an organization is a recipient of budgetary funds and (or) state non-budgetary funds (subparagraph 1-44 of paragraph 1 of Article 2, paragraph 1 of Article 20 of the Budget Code of the Republic of Belarus), then the acquisition of goods (works, services) at the expense of such funds must be carried out through the relevant public procurement procedure. Contracting organizations are not recipients of budgetary funds and, therefore, have no legal grounds for conducting public procurement procedures.
In accordance with the thirteenth part of Article 1 of the Law, the subject of public procurement is the goods (works, services) determined by the customer for acquisition within the framework of the public procurement procedure.
According to the second part of paragraph 3 of Article 21 of the Law, heterogeneous goods (works, services) can be combined in the subject of public procurement and (or) its part (lot) only if they are technologically and functionally related to each other. Therefore, when combining heterogeneous goods (works, services) in the subject of public procurement and (or) its part (lot), it is necessary to justify the technological and functional connection between them.
However, if the Council of Ministers of the Republic of Belarus has established conditions for the admission of goods (works, services) of foreign origin and suppliers (contractors, performers) offering such goods (works, services) to participate in public procurement procedures for a part of the goods (works, services), then such goods (works, services) cannot be combined (paragraph three of clause 3 of Article 21 of the Law).
I would like to note that, according to paragraph twenty-first of Article 1 of the Law, the offer price is the cost of goods (works, services) offered by a participant, including value added tax and other taxes, fees (duties), other mandatory payments, as well as other expenses incurred by the participant in connection with the execution of the public procurement contract (hereinafter referred to as the contract) in case of being recognized as the winning participant.
Thus, the procedure for forming the offer price and, consequently, the contract price depends on how the subject of public procurement is formed.
For example, when procuring works and services in construction in accordance with the legislation, the customer's price and the contractor's offer in construction contracts are determined taking into account all costs for the construction of the facility (performance of works), excluding the cost of equipment, development of design documentation, the purchase and development of which are entrusted by the customer to the contractor, and construction materials, products, and structures supplied by the customer according to the list provided by the customer. The contract price is formed in accordance with the provisions of the Regulation on the procedure for forming an immutable contract (fixed) price for the construction of facilities, approved by the Resolution of the Council of Ministers of the Republic of Belarus of November 18, 2011 No. 1553 (hereinafter referred to as Resolution No. 1553).
According to part one of clause 1 of Article 25 of the Law, changes to the terms of the contract during its execution regarding the subject of public procurement and requirements for the subject of public procurement, its volume (quantity), payment procedure, deadlines for fulfilling obligations by the supplier (contractor, performer), contract price, and liability of the parties for non-fulfillment or improper fulfillment of the contract are not allowed, except for cases established by part two of clause 1 of Article 25 of the Law, as well as by the Council of Ministers of the Republic of Belarus.
Changes to the contract terms regarding the deadlines for fulfilling obligations and the price are permitted in cases provided for by the Resolution of the Council of Ministers of the Republic of Belarus of June 15, 2019 No. 395 "On the implementation of the Law of the Republic of Belarus "On Amendments and Additions to the Law of the Republic of Belarus "On Public Procurement of Goods (Works, Services)", as well as in cases provided for by the Council of Ministers of the Republic of Belarus in other resolutions (such as Resolution No. 1553 and the Resolution of the Council of Ministers of the Republic of Belarus of September 15, 1998 No. 1450 "On Approval of the Rules for the Conclusion and Execution of Construction Contracts"), to the extent not contradicting the Law.
Conclusion of a contract for construction works based on public procurement procedures without considering the cost of equipment, with the condition of increasing the contract price by the cost of equipment purchased by the contractor, is not allowed.
In this regard, if the subject of public procurement consists solely of subcontracted works and the participant's offer price is formed without considering the cost of equipment, then the subsequent purchase and payment for the equipment must be carried out by the customer through a separate public procurement procedure in accordance with the Law.
If it is planned to procure subcontracted works and equipment supply simultaneously, the documents submitted for preparing the offer shall indicate that the participant's offer price must be formed from the price of subcontracted works, calculated according to Resolution No. 1553, and the cost of equipment.
In this case, based on the procurement results, a mixed contract will be concluded, and its price will include the cost of subcontracted works, determined according to Resolution No. 1553, and the cost of equipment, which, as a general rule, are fixed.
In this case, the winning participant concludes the contract as a contractor for the performance of subcontracted works, and as a supplier for the supply of equipment.
Thus, if the subject of public procurement includes, among other things, the purchase of equipment, the participant in the public procurement procedure, when participating in the procedure, must establish its cost, which subsequently can only be changed in cases provided for by the Law and the Council of Ministers of the Republic of Belarus.
It is important to remember that, pursuant to paragraph 12 of part 1 of Article 25 of the Law on Combating Corruption, a violation by a public official or a person equated to him of the established legislative procedure for conducting competitions, auctions, and procurement procedures constitutes an offense that creates conditions for corruption.
It should be noted that the district prosecutor's office constantly studies information on procurements carried out within the district, including in the construction sector.
For example, in the current year, during the analysis of information posted on the electronic trading platform http://goszakupki.by, significant violations of legislation were identified in the conduct of public procurement in construction for the facilities: "Installation of external sanitary sewage network of the educational institution "Secondary School No. 2 of Glubokoye town", "Improvement of the adjacent territory of the educational institution "Glubokoye District Gymnasium". In this regard, the district prosecutor issued relevant directives to the procurement organizer, and the procurement procedures were canceled based on their review.
Deputy Prosecutor
of Glubokoye District
Junior Justice Advisor Ya.I. Sosnovsky