73% of interviewed entrepreneurs of SKR faced corruption on the part of customers of public procurement, and the size of kickbacks vary from 10 to 20% of the amount of tenders

These and other unpleasant facts were announced by the leadership of the South Kazakhstani Chamber of Entrepreneurs at a meeting of the Republican Council for the Protection of the Rights of Entrepreneurs and Counteracting Corruption of NCE RK "Atameken", chaired by Kairbek Suleimenov. The conversation that took place during the videoconference with the regions led to a disappointing conclusion: the current public procurement system remains one of the most corrupt spheres of the economy.

Deputy Director of the Chamber of Entrepreneurs SKR Gazizbek Natbaev summed up the public monitoring, which was conducted to identify corruption risks in public procurement, conducted by local executive bodies and subordinate organizations.

74% of the interviewed entrepreneurs are not satisfied with the system of public procurement. 62% are sure that it is impossible to win a tender without a kickback to the officials responsible for carrying them out.

"Non-transparency of public procurement procedures, lack of clear regulation at the legislative level, shortcomings in the norms of regulatory legal acts in this sphere give rise to a lot of disputes and complaints of entrepreneurs participating in government procurement", - said Nazizbayev. - The Chamber of Entrepreneurs of SKR in 2016 received 67 such appeals. 25% of them on the stage of signing and executing contracts on public procurement. 28% of appeals were on the issue of unreasonable rejection of competitive bids and auction applications of potential suppliers".

As it was noted, in general, in recent years, significant work has been done to improve the transparency and objectivity of public procurement. But there are still gaps in the legislation that allow organizers and customers to influence informally the results of ongoing procurement.

As the analysis of entrepreneurs' complaints to authorized bodies shows, 96% (688) applications (3.2% (23 applications) by the method of requesting price proposals, 0.55% (4 appeals) - purchases in the way of auction, 0.27% (2 references) from a single source).

The result of the conducted public monitoring showed that corruption risks arise at the stage of preparation of the technical specification and tender documentation. There is a problem where customers customize them to a specific supplier. The facts of unreasonable rejection of applications of potential suppliers, unreasonable admission of applications of certain potential suppliers are often found in the process of preliminary and final admission of competitive and auction applications.

Experts of the Chamber of Entrepreneurs of South Kazakhstan, having analyzed the results of tenders worth more than 100 million, conducted by the Department of Public Procurement of SKR last year, found that 78% of all tenders were declared invalid and, as a result, were conducted from one source (43.7% through direct contracts and 34 , 6 percent - from one source for failed purchases). All companies that participated in these tenders were not admitted to them. Although about a dozen construction companies with a strong material and technical base, construction licenses of the first, second categories, qualified specialists, and extensive experience in construction took part in these purchases. Choosing a supplier without competition gives the customer the opportunity to dictate their requirements and leads to corruption.

For example, in 2016, the former head of LLP "Economic Department of Akimat of SKR" was sentenced for fraud. This LLP with 100% state participation in 2010 concludes a public procurement contract for the construction of a rural outpatient clinic and, having no adequate material and technical base, transfers construction work to a subcontractor LLP Sayatzhan. During construction, the leadership of the local government by misleading LLP Sayatzhan, takes for its needs 31.6 million tenge, of which 9.8 million KZT in cash, the rest with building materials, having written a guarantee letter on behalf of the akimat.

Similar LLPs or SCCs exist under almost every state institution that has a development budget.

"Practice shows that the lion's share of business appeals refer to the unjustified rejection of competitive applications of potential suppliers", - comments Gazizbek Natbaev. - In this case, the legislation provides only an administrative penalty without increasing the responsibility for the repetition of the offense (Article 207 part 8 of the Administrative Code of the Republic of Kazakhstan). In this regard, the Chamber of Entrepreneurs proposed to tighten the responsibility of the members of the tender committee and the secretary. In case of revealing of the facts of repeated infringement by members of the competitive commission, expressed by an unreasonable rejection of competitive applications of potential suppliers, it is offered to provide criminal liability of members of the commission».