Systematization security of bans and restrictions on admission of foreign goods for public procurement and for the needs of national defense and state

On April 30, 2020, the Government of the Russian Federation adopted two resolutions (hereinafter – the “Resolutions“), which introduced bans and restrictions on the admission of foreign industrial goods for the purpose of public procurement and procurement for the needs of national defense and state security:

– Resolution No. 616 “On Establishment of a Ban on the Admission of Industrial Goods Originating from Foreign States for the Purposes of State and Municipal Procurement, as well as Industrial Goods Originating from Foreign States, Works (Services) Performed by Foreign Persons for the Purposes of State Defense and State Security Procurement” (hereinafter – the “Resolution No. 616”),

– Resolution No. 617 “On Restrictions on admission of certain types of industrial goods originating from foreign countries for the purpose of procurement to meet state and municipal needs”. (hereinafter – “Regulation No. 617”).

Both Resolutions specify the procedure for application of the national treatment in procurement as provided for by Article 14 of the Federal Law of 05.04.2013 No. 44-FZ “On the contractual system in the field of procurement of goods, works and services to meet state and municipal needs”.

In particular, Resolution No. 616 prohibits the admission of industrial goods originating from foreign countries for the purpose of procurement for state and municipal needs, according to the list in the Annex. The mentioned list contains 125 goods, including furniture, vehicles, machinery and equipment, tools, appliances, paper and cardboard, and shoes and clothing. This list replaces the previously existing lists approved by the Government of the Russian Federation, including by Decision No. 791 (for light industry goods), No. 1072 (for furniture and woodworking goods) and some others. At the same time, the new list does not fully replicate the previously existing separate lists – some goods have been excluded (e.g., sports firearms, spare parts and cartridges for them), and new goods have been added (in particular, paper and cardboard).

For the purposes of procurement for national defense and security, Regulation No. 616 prohibits admission of all foreign industrial goods and works and services performed by foreign persons.

The prohibitions established by Regulation No. 616 also apply to goods supplied to the customer in the performance of the work to be procured, the provision of services to be procured, and those goods which are subject of lease and/or finance lease.

However, the prohibitions of Order No. 616 do not apply to:

  • foreign goods originating from member states of the Eurasian Economic Union (EAEU)
  • cases of absence of production of the relevant industrial goods on the territory of the Russian Federation (which may be confirmed by a permit of the Ministry of Industry and Trade of the Russian Federation, and regarding goods not included in the list – by the customer himself)
  • goods with a value not exceeding RUB 100,000, the purchase of which in aggregate does not exceed RUB 1 million (except for certain goods from the list)
  • purchases made by the FSB of the Russian Federation, the Federal Security Service of the Russian Federation, SVR of the Russian Federation, OVR of the Ministry of Defense of the Russian Federation, and some other government agencies of the Russian Federation (except for purchases of certain types of goods, provided that one unit of goods is purchased, the cost of which does not exceed RUB 2 million)
  • some other cases.

To confirm that the goods do not fall under a ban, it is necessary to give an extract from the register of the Russian industrial production (concerning the goods made in the Russian Federation) or an extract from the register of the Eurasian industrial production (for the goods made in EAEU). Keeping the specified registers will be carried out by Ministry of Industry and Trade.

Resolution No. 616 entered into force on 1 May 2020, except for certain provisions (bans related to cars and wheeled vehicles will enter into force on 1 July 2020).

Resolution No. 617 introduced restrictions on the admission of foreign industrial goods for the purpose of purchasing for the state and municipal needs, in accordance with the list of 174 items annexed to the Resolution. Among the goods listed in the list are office supplies, chemicals, fertilizers, radiators, convectors, pumps, construction materials and fittings, musical instruments, games and toys, sports equipment, and others. As with Regulation No. 616, Regulation No. 617 does not apply to goods from the EAEU Member States.

An “odd-man-out” rule is introduced regarding foreign goods on the list. This rule means that if at least two bids with goods originating from the Russian Federation or EAEU countries are submitted for participation in the state / municipal procurement, the customer must reject all bids related to the purchase of foreign goods.

To confirm the country of origin of the industrial goods, the following should be  provided:

  •  information from the participant of the purchase that the goods are in the register of Russian industrial products (maintained by the Ministry of Industry and Trade), indicating the number of the register entry and the total number of points for the performance of technological operations (conditions) in the Russian Federation (if applicable),

or

  • a certificate of origin of goods, issued by the authorized body of the EAEU Member State in the form ST-1.

Decision No. 617 entered into force on 1 May 2020; it does not apply to procurement whose implementation notices are posted on the unified information system in the field of procurement and invitations to participate in which were sent before that date.

Contact us

Alex Stolarsky
Partner, Rechtsanwalt, Legal & Compliance, Moscow
+7 / 495 / 956 55 57
Evgenia Sinanova
Head of Commercial Law Practice
+7 / 495 / 956 55 57
Ksenia Dikopolskaya
Senior Legal Expert
+7 / 495 / 956 55 57

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