Non-residents in Kazakhstan’s public procurement (architecture and urban planning). How to participate?

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This article is the part of the series of articles "Construction in Kazakhstan from A to Z".

Non-residents in Kazakhstan’s public procurement (architecture and urban planning). How to participate? 

Section 1. Public procurement

1. Is there any difference, starting from January 1, 2015, and if so, what difference?

Changes, adopted on January 1, 2015 and covering public procurement in Kazakhstan, took place within the framework of cooperation of Customs Union (further the “CU”) member countries – Russia, Belarus and Kazakhstan, which entered into an agreement and thereby created a new platform for closer economic cooperation.

Thus, the Treaty on the Eurasian Economic Union (further the "Treaty") adopted on January 1, 2015, provides for further integration of the EAEU member states and harmonization of the legislation of these countries in many areas of economic cooperation, in particular, public procurement. Armenia and Kyrgyzstan joined the Treaty on October 10, 2014 and December 23, 2014, respectively, by signing relative agreements of accession.

The Treaty is quite an extensive document, establishing the legal framework for the new supranational platform. Public procurement is governed by Section 22 "Public (Municipal) Procurement" and Annex #25 to the Treaty "Protocol on the Procedure for Regulation of Procurement" (further "the Protocol"). Provisions of the Treaty largely retain the meaning of the Articles of Agreement on Public (Municipal) Procurement (further the "Agreement"), in effect since January 1, 2012, but it has been significantly amended.

One of the most significant amendments made on 1 January 2015, was that the potential resident of one of the member states to the Treaty may already use the electronic digital signature, which had been issued in its home country, in the territory of the Republic of Kazakhstan (see Para 2). So, Article 88(1) of the Treaty, in particular, provides for the provision to the parties to the Treaty in terms of procurement, an easy access for potential suppliers and suppliers of the member states, to participate in procurement conducted in an electronic format, through the mutual recognition of the digital signatures made in accordance with the laws of one member state, by the other member states.

The treaty provides for a separate provision that the effect of the Treaty do not apply to national banks, which make procurement in accordance with their internal regulations on public procurement (provisions) (Article 88(4) of the Treaty).

Alterations in suppliers’ security:

  • The amount of security for the treaty enforcement in the payment of an advance, as per the terms and conditions of the Treaty, has changed -- it is now not less than 50 percent of the amount of the advance, instead of the previous 100 per cent of the advance payment (Para 3, Item 18 of the Protocol). The limitation on the excess of the security of 30 percent of the advance payment under the Treaty, was annulled.
  • The Treaty provides for the right of the supplier to refuse from the contract if the public procurement contract provides for the payment of an advance to such supplier (Para 4, Item 18 of the Protocol).
  • The Treaty provides for the detailed information on the types of supplier’s security: security deposit and bank guarantee (Para 6, Item 18 of the Protocol).
  • There is a requirement to the national legislation of the parties to the Treaty to ensure timely repayment of the supplier’s security.

Alteration in the requirements to the public procurement contract:

  • The Treaty specifies the year 2016 as possible, but not obligatory for the transition of public procurement in the electronic format (Para 8, Item 28 of the Protocol).
  • Alteration in the national regime of public procurement:
  • The exemptions procedure has been supplemented with a provision that non-compliance with the act adopted by the authority established by the EAEC to abolish adopted exemptions, within two months of the other Member States have the right not to extend its national regime to such a state (p. 33 of the Protocol)
  • The exemptions procedure is supplemented with a provision stating that in case of failure to comply with the statement, adopted by the EAEU authority, on the withdrawal of the established exemptions, the other member states are entitled within two months not to apply their national treatment to such a country (Item 33 of the Protocol).

Other alterations relate to certain methods of public procurement; the most important of them run as follows:

  • Request for proposals: The Treaty accentuates the method of the RFP as an independent method of public procurement. It applies, if the legislation of the party to the Treaty provides for it.
  • Request for a quotation: The Treaty stipulates that the parties should seek to transfer preferably to the conduction of an auction (Item 5 of the Annex #1 to the Protocol).
  • Tender: the period to notify the potential participants of a tender has been reduced. According to the provision in effect since January 1, 2015, the potential suppliers now have 15 days for the submission of their applications for participation in the tender, not 20 days as before. The extension period for filing the application, if any alterations in notifying of a tender, has been reduced by 5 days as well. The Treaty specifies the time limits for entering into the procurement contract (not earlier than 10 business days and no later than 30 calendar days from the date of the decision making on the successful bidder), which are set yet by each party (Item 2 of the Annex #1 to the Protocol).
  • Auction: deadlines for filing the application have been also reduced to 15 days. The time limit for filing the application in the alteration of the notification is reduced to 7 days. The legislation of each party to the Treaty can provide for shorter periods, but they shall not be less than 7 and 3 days, respectively. The limitation on the period for entering into the contract is the same as set for the tender (Item 8 of Annex #1 to the Protocol).

It should be noted that many of the amendments cannot take effect immediately, but only as soon as the relevant amendments will be made to the local legislation, or certain technical procedures will be performed (for example, electronic digital signature, see Para 2). In some cases this may be caused by problems with the law enforcement. In order to ensure the uniform law enforcement, the countries takes steps to harmonize their national legislation. For example, in Kazakhstan such steps have already be taken, and certain amendments have been made to the national legislation on public procurement.

2. Is it obligatory to get an electronic digital signature (EDS)? Is it necessary for the company to come to Kazakhstan? Where EDS is obtained, where the bids is conducted, or elsewhere?

Laws of the Republic of Kazakhstan provide for the recognition of electronic digital signature (further the "EDS") under the international treaty.

In accordance with Article 13 of the Law "On Electronic Document and Electronic Digital Signature", foreign electronic digital signature with the relevant foreign registration certificate shall be recognized as a valid electronic digital signature in the Republic of Kazakhstan under the international treaties ratified by the Republic of Kazakhstan or after the relevant entry in the register of registration certificates.

In accordance with sub-item 2 of Item 4 of the Rules for the Authentication of Foreign Electronic Digital Signature by a Trusted Third Party of the Republic of Kazakhstan. The trusted third party of the Republic of Kazakhstan checks the authenticity of a foreign digital signature, providing that the following conditions are met:

  1. The electronic document under verification is certified by electronic digital signature of a natural or legal person of a foreign state;
  2. The registration certificate of a natural or legal person of a foreign state is issued in a foreign certification center;
  3. Foreign certification center is registered in the relevant Trusted Third Party of the foreign state;
  4. Trusted Third Party is registered in the Trusted Third Party of the Republic of Kazakhstan.

The process of recognition of foreign electronic digital signature is as follows:

  1. The conclusion of an international agreement on the recognition of foreign digital signature via the Trusted Third Party;
  2. Ratification of the international agreement;
  3. Conclusion of the agreement between the Trusted Third Party of the Republic of Kazakhstan and the Trusted Third Party of a foreign state;
  4. Exchange of root certificates between the trusted certification authorities of the countries.

Thus, the conclusion of an international agreement does not mean, in itself, that the foreign electronic signature is automatically recognized in Kazakhstan. It is necessary to carry out a number of procedures so that the certification authorities in Kazakhstan will be technically capable to confirm the authenticity of the foreign digital signature.

2.1. Issue of the EDS for non-residents

As for non-residents of the countries with which Kazakhstan has got no signed international agreement on the recognition of electronic digital signature, in order for them to participate in public procurement in the Republic of Kazakhstan, they have to obtain the above-said electronic digital signature in Kazakhstan. The given service is provided by the Republican State Enterprise "The State Technical Service" of the Agency of the Republic of Kazakhstan on Communications and Information. The EDS is made within 2 business days from the date of submission of relevant application directly to the address of the service provider, or via the nearest Public Service Center (further the "PSC").

In accordance with Item 6 of the "Issue and Withdrawal of the Registration Certificate" State Service Standard (further the "Standard"), to be issued an electronic digital signature, nonresident legal entities shall provide the following:

  • An application for the issue of registration certificates in the form as set in the Standard;
  • An identification document proving the identity of the service recipient as a company;
  • A power of attorney for the representative of service recipient, the latter as a company, in the form as set in the Standard;
  • A document containing the individual identification number (IIN): residence permit or certificate of stateless person, or a registration certificate for foreigners;
  • A document containing business identification number (BIN): in our case, it is the registration certificate of the non-resident foreign entity, opening an account in a resident bank.

Thus, to get an electronic digital signature, a representative of the non-resident company shall, in any case, come to Kazakhstan and obtain identification documents in his/her name (IIN) and in the name of the company (BIN). BIN can be obtained by opening an account with resident bank.

Under Article 562(4) of the Tax Code of the Republic of Kazakhstan, a person opening a current account with a resident bank, is obliged prior to opening the account, to register as a taxpayer. To register as a taxpayer, such non-resident shall produce to the tax authorities at the location of the bank a relevant application for registration.

According to Article 562(2) of the Tax Code of the Republic of Kazakhstan, for the issue of BIN, the notarized copies of the following documents shall be attached:

  • Identification documents of the non-resident natural person, or the constituent documents of the non-resident foreign company;
  • Documents confirming the state registration in the country of incorporation of the non-resident, with indication of the number of state registration (or its equivalent) for the non-resident foreign company;
  • Documents confirming the tax registration in the country of incorporation (citizenship) of the non-resident, with indication of the number of tax registration (or its equivalent), if any.

In accordance with Sub-item 4 of Item 8, the BIN is assigned at the moment of registration with the government revenues bodies as a taxpayer of non-resident legal entities that open current accounts with resident banks.

2.2. Issue of the EDS for non-residents from the CIS

As already mentioned, for the recognition of foreign electronic signature, a relevant international treaty ratified by the Republic of Kazakhstan is required. Unfortunately, at the moment, a foreign company from the CIS is not able to use its electronic digital signature in Kazakhstan due to the lack of adequate international arrangements.

Thus, to participate in public procurement in Kazakhstan companies from the CIS have to be issued an electronic digital signature on the same basis as for non-residents of Kazakhstan (see Para 2.1. of this article).

Active work is underway at the CIS countries’ level, in the field of information cooperation. In recent years, several strategic documents were adopted, on the basis of which agreements of the legal nature will be developed. The latest of these documents is the Strategy of the CIS Member Countries Cooperation in Design and Development of the Information Community, as well as the Action Plan for Implementation of the Strategy for the Period up to 2015. Both of the documents were adopted on September 28, 2012.

According to the Strategy it is necessary to solve issues of creating legal mechanisms to be applied for legalization of electronic documents across borders and ensuring trust between the participants of such form of information interaction. In the cross-border exchange, one of the main objectives is to ensure the guarantee of credibility to the electronic digital signature of a participant of information exchange of another state – the CIS member.

The Action Plan provides for the development of the model law "On Cross-Border Information Exchange of Electronic Documents" in 2015. Also, it is planned to prepare a draft Agreement on Recognition of the Legal Value of Electronic Documents in the International Exchange of Information Between the CIS Member States.

2.3. Issue of the EDS for non-residents from the Customs Union (CU)

The analysis of agreements and contracts in effect before January 1, 2015 within the Customs Union did not allow to conclude that a country as a member of the CU could participate in electronic public procurement in Kazakhstan without registration certificate issued by the National Certification Authorities of the Republic of Kazakhstan (NCA RK). It is supposed that uniform readiness of the CU member countries to ensure national access to public procurement will be provided starting from January 1, 2015. In fact, it will be possible for companies from the CU to participate in public procurement in Kazakhstan only when the parties exchange root certificates between the Trusted Third Party of the Republic of Kazakhstan and the Trusted Third Party of the CU member states.

In the framework of the CU, the CU member states adopted a number of contracts which at the first stage facilitated the procedure for obtaining the electronic digital signature, at the second stage created a legal framework for the operation of the Trusted Third Party, carrying out the legalization of electronic digital signature, and at the third stage will provide recognition of electronic digital signature in the CU member countries.

  • Stage 1. The facilitation in issue of an electronic digital signature for the CU member states: Item 8 of Article 3 of the Agreement on the State (Municipal) Procurement provides for the unimpeded issue to potential suppliers of an electronic digital signature to participate in procurement in the electronic format;
  • Stage 2. Legal framework of activity of the trusted third party, subject to the requirements of the international treaty and local laws: in accordance with Article 10 of the Agreement on Application of Information Technology in the Exchange of Electronic Documents in Foreign and Mutual Trade in the Single Customs Area of the Customs Union, the operation of services of a trusted third party with regard to the parties of information exchange, is carried out in accordance with the requirements of this Agreement and the law of the country of the Party, to jurisdiction of which the trusted third party relates.

A trusted third party provides legalization (authentication) of electronic documents, secures a guarantee of confidence in international (trans-boundary) exchange of electronic documents, ensures the legitimacy of the use of electronic digital signatures in outgoing and/or incoming electronic documents and messages in accordance with the rules and requirements of the law of the country the trusted third party is located in.

Trusted third parties interact to establish trust in the organization of cross-border electronic document turnover between the parties to electronic interaction of the countries of the Parties that use various mechanisms to protect electronic documents. The Parties shall ensure the right of the parties exchanging information to use services of trusted third parties, the functions of which are performed by the state bodies of the countries of the Parties or organizations accredited by them.

  • Stage 3. The mutual recognition of electronic digital signatures in the CU: The Treaty on the Eurasian Economic Union comes into force on January 1, 2015 and involves further the integration of the CU member states and the harmonization of their legislation, also in terms of public procurement. Article 8(1) of the Treaty specifically provides for the member states of the national treatment for procurement an unimpeded access for potential suppliers and suppliers of the member states to participate in procurement carried out electronically, by means of mutual recognition of electronic digital signatures, issued by one member state in accordance with its laws, by the other member states.

3. Additional requirements to non-residents

There are no any additional requirements for non-residents’ participation in public procurement in Kazakhstan. However, there are limitations on specific goods and services that are purchased from local suppliers. Such limitations are the result of measures aimed at protecting the interests of the country, in particular, to support domestic producers. For the countries of the Customs Union, including Armenia and the Kyrgyz Republic, a national regime is provided.

3.1. Non-residents

Law of the Republic of Kazakhstan "On Public Procurement" of July 21, 2007 (further the "Law on Public Procurement") provides for the support of domestic producers of goods, works and services. This is reflected in the lists of goods, operations and services that can be purchased only from domestic producers – there is a list of goods, operations and services purchased only from domestic producers, as well as the range according to the Resolution #470 of the Government of the Republic of Kazakhstan dated May 11, 2014 "On Selecting the Measures of State Support for Categories of Domestic Potential Suppliers".

Also, the Law on Public Procurement provides for the right of the authorized body to ban an admission of foreign suppliers to public procurement in Kazakhstan in cases when it is necessary to protect the interests of the Republic of Kazakhstan. Thus, in accordance with the Article 44(2) of the Law on Public Procurement in order to protect the constitutional order, ensure the law enforcement, national security and defense of the country, to protect the domestic market of the Republic of Kazakhstan, to develop the national economy, to support domestic producers, domestic suppliers of works and services, the authorized body is entitled to put a ban on the admission of goods originating from foreign countries, or works and services, performed or rendered by foreign potential suppliers, and to limit the admission of goods, works and services in the public procurement.

With regard to those goods and services offered by foreign suppliers for government procurement in the Republic of Kazakhstan, for which there is no above-specified ban, special conditions may be provided for their admission to the Republic of Kazakhstan (Article 44(3) of the Law on Public Procurement).

3.2. Non-residents from the CIS

Requirements and limitations are the same as for non-residents. Suppliers from Armenia and Kyrgyzstan, which acceded to the Treaty in the second half of 2014, will be subject to the rules of public procurement provided for in the Treaty. In addition to all the benefits, the suppliers from these countries, in the participation in public procurement in the Republic of Kazakhstan, will be able to take advantage of the national treatment.

3.3. Non-residents from the CU

Legal relations in the field of public procurement, relating to non-residents of Kazakhstan from the CU countries, previously governed by the Agreement, are now governed by the terms of the Treaty.

The Agreement provided for the introduction of national regime on the parties’ territory, i.e. Kazakhstan undertook to provide for suppliers of goods and services from the CU countries regime no less favorable than that for local suppliers with respect to the analogous goods and services. National regime is maintained within the EAEU. Thus, in accordance with Item 30 of the Protocol, each of the Member States shall ensure national regime in procurement in respect of goods and services originating from other Member States, as well as in respect of potential suppliers and suppliers of other Member States, offering such goods, works and services.

In Kazakhstan, the national regime for suppliers from the CU came into force on January 29, 2014 when the Law № 161-V «On Amending Certain Legislative Acts of the Republic of Kazakhstan Concerning Public Procurement" was enacted on January 14, 2014. The introduction of national regime was provided for by the Agreement and had to take place before January 1, 2014.

The Agreement and Treaty stipulated the possibility of exemptions from national treatment. In accordance with Article 4 of the Agreement, in exceptional cases, the Parties may unilaterally set exemptions from their national regime for a period of no more than 2 years through the adopting of relevant laws by the country of the Party. Further, Article 4 sets out the procedure for implementing such exemptions, with the possibility for the CU authority to revoke the exemption. A similar procedure is provided for by the Treaty, with the important supplement saying that in the failure to fulfill the requirements of the EAEU authority to revoke the exemption, the other Member States have the right unilaterally not to extend the national regime to the member state which set the exemption (see Chapter 1 of this article).

In the framework of the CU, for companies participating in government and corporate procurement, the "Register of Bona Fide Suppliers" system is provided. The company is issued a certificate of conformity to this system, which is valid for one year and confirms that the company is a reliable supplier and acts in good faith, fulfilling its obligations. However, the absence of company in the registry does not mean it is not eligible to take part in public procurement; the awarding of this status will mean increased trust from customers, increased competitiveness and market share.

Moreover, on March 24, 2014 the operators of the Unified Register of the Republic of Kazakhstan, the Federal Register of Basic Organizations of the Russian Economy, and the Certification Center "Belarusian Universal Commodity Exchange" signed a memorandum of creation of the "Unified Register of Basic Organizations of the Economies of the Customs Union." Organizations included in the register, are given additional benefits and, most importantly, secure access to participation in public procurement in the CU.

A single register of unscrupulous suppliers is not kept in the CU. Thus, the Russian or Belarusian companies having the status of "unscrupulous suppliers" in their countries are free to participate in public procurement in the Republic of Kazakhstan. The Treaty nevertheless says that the legislation of the member country may provide for the limitation of participation in public procurement, if the company has been recognized as an unscrupulous supplier in its home country, but the legislation of Kazakhstan does not provide for any such limitations.

4. Do the bids for such type of work as construction, design, and engineering have any specifics?

One of the specifics of the bids for the construction, design, and engineering is the requirement of the customer set to the provider that the latter will have relevant permits for the carrying out of these types of activities (if any such requirement to have a license for such type of activities exists). The bid contracts, as a rule, provide for the stipulation as to the availability of appropriate license to the contractor, or they specify the time frames for obtaining such a license in the Republic of Kazakhstan, if the project contractor is, for example, a Russian company.

Talking about the specifics arising out from the current legislation of the Republic of Kazakhstan, there are cases about the point in question, where the provisions of the Law "On Public Procurement" are not applicable. Thus, in accordance with sub-item 62 of Item 1 of Article 4 of the Law "On Public Procurement", the rules of law governing the selection of the supplier and conclusion of a contract of public procurement does not extend to the purchase of services in architectural supervision over the development of design documentation for construction of capital projects, architectural supervision over the construction, renovation and capital repairs of capital projects constructed by related designers.

There are also some limitations on participation in public procurement, if a potential supplier has already participated as a designer in the construction project with regard to which the public procurement is made. In accordance with sub-item 2 of Item 1 of Article 6 of the Law "On Public Procurement", the potential supplier is not entitled to participate in public procurement if the potential supplier and/or its worker <..> has already participated as a general designer or sub-designer in development of a feasibility study and/or design estimates for construction of the facility, with regard to which the public procurement is made, except for the participation of the developer of the feasibility study in public procurement for the development of the project documentation/design estimates.

Section 2. Participation of non-residents in public procurement by JSC Samruk Kazyna

1. Is there any difference starting from January 1, 2015, and if so, what difference?

Changes that took place on January 1, 2015 are associated with the entry into force of the Treaty, which contains provisions relating to public procurement in the countries parties to the Treaty.

The alterations affected the scope of public procurement, ie procurement carried out in full or partially by state organizations and their affiliated entities (Item 32 of Article 2 of the Law "On Public Procurement"). The Joint Stock Company National Welfare Fund Samruk Kazyna as a national holding company (Item 5 of Article 1 of the Law "On National Welfare Fund") and the organizations fifty percent or more of the voting shares (participating interest) of which are held directly or indirectly by JSC Samruk Kazyna (further Samruk Kazyna) are not covered by the Law on Public Procurement. The provisions of the latter do not also apply to national holdings, national management companies, national companies and their affiliated legal entities, the National Bank of the Republic of Kazakhstan, its agencies and legal entities to which it is the founder (authorized body) or shareholder (Item 23 of Article 2 of the Law "On Public Procurement").

Thus, in the making of procurement Samruk Kazyna is guided not by provisions of the Law on Public Procurement, but its own rules and regulations regarding the implementation of procurement, namely:

  • Rules on the Procurement of Goods, Works and Services by JSC National Welfare Fund Samruk Kazyna and Organizations Fifty or More Percent of the Voting Shares (Participating Interest) of Which are Held Directly or Indirectly by JSC Samruk Kazyna on the Right of Ownership or Trust Management, dated 26 May 2012 (further the "Rules of Procurement by Samruk Kazyna);
  • Rules of drawing up, keeping and approval of the List of Bona Fide Suppliers of the Holding Company (Annex to the Minutes of the Meeting #29/12 of the Board of Samruk Kazyna dated July 5, 2012);
  • Rules of Drawing up, Keeping and Approval of the List of Unreliable Potential Suppliers of the Holding Company (Annex to the Minutes of the Meeting #29/12 of the Board of Samruk Kazyna of July 5, 2012, as amended on August 28, 2013).
  • Regulations on the Commission of JSC Samruk Kazyna for Consideration of Complaints Regarding Public Procurement (Annex to the Minutes of the Meeting # 29/12 of the Board of Samruk Kazyna of July 5, 2012, as amended on 25.07.2014).
  • Guideline for Conducting Electronic Procurement of Goods, Works and Services by Samruk Kazyna and Organizations Fifty or More Percent of the Voting Shares (Participating Interest) of Which are Held Directly or Indirectly by JSC Samruk Kazyna on the Right of Ownership or Trust Management, dated May 26, 2012 (Approved by the Resolution of the Board of Samruk Kazyna. Extract from the Minutes of the Meeting #49/13 of September 10, 2013) (further the Guideline for the Carrying out of E-Procurement by Samruk Kazyna, as amended on 24.06.2014).

In this regard, the provisions of the Treaty will not produce a direct effect on the procurement by Samruk Kazyna, however, it could trigger a change in the above-mentioned rules and regulations to bring them in line with the current legislation of the Republic of Kazakhstan, as well to adapt to those consequences which the further integration of the countries into a single economic space will lead to.

2. Is it obligatory to get an EDS? Is it necessary for the company to come to Kazakhstan? Where EDS is obtained, where the bids is conducted, or elsewhere?

In accordance with Item 3 of Annex # 1 to the Guideline for the Carrying out of E-Procurement by Samruk Kazyna, for registration in the e-procurement system of Samruk Kazyna, the potential supplier shall use the EDS.

For this purpose, the EDS can be obtained in two ways:

  • On the same basis as for residents of the Republic of Kazakhstan. Such EDS also gives the right to participate in public procurement in the Republic of Kazakhstan (for the procedure for obtaining the EDS by non-residents see Para 2 of Chapter 1);
  • By applying to the Certification Center (CA) of LLP NIL Gamma Technologies (further CA Gamma Technologies) (it became possible from April 1, 2013). In this case, a non-resident does not have a need to come to Kazakhstan to get the EDS and to be registered with the local tax authorities.

To get the EDS from CA Gamma Technologies, it is necessary to perform the following steps:

  1. Buy the recommended key carrier from one of the partners of CA Gamma Technologies;
  2. Install the necessary software;
  3. Place an order on the Internet website. In the relevant form it is necessary to specify the accurate data for the issue of the certificate of the EDS key;
  4. Complete the procedure of creation of key information.

After sending the completed order form, the next step is to pay for the issue of the certificate of the EDS key according to the order.

The link to the certificate of the EDS key and relevant installation instructions will be sent to the payer’s e-mail.

After getting the EDS by the potential suppliers of Samruk Kazyna, as a next step it is necessary to create an account in the system of potential suppliers. The detailed procedure for registration is given in the Guideline for the Carrying out of E-Procurement by Samruk Kazyna.

2.1. Getting the EDS by non-residents of Kazakhstan

A non-resident may participate in procurement organized by Samruk Kazyna, providing that it has acquired the electronic key SafeNet eToken 5100; non-residents of the European Union should acquire USB token Mini (JaCarta JC100).

The application should contain the following data:

  1. Name of the company;
  2. Legal address of the company;
  3. The actual address of the company;
  4. Identification number of the company;
  5. Bank details (bank, SWIFT code, account number);
  6. Contact data of the person in charge.

2.2. Issue of the EDS for non-residents of Kazakhstan from the CIS

A Ukrainian company gets JaCarta JC203.

In the application, it is necessary to specify that the token is acquired for the trading floor of Samruk-Kazyna and to attach a copy of the Certificate of VAT payer.

Companies from the other CIS member countries get the EDS under the conditions provided for non-residents (see Para 1.1. of this article).

2.3. Issue of the EDS for non-residents from the CU.

A Russian company acquires the electronic key JaCarta PKI/GOST.

It is necessary to specify in the application:

  1. Name of the company;
  2. Legal and actual addresses of the company.
  3. Company’s details of the company;
  4. Bank details;
  5. Full name and contacts of the person in charge.

Companies from the other CU member countries get the EDS under the conditions provided for non-residents (see Para 1.1. of this article)

3. Additional requirements to non-residents of Kazakhstan

In the participation in procurement organized by Samruk Kazyna, nonresidents generally exercise the same rights as companies of Kazakhstan do. In accordance with Item 49 of the Regulations on Procurement by Samruk Kazyna, the potential supplier, non-resident of the Republic of Kazakhstan, shall submit the same documents required by this Item as the residents of the Republic of Kazakhstan, or documents containing similar information. The same provision is contained in the Guideline for the Carrying out of E-Procurement by Samruk Kazyna.

Non-residents, however, can face other challenges and barriers which local companies do not face or such challenges are minor.

3.1. Limitation on the participation of non-residents in public procurement by Samruk Kazyna.

In individual cases in the procurement by Samruk Kazyna, the bid documents may provide for the stipulation that only domestic producers of goods are allowed to the bids. If so, the customer can seek for non-resident suppliers only if no domestic producers are availble. If even only one domestic producer of the needed product is available, the customer shall make procurement in the volume of not more than 30 percent of the total volume through the procedure for procurement from one source from such a potential supplier (Item 17 of the Regulations on Public Procurement by Samruk Kazyna).

In the same way, non-residents have worse conditions than that of the domestic producers in the evaluation of two equivalent applications. In accordance with Sub-item 39 of the Regulations on Public Procurement by Samruk Kazyna, if a potential supplier is a domestic producer of goods that are needed to be purchased, then the conditional reduction of price by 5 percent is applied to it.

3.2. Limitation on subcontracting

The Regulations on Public Procurement by Samruk Kazyna provide for the limitation on the scope of work that can be transferred to a subcontractor which, in the aggregate, shall be no more than two thirds of the total scope of work (cost of construction), services (Sub-item 15 of Item 37 of the Regulations on Public Procurement by Samruk Kazyna).

The given limitation applies not only to non-residents, but all potential suppliers of Samruk Kazyna. For foreign companies, however, the given requirement may be of greater concern, as foreign and international companies often give projects to subcontract work to local suppliers of works and services, leaving subsequently their foreign staff in Kazakhstan only to exercise control over the process of implementation of the project.

3.3. Requirements to the language in which applications are drawn up and information delivered

By participating in public procurement from Samruk Kazyna, foreign firms shall comply with the laws of the Republic of Kazakhstan concerning language. In accordance with the Law on Languages, the Russian language in Kazakhstan is used on a par with the Kazakh language which is the official state language. If the bid proposal is made in a language other than that required for the bid documents, ie, Kazakh or Russian, the participant of the bids shall provide a relevant translation of the documentation.

Moreover, the analysis of bid documents on procurement by Samruk Kazyna shows that in the event of a conflict between the original document and the translation, the preference is given to the language required for the bid documents. In this context, non-residents, especially if they are not from the CIS countries, face additional difficulties with regard to the transfer of documentation. With this, due consideration should be given to the accuracy of translation, since, in any case, the original document in a foreign language will not be of preference

In addition, the Regulations on Public Procurement by Samruk Kazyna require indicating the company’s website where the company will place the information (Sub-item 25 of Item 37 of the Regulations on Public Procurement by Samruk Kazyna). Although the said Regulations do not contain requirements to the language of materials posted on the website for participation in public procurement of Samruk-Kazyna, it is expected that these materials will also be posted in the language required for the bid documents, even if the website is in the English language.

4. Do the bids for such type of work as construction, design, and engineering have any specifics?

It should be noted that the Regulations on Public Procurement by Samruk Kazyna does not apply to the purchase of all kinds of goods, works and services. There is a large list of exceptions. With regard to the operations on construction, design and engineering, Samruk Kazyna perform integrated procurement with regard to the works and services, which includes the following (Item 2 of the Regulations on Public Procurement by Samruk Kazyna):

  • Research and design activities;
  • Construction on a turnkey basis (ie construction, the ensuring of its completion, and delivery of the facility to the customer in the condition ready-to-use);
  • Management of R & D activities, the construction on a turnkey basis;
  • Supply of goods and provision of services, associated with the R & D activities.

It should be noted that this limitation applies to the purchases, which include all of the above-said elements. This does not prevent Samruk Kazyna from announcing the tender for the purchase on each of the above items individually.

Also, in the procurement of works on construction and installation operations, the project documentation can include requirements with regard to permits (licenses) for the implementation of this type (subtype) of activity. The bid documents clearly specify all the requirements to potential suppliers, which are available depending on the complexity of the construction project in terms of the company's expertise, availability of production facilities, required level of skills the personnel, and documentation on HSE and quality control.

The Regulations on Public Procurement by Samruk Kazyna (Sub-items 3,4, and 5 of Item 37) provide for the mandatory information, including as below:

  • If in the procurement of works and services the amount allocated for their implementation under the bids (lot), exceeds more than 75 million tenge excluding VAT, the Customer/ bids organizer may set a number of qualification requirements in the bid documents that provide for the required expertise of the potential supplier in the last 5 (five) years preceding the procurement of homogeneous works or services purchased in the market or particular industry, to be confirmed by the original documents or notarized copies of relevant statements of delivery and acceptance of work performed or services rendered, the aggregate volume of which under a single contract in every year is no less than 75 million tenge. It is not allowed to establish the requirement with regard to the expertise of work to be more than five (5) years;
  • In the procurement of works and services, the Customer/ bids organizer may set the requirement in the bid documents that the potential supplier shall have qualified professionals that have relevant experience in the area, corresponding to the subject of procurement, to be confirmed by the documents which the Customer/bids organizer will specify, and/or by the laws of the Republic Kazakhstan, including relevant notarized copies of the diplomas, certificates, statements and other documents confirming their professional qualification and experience. It is not allowed to establish the requirement to the experience of specialists to be more than five (5) years.
  • In the procurement of works and services that have to be performed at the Customer’s hazardous production facilities, specific requirements shall be set to the potential supplier and its specialists attracted to carry out the works and services, as in accordance with the standards and/or other documents specified by the Customer and/or the laws of the Republic of Kazakhstan.

The Regulations on Public Procurement by Samruk Kazyna specifically provide for the requirements to the contract of procurement of works for the construction on a "turnkey" basis. According to Item 125 of the Regulations, such contract shall contain obligations of the general contractor for the acquisition of goods to be installed or used for equipping the facility under construction, and/or used in the construction in accordance with the approved design and estimate documentation, from domestic producers of these goods. If only there are no relevant domestic producers, the purchase of goods can be made from non-residents of the Republic of Kazakhstan on the general grounds.

Section 3. Regulatory framework applied

International treaties and agreements:

  1. Treaty "On the Eurasian Economic Union", Astana, May 29, 2014, ratified by the Law #240-V of the Republic of Kazakhstan dated October 14, 2014;
  2. Agreement on the State (Municipal) Procurement, Moscow, December 9, 2010, ratified the Law #457-IV of the Republic of Kazakhstan dated July 8, 2011;
  3. Cooperation Strategy of the CIS Member States in the Construction and Development of the Information Society of September 28, 2012;
  4. Action Plan for the Strategy Implementation for the Period up to 2015, dated September 28, 2012.

Laws of the Republic of Kazakhstan:

  1. Code of the Republic of Kazakhstan on Taxes and Other Obligatory Payments to the Budget (Tax Code) of December 10, 2008, as amended on 28.11.2014;
  2. The Law of the Republic of Kazakhstan "On Electronic Document and Electronic Digital Signature", as amended on 29.12.2014;
  3. Law of the Republic of Kazakhstan "On Public Procurement" of July 21, 2007, as amended on 29.12.2014;
  4. The Law #161-V «On Amendments to Certain Legislative Acts of the Republic of Kazakhstan on Public Procurement" of January 14, 2014;
  5. Rules for authentication of foreign digital signature by a trusted third party of the Republic of Kazakhstan;
  6. Standard of state service "Issue and Withdrawal of the Registration Certificate", approved by the Resolution #136 of the Government of the Republic of Kazakhstan, dated February 24, 2014;
  7. Resolution #470 of the Government of the Republic of Kazakhstan dated May 11, 2014 "On Selecting the Measures of State Support for Categories of Domestic Potential Suppliers";
  8. Rules on the Procurement of Goods, Works and Services by National Welfare Fund Samruk Kazyna and Organizations Fifty or More Percent of the Voting Shares (Participating Interest) of Which are Held Directly or Indirectly by JSC Samruk Kazyna on the Right of Ownership or Trust Management, dated May 26, 2012, as amended on 18.12.2014;
  9. The rules of formation, management and approval of the list of bona fide suppliers Holding (Annex to the Protocol of the meeting of the Board of "Samruk-Kazyna") on July 5, 2012 № 29/12, with amendments and additions as of 08.28.2013, the
  10. Rules of Drawing Up, Keeping and Approval of the List of Bona Fide Suppliers of the Holding Company (Annex to the Minutes of the Meeting #29/12 of the Board of Samruk Kazyna, dated July 5, 2012), as amended on 28.08.2013;
  11. Rules of Drawing Up, Keeping and Approval of the List of Unreliable Potential Suppliers (Suppliers) of the Holding Company (Annex to the Minutes of the Meeting #29/12 of the Board of Samruk Kazyna of July 5, 2012, as amended on August 28, 2013);
  12. Regulations on the Commission of JSC Samruk Kazyna for Consideration of Complaints Regarding Public Procurement (Annex to the Minutes of the Meeting # 29/12 of the Board of Samruk Kazyna of July 5, 2012, as amended on 25.07.2014);
  13. Guideline for Conducting Electronic Procurement of Goods, Works and Services by Samruk Kazyna and Organizations Fifty or More Percent of the Voting Shares (Participating Interest) of Which are Held Directly or Indirectly by JSC Samruk Kazyna on the Right of Ownership or Trust Management, dated May 26, 2012 (Approved by the Resolution of the Board of Samruk Kazyna. Extract from the Minutes of the Meeting #49/13 of September 10, 2013) (further the Guideline for the Carrying out of E-Procurement by Samruk Kazyna, as amended on 24.06.2014).

The article was prepared by Andrey Reshetnikov, Artyushenko & Partners Lawyer, as part of the series of articles "Construction in Kazakhstan from A to Z". First posted on 05.02.2015.

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