FEDERAL LAW

NO. 94-FZ OF JULY 21, 2005

ON PLACEMENT OF ORDERS TO SUPPLY GOODS, CARRY OUT WORKS AND

RENDER SERVICES FOR MEETING STATE AND MUNICIPAL NEEDS

(with the Amendments and Additions of December 31, 2005)

Adopted by the State Duma on July 8, 2005

Endorsed by the Federation Council on July 13, 2005

Chapter 1. General Provisions

Article 1. The Scope of Regulation of this Federal Law and Aims Thereof

1. This Federal Law shall regulate the relations connected with the placement of orders to supply commodities, carry out works and render services for meeting state or municipal needs (hereinafter also referred to as placement of an order), in particular, shall establish a uniform procedure for placing orders, for the purpose of ensuring the unity of the economic space on the territory of the Russian Federation when placing orders, the efficient use of budget assets and of those from off-budget financing sources, providing greater opportunities to natural persons and legal entities as to participation in the placement of orders and encouraging such participation, developing fair competition, improving the activities of state power bodies and local self-government bodies concerning placements of orders, ensuring publicity and transparency in placement of orders, prevention of corruption and other abuse while placing orders.

2. This Federal Law shall apply in the event of placing orders to supply commodities, carry out works and render services for meeting state or municipal needs, except when such commodities, works and services are supplied, carried out and rendered to the amount not exceeding the limit rate of settlements in cash between legal entities within a single transaction in the Russian Federation established by the Central Bank of the Russian Federation.

3. The specifics of placing the state defence order, an order to supply material assets to the state reserve, may be established by other federal laws.

Article 2. The Legislation of the Russian Federation and Other Normative Legal Acts of the Russian Federation Concerning Placement of Orders

1. The legislation of the Russian Federation on placements of orders is based on the provisions of the Civil Code of the Russian Federation, the Budget Code of the Russian Federation and consists of this Federal Law and other federal laws regulating the relations connected with placement of orders. The rules of law contained in other federal laws and connected with placements of orders must comply with this Federal Law.

2. In the instances provided for by the legislation of the Russian Federation on placements of orders the Government of the Russian Federation shall be entitled to adopt normative legal acts regulating the relations connected with placement of orders.

3. The federal executive body charged with normative legal regulation with respect to placements of orders shall be entitled to adopt normative legal acts regulating the relations which are connected with placements of orders in the instances and to the extent that are provided for by this Federal Law and by the normative legal acts of the Government of the Russian Federation adopted in compliance with it.

4. Where an international treaty made by the Russian Federation establishes rules other than those provided for by this Federal Law, the rules of the international treaty shall apply.

Article 3. State Needs and Municipal Needs

1. State needs shall mean the Russian Federation's needs for commodities, works and services required for the exercise of the functions of the Russian Federation (in particular, for implementation of federal targeted programmes), for fulfilment of international obligations of the Russian Federation, in particular for implementation of the international targeted programmes where the Russian Federation participates (hereinafter also referred to as federal needs) or the needs of the constituent entities of the Russian Federation in commodities, works and services required for exercise of the functions of the constituent entities of the Russian Federation, in particular for implementation of regional targeted programmes (hereinafter also referred to as needs of the constituent entities of the Russian Federation) which are satisfied in compliance with expenditure obligations of the Russian Federation or expenditure obligations of the subjects of the Russian Federation with the use of the federal budget funds, or budget funds of the constituent entities of the Russian Federation, or funds from off-budget financing sources.

2. Municipal needs shall mean the needs of municipal establishments for commodities, works and services required for resolving problems of local importance and exercise of individual state powers transferred to local self-government bodies by federal laws and (or) laws of the constituent entities of the Russian Federation that are satisfied with the use of local budget funds in compliance with the expenditure obligations of municipal establishments.

Article 4. State Customers and Municipal Customers

1. As state customers and municipal customers (hereinafter also referred to as customers), when placing orders to supply commodities, carry out works and render services with the use of budget funds, may act accordingly state power bodies of the Russian Federation or state power bodies of the constituent entities of the Russian Federation, as well as the recipients of budget funds authorised by the said state power bodies or local self-government bodies to place orders.

2. if the federal executive body, the executive body of a constituent entity of the Russian Federation or the local self-government body authorised to exercise the functions of placing orders for state or municipal customers (hereinafter referred to as an authorised body) are established, the said authorised body shall exercise the given functions, except for signing state or municipal contracts of supplying goods, carrying out works and rendering services to meet state or municipal needs. With this, state or municipal contracts shall be signed by state or municipal customers. A procedure for interaction of an authorised body and state or municipal customers must be set by a decision on the establishment of such authorised body.

Article 5. Placement of Orders to Supply Commodities, Carry Out Works and Render Services for Meeting State or Municipal Needs

Placement of orders to supply commodities, carry out works and render services for meeting state or municipal needs shall mean the activities of customers or authorised bodies exercised in the procedure provided for by this Federal Law, which are aimed at finding suppliers (performers, contractors) for the purpose of making with them state or municipal contracts of supplying goods, carrying out works and rendering services to meet state or municipal needs (hereinafter also referred to as a state or municipal contract or contract).

Article 6. Specialised Organisation

1. A customer or an authorised body shall have the right (where such right is provided for by a decision on establishing the authorised body) to attract a legal entity on a contractual basis (hereinafter referred to as a specialised organisation) for exercise of the functions of placing an order by way of sales in the form of a tender for the right to make a state or municipal contract (hereinafter also referred to as a tender) or an auction of the right to make a state or municipal contract (hereinafter also referred to as an auction) - that is, to devise tender documentation or auction documentation, to publish and insert a notice of holding a public tender or an public auction, to send invitations to participate in a public tender or a public auction, as well as to exercise other functions related to ensuring the conduct of sales. With this, establishment of a commission for placement of an order, fixing of the initial price of a state or municipal contract, determination of the subject and essential conditions of a state or municipal contract, endorsement of a draft contract, tender documentation, auction documentation, determination of the terms of sales and their modification shall be effected by the customer or authorised body, while a state or municipal contract shall be signed by the customer.

2. A specialised organisation shall be selected by a customer or an authorised body by way of holding sales in compliance with this Federal Law.

3. A specialised organisation shall exercise the functions specified in Part 1 of this Article, on behalf of a customer or authorised body. With this, either the customer or authorised body shall obtain the relevant rights and responsibilities.

4. A customer or an authorised body shall be jointly liable for the harm caused to a natural person or legal entity as a result of unlawful actions (omission to act) of the specialised organisation made within the scope of authority transferred thereto by the customer or the authorised body on a contractual basis and connected with placement of an order, when it exercises on behalf of the customer or authorised body the functions specified in Part 1 of this Article.

5. A specialised organisation may not participate in the placement of an order if this organisation is engaged in the exercise of the functions indicated in Part 1 of this Article.

Article 7. Commission for Placement of Orders

1. When placing an order by way of holding a tender or an auction, as well as by way of a call for bids in respect of commodities, works or services (hereinafter referred to as a call for bids), a tender, auction or bidding commission shall be established (hereinafter also referred to as a commission).

2. A customer or an authorised body, prior to publishing a notice of holding a public tender or public auction, of making a call for bids, of a preliminary selection or sending invitations to participate in a closed tender or a closed auction shall decide on establishing a commission, determine its composition and working routine, and shall appoint the chairman thereof.

3. A commission must include at least five persons.

4. The natural persons who are personally interested in the results of placing an order (including the natural persons who have filed applications for participation in a tender, applications for participation in an auction or applications for participation in a bidding (hereinafter referred to as bids) or those on the staff of the organisations that have filed the said applications) or the natural persons who can be influenced by participants in the placement of an order (including the natural persons who are participants (stockholders) of these organisations, members of their managerial bodies, creditors of participants in placement of an order) may not be members of the commission. In the event of detecting the said persons within the composition of a commission, a customer or authorised body that has decided on the establishment of the commission shall be obliged to replace them immediately by other natural persons who are not personally interested in the results of placing the order and who cannot be influenced by participants in its placement.

5. The replacement of a commission member shall be only allowable on the basis of a decision of the customer or authorised body that have decided on the establishment of the commission.

6. A tender commission shall open envelopes with applications for participation in a tender or shall provide access to applications for participation in a tender, which are kept in the general use information system filed in the form of electronic documents and signed in compliance with normative legal acts of the Russian Federation (hereinafter also referred to as opening of envelopes with applications for participation in a tender and provision of access to applications for participation in a tender filed in the form of electronic documents), shall select tender participants, consider, assess and compare applications for participation in a tender, determine a tender winner, keep a record of opening envelopes with applications and of provision of access to applications for participation in a tender filed in the form of electronic documents, a record of considering applications for participation in a tender, a record of assessment and comparison of applications for participation in a tender.

7. An auction commission shall consider applications for participation in an auction and select its participants, shall keep a record of consideration of applications for participation in a tender.

8. A bidding commission shall preliminarily select participants in placement of an order, keep a record of considering applications for participation in a preliminary selection in the instances provided for by this Federal Law, and shall consider, assess and compare bids and determine the winner of bidding, keep a record of consideration and assessment of bids.

9. A customer or authorised body shall be entitled to establish a single commission for exercise of the functions provided for by Parts 6-8 of this Article.

10. A commission shall be authorised to exercise the functions provided for by Parts 6-8 of this Article, if at least 50 per cent of the total number of its members are present at the commission's meeting. The commission members must be notified in due time of the place, date and time of holding the commission's meeting.

Article 8. Participants in Placement of Orders

1. As participants in placement of orders shall be deemed the persons claiming to make a state or municipal contract. Any legal entity regardless of its organisation and legal form, property form, location and the capital's place of origin or any natural person, in particular, an individual businessman, may participate in the placement of an order.

2. Participation in placement of orders may be only restricted in the instances provided for by this Federal Law and other federal laws.

Article 9. State or Municipal Contract of Supplying Commodities, Carrying Out Works and Rendering Services to Meet State or Municipal Needs

1. A state or municipal contract shall mean the contract made by a customer on behalf of the Russian Federation, a constituent entity of the Russian Federation or municipal formation for the purpose of meeting state or municipal needs.

2. A state and municipal contract shall be made in the procedure provided for by the Civil Code of the Russian Federation and other federal laws subject to the provisions of this Federal Law.

3. After determining the winner of a tender, auction or the winner of bidding, the customer shall be entitled within the time period provided for making a state or municipal contract to deny making the contract with the winner of the tender, auction or the winner of bidding, or if the winner of a tender, auction or the winner of bidding evades making the contract with the participant in placement of the order with which such contract is to be made, in the event of detecting the following facts:

1) of effecting liquidation of participants in placement of the order which are legal entities or of conducting bankruptcy proceedings in respect of participants in placement of the order which are legal entities or individual businessmen;

2) of suspension of the activities of the said persons in the procedure provided for by the Code of Administrative Offences of the Russian Federation;

3) of presenting by the said persons wittingly false data contained in the documents provided for by Part 3 of Article 25 or Part 2 of Article 35 of this Federal Law;

4) of the said persons' property being under arrest made on the basis of a court decision, if upon the expiry of the time period for making the contract the balance sheet value of arrested property exceeds twenty five percent of the balance sheet value of the said persons' assets according to the business accounting report documents for the last complete reporting period.

4. An order shall be deemed placed as of the date of making a state or municipal contract.

5. When making and executing a state or municipal contract, it shall not be allowable to modify by agreement of the parties and unilaterally the terms of the contract specified in Part 12 of Article 25, Part 5 of Article 27, Part 3 of Article 29, Part 1 of Article 31, Part 12 of Article 35, Part 6 of Article 36, Part 13 of Article 37, Part 3 of Article 38, Part 1 of Article 40, Part 14 of Article 41, Part 6 of Article 46, Part 8 of Article 47, Part 10 of Article 53 and Parts 5 and 6 of Article 54 of this Federal Law, except for the instance provided for by Part 6 of this Article.

6. On the proposal of the customer or authorised body tender documentation may provide for the customer's right to change, when executing the contract unilaterally, the volume of all the works and services provided for by the contract by at most five per cent of such volume, in the event of detecting the need for the additional works or services that are not provided for by the contract but are connected with the works and services provided for by the contract or if some part of the works or services provided for by the contract is no longer needed. With this, the customer shall be entitled, by agreement with a supplier (performer, contractor), to change the price of the contract in proportion to the volume of the said additional works or services, but by five per cent of such price at most.

7. When making a state or municipal contract of supplying energy resources, the relevant draft contract sent by a state or municipal customer to the supplier must be based on the volume of energy resources' consumption coordinated in the procedure provided for by the legislation of the Russian Federation.

Federal Law No. 142-FZ of July 27, 2006 supplemented Article 9 of this Federal Law with part 7.1. The part shall enter into force from January 1, 2007

8. The dissolution of a state or municipal contract shall be allowable by agreement of the parties thereto or by court decision for the reasons provided for by the civil legislation.

9. In the event of a delay in discharge by a customer of the commitment provided for by a state or municipal contract, the other party shall be entitled to demand payment of a forfeit (fine or penalty). The forfeit (fine or penalty) shall be charged for each day of delay in discharging the commitment provided for by a state or municipal contract, starting from the date following the day of expiry of the time period for discharge of the commitment established by the state or municipal contract. The rate of such forfeit (fine or penalty) shall be established in the amount of one three hundredth of the refinancing rate of the Central Bank of the Russian Federation effective on the date of paying the forfeit (fine or penalty). A customer shall be relieved of paying a forfeit (fine or penalty) if it can prove that a delay in discharge of the said commitment has been caused by an act of God or through the other party's fault.

10. A state or municipal contract shall include an obligatory provision to the effect that the supplier (performer, contractor) shall be liable for failure to discharge, or improper discharge of, a commitment provided for by the state or municipal contract.

On the Procedure for Disposition of the Rights to the Results of Scientific-and-Technical Activity see Decision of the Government of the Russian Federation No. 685 of November 17, 2005

Article 10. Ways of Placing an Order

1. An order can be placed:

1) by way of holding sales in the form of a tender or auction, including an auction in an electronic form;

2) without holding sales ( by a call for bids, with a single supplier (performer, contractor), at commodity exchanges).

2. In all instances an order shall be placed by way of holding sales, except for the instances provided for by this Federal Law.

3. A decision on the way of placing an order shall be rendered by a customer or an authorised body in compliance with the provisions of this Federal Law.

4. Orders to supply commodities, carry out works and render services for meeting state or municipal needs which are not accordingly supplied, carried out and rendered on the basis of specific applications of a customer or authorised body, for which there is a functioning market and which can be compared solely on the basis of prices thereof, shall be placed by way of holding an auction. Lists of the commodities, works and services in respect of which orders accordingly to supply, carry out and render them are placed by way of holding an auction shall be established by the Government of the Russian Federation. If commodities, works or services are included in the said lists, placement of orders to supply such commodities, carry out such works and render such services for meeting state or municipal needs by way of holding a tender shall not be allowable.

5. A violation of the provisions concerning placement of an order which are provided for by this Federal law shall serve as ground for declaring placement of the order invalid by a court of law or arbitration court on the basis of a claim made by a person concerned or a claim made by the federal executive body, the executive body of a constituent entity of the Russian Federation or the local self-government body authorised to exercise control with respect to placement of orders.

6. Two and more customers or authorised bodies shall be entitled to place orders to supply commodities of the same name by way of holding joint sales. The rights, duties and liabilities of customers or authorised persons when holding joint sales and a procedure for holding joint sales shall be determined by