A case of Armenia: Legal framework for E-procurement in Public Procurement Sector

1. A case of Armenia: Legal framework for E-procurement in Public Procurement Sector Mr Karen Brutyan, PhD, PFM and PP EBRD Consultant, Wolf Theiss 1-2 December 2011 Kiev

2. EGP Reforms strategy and Legal framework • As a part of the “Procurements reform strategy” “Roadmap of the introduction of E-procurement system” has been approved in 2009 by the Republic of Armenia Government • General Rules are adopted by the Republic of Armenia parliament, “Law on Procurement”, • The Republic of Armenia Government approves “The procedure for E-procurement” • The Republic of Armenia Ministry of Finance approves E-procurement manuals for: • Economic operators, • Contracting authorities, • System administrators.

3. EGP Roadmap • Gap analyses: Limited scope of competition and introduction of strict control procedures make procurement process less effective. This leads to delays of contract implementation and increase of data processing costs both for the Government and suppliers. Prices of purchased goods and services grow. In addition, timing permitted for some types of contracts becomes too long, since it is not practical to draft a number of contracts within more reasonable time. • Solution New technology can essentially improve procurement management and efficiency and modernize public administration. This technology is capable to deepen procurement reforms and do it in a more comprehensive manner than other measures can do. • Conclusion Reforms facilitated by electronic public procurement are not just a direct output of this technology. They result from institutional changes which were made possible due to use of this technology. In other words, such changes do not take place through just introduction of new hardware or software for management of public agencies. Instead, their reformative impacts are transferred through well developed policy and actions, which use these new technologies to modernize the processes and principles.

4. The expected output • The output expected from the program implementation is establishment of a modern, fully operative national system. • The program has two core components: • Component 1. Introduction of electronic tender (E-Tendering) system. At this stage the target is to automate to the maximum possible level procurement carried out through competitive methods: • issue of announcements and provision of invitations to participate; • acceptance of bids, evaluation and contract award; • contract signing. • Component 2. Introduction of e-purchase system (E-Purchasing). The objective of measures carried out at this stage is to create a unified and complete procurement data base and automate the following: • E- contracting, • E- catalogues, • E- payments, etc.)

5. EGP system management structure • MinistryofFinance -Development and introduction of e-procurement policies, • Procurements Support Center - Organization and governance of electronic procurement operation, including • Organization of e-procurement system operation • Technical assistance to users of e-procurement system • Technical control over e-procurement system operation • Technical assistance for introduction of e-procurement system in communities, non-commercial organization and other entities

6. EGP Legal framework: General Rules (i) The tools to be used for communication by electronic means, as well as their technical characteristics, must be non-discriminatory, generally available to any potential bidder and interoperable with information and communication technologies means in general use. The following rules are mandatorily applicable to means for the electronic transmission and receipt of bids: 1) The information regarding the specifications necessary for the electronic submission of bids, including encryption, shall be available to any interested bidders; 2) The electronic devices for electronic receipt of bids must guarantee the integrity and confidentiality of the received data, fulfilling at least the following conditions: a. The exact time and date of the receipt of bids can be precisely determined;

7. EGP Legal framework: General Rules (ii) b. Before the time limits laid down for the transmission of the data, no one can have access to the transmitted data; c. In the case when the interdiction of access to the transmitted data has been breached, the unauthorized access can be clearly detectable; d. Only authorized persons may set or modify the dates for opening data received; e. During the different stages of procurement procedure, the access to received data is possible only by an simultaneous action of at least two authorized persons/systems and only after the date established according to provisions of subparagraph b) of this paragraph; f. Data received and opened in accordance with the requirements of this paragraph must remain accessible only to persons authorized to acquaint themselves therewith. 3) The bidders, before the deadline laid down for submission of bids, shall submit certificates, declarations and other documents, in case these are not available in electronic format.

8. EGP Legal framework: General Rules (iii) ELECTRONIC AUCTIONS The law on Procurements establishes specific general regulations and rules for Electronic auction: • Article 38: Conditions for conducting an electronic auction • Article 39: Limitations for conducting an electronic auction • Article 40: The procedure for conducting an electronic auction • Article 41: Completion of an electronic auction

9. The procedure for E-procurement • Adopted by the Republic of Armenia Government, • Based on the General Rules set up by the “Law on procurement” and regulates all legal issues which are not regulated by the law, • Provides legal rules for using the system, including responsibilities of the users and system administrators. USER MANUALS – Step by Step guide • Adopted by the Republic of Armenia Ministry of Finance, • Based on the General Rules set up by the “Law on procurement” and regulations set up by the Republic of Armenia Government • Provides detailed depiction of the workflow of the ARMEPS platform so as for the user to gain an insight on the different steps of the procurement procedure and understand the exact points were his/her involvement may be required.

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