Change for Businesses Participating in State Procurement: Babken Tunyan

Member of the National Assembly from the "My Step" faction, Babken Tunyan, writes on his Facebook page: "Recently, one of the most frequently raised issues by the business community has been the requirement of a 100% bank guarantee for participation in state procurement. This issue will be addressed at tomorrow's government meeting.

CURRENT REGULATIONS
According to current regulations, for state procurements exceeding 10 million drams, it is necessary to present qualification assurance in the form of a bank guarantee or cash equivalent to the selected participant's price offer. In simpler terms, if, for example, the contract value is 200 million drams, the winning business not only has to carry out the work of that magnitude but also must 'freeze' an amount equivalent to 200 million drams by presenting a bank guarantee or cash.

WHAT JUSTIFIED THE 100% GUARANTEE REQUIREMENT?
This stringent regulation was introduced to ensure that the state, as the buyer, receives the results that meet its needs while managing the risks of contract failure, potential damages compensation, and additional resource investment. It was also intended to exclude both the establishment of discriminatory qualification criteria and possible anti-competitive agreements and abuses arising in the context of bid evaluations and contract execution.

SHORTCOMINGS
Time has shown that the requirement for qualification assurance to be 100% of the price offer, as well as the lack of alternatives, creates problems for businesses. In particular, the participation opportunities for SMEs are limited, and there are risks of unhealthy mechanisms emerging. For example, a large organization with free funds or the ability to obtain a bank guarantee can win a bid and subcontract its contractual obligations to smaller businesses. In other words, an artificial chain is formed in the state procurement process, which in turn increases the cost of goods and services purchased by the state.

I want to emphasize that the main complaint of most of the businesses that have approached me recently has been precisely this regulation.

THE ISSUE IS ADDRESSED
Today, during the question-and-answer session with the government in the National Assembly, "My Step" faction member Karen Hambardzumyan raised this issue. In response, Deputy Prime Minister Tigran Avinyan informed that changes would be made to the government's relevant decision at tomorrow's meeting. The qualification requirement will generally be relaxed, and alternative options will also be introduced in addition to bank guarantees and cash.