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THE NEW REVIVAL POLICY TO ENCOURAGE BIDDERS’ PARTICIPATION IN PUBLIC PROCUREMENT

3/16/2022

As part of the implementation of the Parliament Resolution No. 106 of 2021, whereby the “New Revival Policy” was adopted to intensify economic recovery amid the pandemic, the Public Procurement Law of Mongolia will be amended to minimize economic operators’ costs in participating in bidding procedures, to give additional preference to goods and products of small and medium enterprises, and to ensure effectiveness and clarity of the contract award, execution, and implementation procedures. 

The said amendment has been drafted with the support of the “Strengthening Fiscal and Financial Stability Project” being implemented by the World Bank. 

MAJOR CHANGES THAT WILL BE BROUGHT BY THE DRAFT AMENDMENT ARE AS FOLLOWS:

  • The development projects under the auspices of the New Revival Policy would be procured through a new method of competitive dialogue; 
  • The state-owned enterprises would not be obligated to adhere to the Public Procurement Law only if and when they would finance no more than 30 percent of the development projects under the auspices of the New Revival Policy;
  • Introducing flexibility to the restrictions to modify public procurement contracts stated in Article 41 of the Public Procurement Law of Mongolia so that the contract price of long-term public works contracts could be increased if (i) the costs are inevitably increased due to circumstances out of control of any party such contract and (ii) the budget is increased by law; 
  • Contracting authorities would be allowed to award contracts agreeing on unit price and other conditions of frequently needed goods and services for a term of up to 3 years so as (i) to minimize numbers of unnecessary bidding procedures that would take place each year and (ii) to put an end to the situations where necessary goods and services would not be supplied until execution of the next contract;
  • Contracting authorities will be obligated to award contracts within 15 business days after the date of bid opening thanks to the technology solutions which handle all bidding procedures in the e-procurement system and would collect bidders’ data from the relevant state databases on a real-time basis;
  • Each of bid guarantee and contract performance guarantee amounts will respectively be decreased to 0.5 percent of procurement budget and 3 percent of contract price amount so as to minimize financial burdens on the economic operators participating in bidding procedures; and
  • Current contract conditions setting retainment amount of 5-10 percent of the construction contracts will be replaced with up to 5 percent of the contract price. 

The draft law is being expected to be discussed during the 2022 spring session of the Parliament. 


PUBLIC PROCUREMENT POLICY DIVISION, LEGAL DEPARTMENT

MINISTRY OF FINANCE

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