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. Last Updated: 07/27/2016

Service Cracks Down on Misspelled State Orders

The Federal Anti-Monopoly Service has annulled contracts worth 1.2 billion rubles ($38.5 million) for state orders because of typographical distortions in six declarations, and more than 2,000 other violations have been found and will be investigated.

Using Latin letters instead of Cyrillic, as well as other typographical tricks, could be used to short-circuit the competitive bidding process. Using nonstandard spellings in declarations on the government’s web site for state purchase could allow well-connected firms to land sweetheart deals if other companies are unable to find the order.

Vatutinki, a children's welfare center, left out the space between the words "children" and "Vatutinki" in its announcement about buying reconstruction work worth 106.2 million rubles, but only in the special blanks for the search engine at zakupki.gov.ru.

All government bodies ordering goods or services are required to post announcements on the site about the start of bidding, the terms of the tender and the rules for evaluating bids. Bidding on the Vatutinki order is set for July 9.

According to Economic Development Ministry figures, the federal government will spend 1.35 trillion rubles on goods, work and other services this year, excluding classified military orders, and the figure will exceed 4 trillion rubles when combined with regional and municipal orders.

The bidding on an order posted by Shchyolkovsky Biokombinat (for the production and oversight of a culture of inactive anti-rabies vaccine, valued at 773 million rubles) was held March 11, and it was won by PSK Union-Stroi, the only firm to bid. In the announcement's key words, the Cyrillic letter "k" was replaced with the Latin one, and the letter "o" was replaced with the number "0."

Tricks involving the substitution of letters is hardly new, dating at least back to 2006 when the new law on state orders came into effect, said Alexander Stroganov, general director of the State Orders Placement Center. Such methods lead to significantly fewer bids, said Alexei Morozov, one of the authors of the National Rating of Purchasing Transparency. The bidding in such cases involves one or two suppliers, and the price is 10 to 15 percent higher than in competitive tenders, he said.

On Tuesday, the anti-monopoly service official announced that distorted spellings in the announcements would lead to the nullification of orders. "The aforementioned actions of the buyers essentially means that bidding is not being held, since potential participants in the tender cannot find information about it by keyword on the official site," the service said.

The service attached to the announcement a list of six violations for a total sum of more than 1.2 billion rubles. On Wednesday, another 16 tenders were to be investigated, said Mikhail Yevrayev, the service's managing director. In total, some 2,000 purchases with distorted listings will be investigated, he said.

Yevrayev said that in the cases where a contract has not yet been signed, the anti-monopoly service would void the offers for violating the rules for announcing a purchase (Article 16 of the law on state orders). In instances where a contract was signed, the service will seek to have them annulled in court.

Citing Article 16 does not make sense, said an official at one of the bodies accused of distorting listings: the announcements were published in time, and while the search engine on the official site did not work because of the mistakes, Yandex found them. "We're not going to go to court, but some of the other victims are planning to," he said.

Those who are keeping track of the orders will find out about the announcements, even if there are mistakes, agreed Union-Stroi director Vladimir Mikhnovich. The tricks with typos, he said, come from the buyer's desire to find a reliable person to do the work.

"Otherwise, companies you've never heard of will come, win, and then won't do the work because they aren't able."

The heads of the Shchyolkovsky Biokombinat and Vatutinki did not answer their phones Tuesday.

If the orders were related to defense, such as the Shchyolkovsky Biokombinat offer, the information will be handed over to the Federal Service for Defense Contracts, which should take similar steps, Yevrayev said.

A Defense Ministry source said the defense contracts service was looking over the anti-monopoly service's materials, and if it finds violations in any of the tenders, it could go to court to nullify the contract. If financing of the program already began, however, the situation will be much more complicated, he said.

"It's possible to halt the completion of an order through the courts, but in most cases, the completion of such an order will most likely have to be entrusted to the organization that began it," the Defense Ministry source said.

The matter will not be limited to technical repercussions, Yevrayev said. Those responsible for the faulty announcements will face 50,000 ruble ($1,600) administrative fines. Additionally, the heads of agencies overseeing the bodies making the orders will be sent letters requesting a review of whether the managers are fit to hold their posts.

In all of the cases, the documents will also be handed over to the Prosecutor General's Office and the Interior Ministry, Yevrayev added.

The Federal Anti-Monopoly Service will need to separate the intentional distortions from the careless mistakes, warned Stroganov, and in court it will be difficult to prove the intent of such mistakes.

"It's nearly impossible," said a source in the Interior Ministry. Without that, it is impossible to open a case of limiting competition (Article 178 of the Criminal Code, punishable by up to five years in prison).

A spokesperson for the Agriculture Ministry, which oversees the Shchyolkovsky Biokombinat, said the ministry had not yet seen any documents from the anti-monopoly service.

The organizations themselves carry full liability for breaking the law, said a spokesperson for the Health and Social Development Ministry, which oversees Vatutinki.