Russia Country Profile

Public Procurement and Contracting

Individual Corruption

Public procurement in Russia can be characterised as still open to manipulation, although regulation has been improved, according to the Bertelsmann Foundation 2010.

Business Corruption

Public procurement regulations can be found at the official public procurement website. At the local level, depending on the region in question, tender notices can be publicly available or information can be totally lacking to everyone except for a few selected bidders.

According to the World Bank 2006, many companies consider information regarding rules and regulations on public tendering inadequate or have regularly witnessed non-transparent practices. Sometimes the state only shares information with selected bidders, spawning accusations of pre-selecting winners. In other instances, the terms and conditions for bidding are specified so that few companies can actually bid (single sourcing). Kickbacks are common, and there are reports of companies paying no less than a 16% kickback in order to obtain a government contract. In 2005, the United Nations procurement department exposed a Russian procurement agent who received more than USD 1 million in kickbacks from companies doing business with the United Nations, according to The Washington Post. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Russia.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to the Prosecutor General's Office, many corruption crimes occur in the sphere of public procurement. For instance, no guidelines exist on how to determine prices on procured property. As a result, procurement officials tend to rely not on market prices but on the volume of budget financing, as reported in a December 2009 article by Moskovski Komsomolets.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.7 on a 7-point scale (1 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 2.7 on a 7-point scale (1 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2009:
- More than 46% of the companies surveyed expect to give gifts to secure a government contract.

- The average value of gift given to secure a government contract amounts to almost 4% of the contract value.

OECD: Investment Policy Reviews 2006 (in Russian):
- More than 40% of the companies interviewed considered information on rules and requirements for public tendering to be inadequate or untimely.

- This trend is even stronger in the regions, where 60% of companies see the rules and requirements for public tendering to be inadequate or out of date.

EBRD & World Bank: BEEPS Russia 2005:
- 22% of the companies state that bribery is frequently needed in order to obtain government contracts compared to the CIS average of 14% in 2005.