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LAW OF UKRAINE

of April 10, 2014 No. 1197-VII

About implementation of public procurements

(as amended on 25-12-2015)

This Law establishes the legal and economic principles of implementation of purchases of goods, works and services for ensuring needs of the state and territorial community.

The purpose of this Law is creation of competitive environment in the sphere of public procurements, prevention of manifestations of corruption in this sphere, development of fair competition.

Section I. General provisions

Article 1. Basic concepts

1. In this Law the terms below are used in such value:

1) the acceptance of the offer of the competitive biddings or the price offer (the offer on results of application of the negotiation procedure) - adoption of the offer of the competitive biddings by the customer or the price offer which is recognized as the most economic by results of assessment (by results of application of the negotiation procedure), and provision of consent to capture of obligations on payment of subject of purchase or its part (lot). The offer of the competitive biddings or the price offer, the offer on results of application of the negotiation procedure is considered accepted if the customer submits to the participant to the time established by this Law the written confirmation about the acceptance of such offer;

2) the general customer - the public authority, local government body, the public, municipal institution or the organization determined respectively by the Cabinet of Ministers of Ukraine, Council of Ministers of the Autonomous Republic of Crimea, local public administrations or executive bodies of local councils responsible for the organization and holding procedures of purchases for the benefit of customers by the framework agreements according to this Law;

3) public procurement (further - purchase) - acquisition by the customer of goods, works and services according to the procedure, established by this Law;

4) the purchase agreement - the agreement which is signed between the customer and the participant on the results of the procedure of purchase and provides provision of services, performance of works or acquisition of property right to goods;

5) documentation of the competitive biddings - documentation which is developed and affirms the customer will be promulgated for open entry and free of charge moves the customer when tendering (the competitive biddings) to physical/legal entities. Documentation of the competitive biddings is not object of copyright and/or the related rights;

6) electronic means - the electronic equipment and the software for creation, processings, transfers and data storage and electronic documents;

7) ensuring agreement performance about purchase - provision by the participant to the customer of performance guarantees of the agreement obligations about purchase, in the form of such providing as guarantee, pledge, deposit, the deposit;

8) providing the offer of the competitive biddings - provision by the participant to the customer of performance guarantees of the obligations in connection with submission of the offer of the competitive biddings, in the form of such providing as guarantee, pledge, deposit, the deposit;

9) customers - the public authorities, local government bodies and bodies of social insurance created according to the law and also legal entities (the companies, organizations, the organizations) and their associations which provide needs of the state or territorial community if such activities are not performed on industrial or commercial basis in the presence of one of the following signs:

the legal entity is manager, the receiver of budgetary funds;

public authorities or local government bodies or other customers have by a majority vote in the supreme body of management of the legal entity;

in the authorized capital of the legal entity the state or municipal share fraction (share, shares) exceeds 50 percent.

The customers determined in Item of 1 part one of article 1 of the Law of Ukraine "About features of implementation of purchases in certain spheres of economic activity" also treat customers;

10) qualification documentation - documentation which is developed, affirms, will be promulgated for open entry and is free of charge provided by the customer when carrying out preliminary qualification of participants to physical/legal entities;

11) the qualification offer - the proposal which is submitted by the participant of preliminary qualification to the customer according to requirements of qualification documentation;

12) committee on the competitive biddings - the office (official) faces of the customer (the general customer) appointed responsible for the organization and holding procurement procedures according to this Law;

13) monitoring of purchases - the analysis of observance by the customer of the legislation in the sphere of public procurements at all stages of procurement procedure by systematic observation (including using electronic means) according to information placed on the official web portal of Authorized body concerning purchases, or obtaining from the customer of the relevant information;

13-1) specialized organizations conducting procurements - specialized funds of the organization and mechanisms of the United Nations, International association of providing with medicines (International Dispensary Association), the Royal Agency of Great Britain (Crown Agents), the Global mechanism for providing with medicines (Global Drug Facility), Partnership in the sphere of deliveries and supply managements (Partnership for Supply Chain Management) which provide to the governments of the states and/or the central public authorities of service of the organization and holding procedures of purchases of medicines of medical products and the services connected with it based on the relevant agreements and according to internal regulations and procedures of such organizations;

14) the most economic offer - the offer answering to all criteria and conditions determined in documentation of the competitive biddings is also recognized as the best by results of assessment of competitive offers according to article 28 of this Law;

15) the announcement of holding procurement procedure - the announcement of carrying out open tenderings, the announcement of holding procedure of the two-level biddings, the announcement of carrying out preliminary qualification, request of price offers, information on application of negotiation procurement procedure;

16) the announcement of results of procurement procedure - the announcement of results of tendering, the message on results of carrying out preliminary qualification, information on results of the procedure of request of price offers, information on results of holding negotiation procurement procedure;

17) body of appeal - Antimonopoly Committee of Ukraine;

18) the winner of procurement procedure - the participant, the offer of the competitive biddings or the price proposal of whom is recognized as the most economic and is accepted in case of tendering (the competitive biddings), or the participant whose proposal is accepted by results of application of negotiation procurement procedure;

19) the connected person - person corresponding to any of the following signs:

the legal entity exercising control over the participant of procurement procedure or is controlled by such participant of procurement procedure, or is under general control with such participant of procurement procedure;

the physical person or members of his family exercising control over the participant of procurement procedure;

office (official) face of the participant of procurement procedure, authorized to perform on behalf of the participant of procurement procedure the legal acts directed to establishment, change or the termination of the civil relations and members of the family of such office (official) person;

physical persons - members of the committee on the competitive biddings of the customer and/or members of their families which exercise control over participants of procurement procedure, or authorized to perform the legal acts directed to establishment, change or the termination of the civil relations on behalf of the participant of procurement procedure.

It is necessary to understand possibility of implementation of decisive influence or decisive influence on economic activity of the participant of procurement procedure as control directly or through the bigger number of the related physical persons or legal entities, it is performed, in particular, by realization of right of possession or use of all assets or their considerable share, the right of the solving influence on forming of structure, results of vote, and also transactions which give opportunity to determine conditions of economic activity, to give mandatory instructions or to perform functions of governing body of the participant of the procurement procedure, or ownership of shares (share, the block of shares) constituting at least 25 percent of the authorized capital of the participant of procurement procedure.

For physical person the total amount of ownership of shares in the authorized capital of the participant of procurement procedure is determined depending on amount of the corporate laws belonging to such physical person, members of his family and legal entities who are controlled by such physical person or members of his family.

For the purposes of this Law spouses, children, parents, brothers and sisters, the grandfather, the grandmother, the grandsons, adoptive parents adopted and also other persons on condition of their permanent residence together with the connected person and maintaining reckon with it general economy as family members;

20) services - any subject of purchase (except goods and works), in particular, transport services, development of technologies, scientific research, scientific and technical (experimental) developments, medical and consumer services, leasing, employment (lease), and also financial and consulting services, running repair;

21) purchase subject - goods, works or services which are bought by the customer within the single procurement procedure on which participants are allowed to submit proposals of the competitive biddings (qualification, price offers) or offers at negotiations (in case of application of negotiation procurement procedure). The subject of purchase is determined by the customer according to the procedure, established by authorized body. For holding procurement procedure there shall be at least two offers, except cases of application by the customer of negotiation procurement procedure;

22) the offer of the competitive biddings - the offer concerning subject of purchase or its part (lot) which the participant provides to the customer according to requirements of documentation of the competitive biddings;

23) works - designing, construction new, expansion, reconstruction, capital repairs and restoration of the existing objects and constructions of production and non-productive appointment, work on regulation in construction, exploration works, technical retrofitting of operating plants and covering notes to service works, including geodetic works, drilling, seismic researches, both satellite photographing and other services which join in the estimated cost of works if the cost of such services does not exceed the cost of works;

24) the framework agreement - the agreement which is signed by one or several customers (the general customer) in writing according to the procedure, established by this Law, with one or several participants of procurement procedure for the purpose of determination of the main conditions of purchase of separate goods and services for the conclusion of the corresponding purchase agreements during effective period of the framework agreement;

25) proposal validity of the competitive biddings or the price offer - the term established by the customer in documentation of the competitive biddings or request of price offers during which the participant has no right to change the offer of the competitive biddings or the price offer;

26) the subject of appeal in body of appeal (further - the subject of appeal) - the physical person or legal entity which addressed to body of appeal for the purpose of protection of the rights and the interests protected by the law concerning the decision, action or failure to act of the customer, the general customer that contradict the legislation in the sphere of public procurements and as a result of which the right or legitimate interests of such person is violated;

27) goods - products, objects of any kind and appointment, including raw materials, products, the equipment, technologies, objects in strong, liquid and gaseous state, and also the services connected with delivery of goods if the cost of such services does not exceed the cost of goods;

28) the biddings (the competitive biddings) - implementation of competitive selection of participants for the purpose of determination of the winning bidder (the competitive biddings) according to the procedures established by this Law (except negotiation procurement procedure);

29) Authorized body - the central executive body, realizing state policy in the sphere of public procurements;

30) the participant of preliminary qualification - physical person, including the physical person - the entrepreneur, the legal entity (the resident or the nonresident) who in writing confirmed intention to take part in preliminary qualification and/or submitted qualification the proposal;

31) the participant of procurement procedure (further - the participant) - physical person, including the physical person - the entrepreneur, the legal entity (the resident or the nonresident) who in writing confirmed intention to participate in procurement procedure and/or submitted the proposal of the competitive biddings, or the price offer or took part in negotiations in case of application of negotiation procurement procedure;

32) the price offer - the offer concerning subject of purchase or its part (lot) which the participant represents to the customer according to request of price offers;

33) part of subject of purchase (lot) - the part of goods, works or services determined by the customer on which within the single procurement procedure participants are allowed to submit proposals of the competitive biddings, or price offers and offers at negotiations in case of application of negotiation procurement procedure. For holding procurement procedure on each separate part of subject of purchase (lot) there shall be at least two offers, except cases of application by the customer of negotiation procurement procedure.

Article 2. Scope of the Law

1. This Law is applied to all customers and purchases of goods, works and services provided that the cost of purchase of goods (goods), service (services) is equal or exceeds 200 000 hryvnias, and works - 1500000 hryvnias.

The cost of subject of purchase of goods, works and services established in paragraph one of this part is reviewed each 12 months taking into account consumer price indexes, price indexes of producers of industrial output. By results of review the Cabinet of Ministers of Ukraine introduces the bill on introduction of amendments to this Law in need of the Verkhovna Rada of Ukraine.

2. Conditions, procedure and procedures of purchases of goods, works and services can be established or change exclusively this Law, except the cases provided by this Law. Change of provisions of this Law can be performed only by introduction of amendments to this Law.

3. Operation of this Law does not extend to cases if subject of purchase are:

the goods, works and services connected with development of design, production of the protected paper, banknotes, coins and the state awards of Ukraine, their storage, transportation and accounting;

goods, works and services which procurement is conducted by foreign diplomatic organizations;

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