Are State Contracts Worth the Bother?

About 80% of sureties and bank guarantees submitted by bidders on state contracts are fake, said Ekaterina Solovieva, deputy head of the Moscow department of the Federal Antimonopoly Service of Russia. Ms Solovieva commented on a case where a winner of a state tender was refused a contract because of a false bank guarantee.

The Treasury is the largest buyer in Russia. The federal government and its various agencies procured more than $170 billion worth of goods and services last year and its potency as the largest customer in the land is growing rapidly: within ten years the amount of everything, from pins and websites to luxury cars and airplanes, purchased by the Treasury rose twenty times. And, this magazine believes, the growth will not stop there.

There are - of course - talks of corruption in the system. President Medvedev once said that $34 billion is stolen on the way each year and this is surely not far off the mark. Yet researches show that public procurement in Russia is getting better. More small and medium sized companies without ‘the right connections’ win state contracts and, though a large stake of taxpayer's money is still going to the ‘right hands’, something is left for mortals.