Russian Small &
Enterprises Forum


Small and medium businesses may get 15% of public procurement contracts

The government has been discussing for months the need to improve the conditions for small and medium enterprises (SMEs) and their access to public contracts. In a report to the State Duma, the Prime Minister Dmitry Medvedev said that efforts to expand the small and medium businesses’ access to federal and municipal procurement must be continued, because today contracts are often only available to well-connected companies, while auctions and tenders are held for show.

The financial branch of the government has prepared a draft resolution that will allocate a certain percentage of procurement contracts to SMEs. Currently, the annual volume of goods, works and services purchased from small and medium enterprises under direct contract accounts for 10% of the total. Starting January 1, 2017 this ratio is expected to be set at 15% by law. The government hopes that this will help stimulate demand for goods, works and services offered by small and medium businesses.

“We must tread carefully in order not to kill the very idea. We’ll see how it works in the pilot project. 15% is the optimal figure. Once it’s enacted, we will talk to businesses and learn about the impact this mechanism will have on them, and if everything is fine, the quota could be gradually increased”, a ranking government official told Izvestiya.

In general, the projected volume of direct purchases from small and medium enterprises stood at RUB 207.7 billion as of March 2016. The leaders in terms of planned purchases from SMEs include state-owned companies such as OAO Russian Railways (RUB 32.8 billion), FSK UES (RUB 29.6 billion), Rostelecom (RUB 23.1 billion), Rosneft (RUB 17.1 billion), Rosenergoatom (RUB 15.8 billion), Gazprom Centrremont (RUB 10.5 billion), Uralvagonzavod (RUB 10.09 billion), Russian Post (RUB 8.95 billion), Gazprom (RUB 7.3 billion) and Alrosa (RUB 7.2 billion).

Besides, starting May 1 a two-level system of control over compliance with the mandated share of procurement from SMEs will be introduced. On December 1, 2016 the Federal Corporation for the Development of Small and Medium Enterprise will start reviewing draft plans to purchase innovative and high-tech products. Also, plans to “grow” small and medium enterprises in size are afoot jointly with their customers and government authorities in Russian regions. The share of purchases by major customers from small and medium enterprises is expected to grow from 18% in 2016 to 25% in 2018 (by 2.3% annually).

As of the beginning of 2016, the Federal Corporation for the Development of Small and Medium Enterprise had issued 3,500 guarantees to SMEs for a total of RUB 19.2 billion, exceeding the original target of 2,700 guarantees. As part of the National Guarantee System (NGS), in 2016 the Corporation will start implementing in ten Russian regions uniform requirements for main and supporting processes of guarantee support by all NGS participants, including the SME Corporation, regional guarantee organizations and the SME Bank. The guarantee support for SMEs is expected to reach at least RUB 65 billion in 2016 (SME Corporation: RUB 30 billion, SME Bank: RUB 12 billion, Russia’s regions: RUB 23 billion).

Besides, multi-functional business centres are planned for all Russian regions to provide a range of state and municipal services, state support, and advisory, consulting and credit services. This project must be implemented as soon as 2017 jointly with the Ministry of Economic Development.

The launch of the SME Business Navigator geo-marketing information system is scheduled for this summer. The project will offer an interactive map of Russia divided by the region where the user will be able to get one-stop-shop access to information about all types of federal, regional and municipal support available to small and medium enterprises. The website will also offer a catalog of model business plans for 75 most popular types of business. Eventually the total of model business plans will reach around 700. Beginning in July 2016 the Navigator will cover 76 cities, to be expanded to 169 cities at a later stage.

More details: http://izvestia.ru/news/610984