SmartTender Lawers

Recently, many customers have returned to work, and the question arose: what to do with purchases that “hung” with the onset of martial law? How to deal with reports, and publication of contracts? And most importantly, how should the customer act if there is a violation of the deadlines for the disclosure of information?

Of course, first of all, you must complete all the actions required by law, and publish all the documents that should be published, even if you understand the violation of the deadlines. But, unfortunately, often customers choose to act differently, which leads to various violations that are detected by the SASU.

In this article, Anastasiia Koretska, SmartTender legal adviser, will consider what violations have occurred most often since the state of emergency was introduced in the country, what is the position of the SASU regarding them, and how legitimate it is to refer to “martial law” when making certain violations. Also, at the end of the article, we offer you to read the comment of Nataliia Zaiets, candidate of economic sciences and lawyer, regarding the issue of administrative responsibility of customers for the detected violation.

Examples of Conclusions of the SASU and Explanations of Customers to Them

It is known that the Ministry of Economy in its letter dated 04.03.2022 No. 3304-04_9225-06 “On procurement during martial law” reported that procurement procedures and simplified procurement that began before the introduction of the legal regime of martial law in Ukraine are completed in the manner determined The Law of Ukraine "On Public Procurement" (hereinafter – the Law).

Despite this, sometimes customers consider it possible to invoke martial law as a valid reason for violating the terms for concluding a procurement contract or other actions that must be performed by the customer under the Law:

Purchasing ID: UA-2022-02-07-008253-b

SmartTender Lawers

Comment: Martial law is not a valid reason for violating the term for concluding and publishing a treaty. That is, the SASU believes that despite the existence of such circumstances as “martial law”, violations of the terms for agreeing cannot be allowed, and such an agreement should not exist.

Purchasing ID: UA-2022-02-03-002144-b

SmartTender Lawers

Comment: We see that the customer can find a way out of the situation. Violation of deadlines can sometimes be corrected if such violation of deadlines can be offset by the publication of a decision to extend such deadlines. Of course, if these terms allow this. As can be seen from this situation, unlike the previous one, the customer was saved by the norm on the extension of up to 60 days, which, unfortunately, cannot be done in the negotiation procedure. Therefore, even if a contract is not concluded on time in a public auction, the situation can often be corrected using the opportunities provided by the Law. Taking into account the peculiarities of the electronic procurement system, I recommend that customers, simultaneously with downloading the contract itself, download the protocol on the extension of the term for concluding the contract if such an extension took place.

Purchasing ID: UA-2022-02-16-009323-b

SmartTender Lawers

Comment: Despite the presence of a violation, it is possible to correct the situation if the necessary actions are taken within the framework of monitoring. If the contract as a result of the procurement was not concluded due to the onset of martial law, it is necessary to cancel the procurement procedure.

Purchasing ID: UA-2022-02-21-007662-b

SmartTender Lawers

Comment: This position is not uncommon since April. We see that SASU either does not take into account the impossibility of the customer to perform the necessary actions or does not consider his argumentation sufficient.

Purchasing ID: UA-2022-02-17-008851-b

SmartTender Lawers

Comment: In case of violation of the terms for consideration of the tender offer, if the number of working days exceeds 25, it is not allowed to block this with a protocol on the extension of the consideration period. Such a purchase is subject to cancellation with the argument “impossibility to eliminate violations”.

Purchasing ID: UA-2021-10-23-006883-b

SmartTender Lawers

Comment: This case allows us to see that reporting is necessary and should be carried out when the opportunity arises, but the SASU is condescending to objective circumstances, sometimes without even asking for documents and confirmations.

Purchasing ID: UA-2021-11-17-004016-b

SmartTender Lawers

Comment: If the deadline for reporting on the implementation of the contract should come after February 24, 2022, it is necessary to report when the opportunity arises. That is, under current circumstances, exceeding the deadline for publishing a report would not be a violation. But it is necessary to document all the deadlines and the reason for the violation of the deadlines.

Purchasing ID: UA-2022-02-16-001871-a

SmartTender Lawers

Comment: The conclusion can be drawn simply: martial law is not a good reason for breaching obligations under the contract, namely, failure to provide security for the performance of the contract. Even though customers are trying to meet the demands of suppliers in this difficult time and help them save money from risks, customers are violating the norms of the Law, in particular Art. 31 of the Law. Consequently, it is impossible to “get around” the need to introduce security for the treaty by referring to martial law. At least that's what SASU thinks.

Why Should the Customers Not Refer to the Suspension of Monitoring Procedures in Response to the Conclusions of the SASU?

It should be noted that most of the customers, even in July, continue to call the actions of auditors illegal when providing their explanations or objections to the conclusion. They say that the monitoring procedure violates Order No. 34 dated February 24, 2022, of the Chairman of the State Audit Service of Ukraine Gennadiy Plis, which stopped all monitoring procedures. Although let me remind you, on March 25, 2022, the SASU resumed its work by Order No. 49, so the references to the invalidity of the monitoring are groundless and unfounded.

When Can Martial Law Be Cited as the Cause of a Violation?

We figured out that references to force majeure circumstances, such as martial law, do not work in cases of violation of the term for concluding a contract, failure to provide security for the performance of a contract, and non-cancellation of the purchase in cases where it was necessary and when the deadline for consideration of the tender proposal was exceeded.

A good reason and a good argument for the customer is the reference to martial law in situations where the deadlines for the publication of documents, such as a report on the implementation of the contract, a protocol on the extension of the deadline for signing the contract, and as a basis for untimely cancellation of the purchase, are violated.

How Long Can the Customer Provide an Explanation to the SASU?

According to paragraph 5 of Art. 8 of the Law, the customer, within three working days from the date of publication of the request for explanations on the decisions made and/or actions taken or inactions that are the subject of research as part of the monitoring of the procurement procedure, must provide appropriate explanations (information, documents) through the electronic procurement system. The Law also states that the customer, within the period of monitoring the procurement procedure, has the right, on his initiative, to provide explanations for the decisions made and/or actions taken or inaction, which are the subject of research as part of the monitoring of the procurement procedure.

I note that in cases of violation of the three-day deadline for providing explanations by the customer, subject to the later provision of such explanations with arguments, the auditors respect the grounds for such a violation. Therefore, one should not be afraid of violating such deadlines, but in good faith perform their duty to provide information and help auditors reproduce a comprehensive and complete picture of the event.

The conditions for bringing the customer to administrative responsibility describe the provisions of Art. 8 of the Law. In any case, I emphasize the need for fruitful cooperation with the control body, because it mainly gives customers the opportunity, firstly, to keep the situation under control, and secondly, to correct the mistakes made in time.

Nataliia Zaiets' Comment on the Administrative Responsibility of Customers

When establishing a violation and ensuring responsibility for its consequences, auditors are guided not only by the fact of the violation but also by analyzing the actions of customers after the violation was established.

Even court decisions testify that in some cases, if the violation is insignificant, in particular, its consequences, Article 22 of the Code of Administrative Offenses may be applied, which provides that if the administrative offense committed is insignificant, the body (official) authorized to resolve the case may release the violator from administrative responsibility and limit verbal remark.

Also, practice indicates that in the case of disputed conditions, in the presence of a violation, when the customers have proven the impossibility of eliminating it, the courts are guided by Part 3 of Art. 62 of the Constitution of Ukraine, which establishes that all doubts regarding the proven guilt of a person are interpreted in his favor.

Therefore, we can find a decision where the court notes that, taking into account the circumstances established during the court investigation, which raise doubts about the incriminated PERSON_1 administrative offense, provided for in Art. 164-14 of the Code of Administrative Offenses, guided by Art. 62 of the Constitution of Ukraine, I interpret these doubts in favor of the administrative offender (case No. 465/1574/20).

According to para. 4 p.p. 5 h. 7 st. 8 of the Law, if monitoring revealed signs of a violation, but during such monitoring, the tender was canceled or recognized as not having taken place, the state financial control body notes a description of the violation without an obligation to eliminate such violation.

By Part 9 of Art. 8, in the case of confirmation by the state financial control body of the fact that the customer has eliminated the violation (violations) of the legislation in the field of public procurement, set out in the conclusion, which this body notes in the electronic procurement system within five working days from the day the customer publishes the relevant information in the electronic system procurement, official (official) person of the customer and/or authorized person of the customer shall not be held administratively liable for the violation of legislation in the field of procurement for violations that were eliminated by the customer by the conclusion.

At the same time, within five working days from the date of publication of the opinion by the state financial control body, the customer shall make public through the electronic procurement system information and/or documents that testify to the elimination of the violation(s) of the legislation in the field of public procurement, set out in the opinion, or reasoned objections to a conclusion, or information about the reasons for the impossibility of eliminating the identified violations.

Thus, the Law stipulates the obligation of the state financial control body to indicate in the conclusion the obligation to eliminate the violation (violations) of the legislation in the field of public procurement and the right of the customer to eliminate the violation (violations) outlined in the conclusion.

By Part 9 of Art. 8 of the Law, in the case of confirmation by the state financial control body of the fact that the customer has eliminated the violation(s) of legislation in the field of public procurement, set out in the conclusion, which this body notes in the electronic procurement system within five working days from the day the customer publishes the relevant information in the electronic procurement system, an official (official) person of the customer and/or an authorized person of the customer shall not be held administratively liable for the violation of legislation in the field of procurement for violations that were eliminated by the customer by the conclusion.

Therefore, if the state financial control body does not indicate obligations to eliminate the violation (violations) in the conclusion, it cannot hold the customer accountable, because in this way it violates his right to eliminate violations.

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