Debate: Alexei Navalny and Yaroslav Kuzminov

Colleagues,

Well, we invited Mr. Navalny to join us

after his well-known blog post, from which

I learned, somewhat to my surprise, that I am

the author of the concept for the Federal

Contract System together with my

wife. I am not, in fact, the author, but

I am closely involved

with that position.

This is not all that important for a broad

audience, because the subject of the law on

the Federal Contract System, the subject

of Federal Law No. 94-FZ, that is, the subject

of public procurement in the Russian state,

is a topic that deserves very

serious

discussion. So what are we arguing about?

Whether the Federal Contract System is needed

and what its fate should be.

Let me say right away that presenting it as follows—

that there is a competitive and transparent law,

94-FZ, and they want to repeal it and replace it

with a vague system that expands

officials' opportunities to steal—this is

to put it politely, very naive.

Alexei, no one is proposing any anti-corruption

provisions be removed;

there is no talk of abolishing competitive bidding,

no reduction in access for independent

producers to government contracts, no

restriction of transparency, and most importantly,

no expansion of officials' discretion.

In fact, framed this way, the issue has never

been raised either in the expert community or in the government,

because the current state of affairs

is so problematic that the discussion is really

about

how to increase procurement transparency,

how to limit arbitrary behavior by

officials, and how to improve the efficiency

of using taxpayers' money. There are

three concepts: there is the Economic Development Ministry's concept,

there is the Federal Antimonopoly Service's concept, and just yesterday

or the day before, the State Duma put forward another framework;

a concept from the relevant committee has appeared.

It is clear that the approaches differ in the details,

and will continue to differ.

So, with your permission,

we will now try to sort out what exactly

the necessary expansion of the law—or the Federal Contract System—consists of,

call it what you like, and what exactly is at issue

in the public defense of 94-FZ, its supposed sanctity and inviolability

as the only

anti-corruption barrier. Here is 94-FZ:

well, here it is.

This, folks, is the package of amendments

to 94-FZ: 120 pages adopted in

half a year, in the first half of 2010. In the other

half, just as many were adopted.

And the text of 94-FZ itself, with all the amendments marked,

can be found—there is practically no untouched place left in it.

None.

Let's pass it around the rows now; whoever wants one, I'll hand it over.

By the way, there is an extra copy, so let's

send it down the other side as well.

Let's move on to

the substance of the law.

No one can understand and correctly

apply the law except for a few very

rare specialists, whose fees

automatically shoot through the roof. This is

the classic fate of a law patched over and over again;

the law on education has the same

system: patch upon patch, and in the end it becomes impossible to understand

for ordinary

readers. Now let's

look at how the law

actually works. Procurement carried out through

competitive procedures, rather than from a

single

source: in 2006,

77%. The law was adopted, people believed in it. In 2007,

55%. In 2008,

51%. In 2009,

44%, then 42.7%—official Rosstat data (Russia's federal statistics agency). So

folks, we're coming back down to earth.

Estimated budget losses—well, I

made a rough calculation. Of course it's fairly difficult

to calculate precisely, but roughly 200 billion rubles

just because of sole-source suppliers, and

overall, taking into account the corruption

component in pricing, about 1 trillion

rubles out of five.

For those who do not know, the federal

education budget is 400

billion rubles. The main problem with 94-FZ

is that, when it was being prepared on such a broad scale,

the people drafting it did not understand or did not take into account

that goods and services have not only

such a wonderful characteristic as price, but also

quality, including operating costs.

But market participants understand this very well

and always have, and they take advantage of

the state wherever and however they can.

Anecdote number

thirteen: a company that specializes in winning

everything. I can, so to speak, give an example

from my own institution.

Let me give it.

So, I had it here somewhere. Here

is the example.

At the Higher School of Economics, in November, the company Stroy Proekt

won a series of auctions for renovation work:

window replacement, asphalt surface repairs,

and so on, with bids up to 60% below

the initial price. Only three contracts were fully

performed; the rest were

terminated. On three contracts, the company did not even

begin work. Do you know how a company that specializes in

winning everything operates? It's elementary, really.

They find some unfortunate institution

that has to hold a tender at the end

of the year. That happens for various reasons; it is not

always the institution's fault.

They win everything there, and then

they come and say: listen, there is this kind of

company, it will do everything; it will get it done in February

or March, just meet with them—that is,

the person responsible is an official or an execu-

it fuels corruption

and she was looking for someone to install windows for her, and she

found someone for one floor, they installed the windows, somehow

for her

they paid for the garbage removal too, she also found someone for that

for the rest she found no one. Well, it’s the end of the year, it’s difficult.

But this is a widespread situation. The second

the second case, anecdote number two: there’s a cartel

collusion involving an official, simply

blatantly before

the auction is declared not to have taken place, and at the stated

maximum price, everything

Today all agencies agree that

the law needs to be changed, but each agency has

its own point of view and its own administrative

interest. Federal Law 94 has three

nannies, so that’s why it has, so to speak, an eye

The Finance Ministry’s interest is saving public funds. Well, fine,

with a budget deficit, the Finance Ministry

I understand. Encouraging private investment,

ensuring the efficient use

of funds. Lately they’ve been talking there about

encouraging innovation, that somehow

preferences need to be given. The FAS’s role is to ensure growth

of competition in our economy. The three

agencies have different

and discretionary, so-called

administrative discretion of an individual

official

So, can the FAS consider that the decline

in the share of competitive bidding from 77% to 42% over 5

years—how did that happen if the law

is good, if it really protects competition?

when in the hands of the FA-

-S

or is the decline

the effect of other factors, is it the result

of a spontaneous selection of the best, the most

efficient suppliers? People find

each other, so to speak, and the bad ones are filtered out

they simply don’t apply for these tenders. Well,

people get used to it, everything is normal, and competition

continues to grow and is not

being undermined—maybe that’s one way to explain it. But

if everything is so wonderful, then why even

have Federal Law 94? It costs billions of rubles a year. If

you’ve found each other so perfectly

customer and contractor, then for God’s sake this

competition—just legalize direct

long-term contracts, and let’s turn the FAS into

Gossnab (the Soviet Union’s state supply agency)—there was such a body in the Soviet Union

an agency that decided supplies between

socialist enterprises. But the most

important thing is that the discretionary powers

would remain with the FAS. All in all, that’s a rather

tempting thing. But that’s a joke; let’s return to

reality: the share of procurement growing

outside competitive bidding—that is, when

an official personally decides with whom

to sign a contract at the stated price

this is called “the tender did not take place”

a widely known situation. According to the FAS’s estimates,

43% of funds are spent this way

almost half. What is happening? Why don’t people

take part in tenders? They don’t believe in

the possibility of fair competition under Federal Law 94

in its current form. We keep patching it up

patching and patching it, and they believe in it less and less

that’s what is really happening

So how is this done technically? Why

don’t they believe? Well, what we ourselves have

encountered is a tender for some job, with a deadline

for completion of 2

days—for a major job, several hundred

pages. Such an auction is designed for

girls with a magic wand

or the technical specifications are written for a specific

contractor and supplier, or the price

is inflated because, excuse me, no one

controls the price, no one

discusses it. But even if all this could

be overcome, the main danger is not

in

that. The main danger is not that. If

a procedure is in place under which the contract

will be concluded in any case

then there is an incentive for cartel collusion

the bidders make arrangements among themselves

often the one designated as the winner pays

compensation to the others; there is a market for these

payoffs—in construction, computer

equipment, cleaning, everything

you can imagine. And what do the participants in cartel collusion

divide among themselves? They divide

the inflated price, they divide it with the official. The problem

is that

all of this is being discussed

because we have, conditionally speaking,

several phases of the procurement process

there is justification of the need, there is

discussion of the possible price, there is

the procurement itself, and there is monitoring

of contract performance and the accumulation of some

record of that performance. Federal Law 94 is

only the procurement procedure

That’s all. This kind of regulation happens

There is no such doctor who treats

only the upper part

of the body. I’m already an elderly person, and for me

the lower part will soon start hurting too—I don’t agree

to that. I think we still need

to have something more

effective. And in fact, I’m not trying to

not

persuade anyone: the expediency of procurement should be discussed publicly

the expediency of procurement, technological

alternatives, the justification of the price—there needs

to be such an addition to

the law. Everyone agrees with this. Arteev

agrees

agrees, agrees. The dispute is about what form this will take

whether it will be in Federal Law 94 or in a separate

law, whether the FAS will be an independent player

or whether the Finance Ministry will stand above it

That’s the problem. For more than a year

a number of agencies—this is an obvious situation for

everyone, odious to the extreme, I think

that the situation with public procurement is outrageous and

has reached the breaking point

and against that backdrop, more or less everyone

agrees. Now compare, compare what

Artemyev is proposing with what was proposed by

the Institute for Public Procurement at the Higher School of Economics

what the mayor reworked after that, and what

Sham has just announced there

a coincidence? Well, I think, well,

nobody in their right mind introduces a rule without

having in mind themselves personally, their own

departmental interests. Better to put it this way:

let it stay as it is, and we’ll fight it out. Maybe we’ll

win. Listen, after all,

the issue is the federal contract system, or

more broadly, taxpayers who are paying an extra

trillion rubles — that’s 10% of tax revenues

of the budget. We could have reduced taxes by 20%

Well, not on natural resources,

but on the main taxes — I calculated it

20%. Entrepreneurs who find it impossible

to enter a new market without connections

society, living with a sense of total

hopelessness in the fight against corruption

crooked, distorted procurement totaling 200 billion

in fact, all it can do

in the current situation is distract

attention from the need for change, whether

willingly or unwillingly becoming part of a smokescreen

Now, flaw number

44-FZ (the Russian public procurement law) effectively

officials and employees of budget-funded

organizations today are afraid only of

violating procedure. Everything is geared precisely toward

that

you know what struck me most in your

post, in your words in general?

What amazed me was your conviction that it is

officials who are interested in changing

44-FZ. Listen, 44-FZ enjoys simply

colossal popularity among officials

it hangs in the corner and they pray to it every

morning. Not the top managers — they are responsible

for results politically; Putin

and Medvedev will ask them anyway, because

to Putin and Medvedev, in the end, it doesn’t matter how they

get it done — they try to maneuver there,

to do something. But deputy heads, department

chiefs, section heads, both

as contracting authorities and as those handling procurement, they

are no longer afraid of anything

an inspection comes — and there it is:

I followed the procedure; it doesn’t matter what was actually built

if you have complaints, complain about the tender

there are complaints, as Raikin (the Soviet satirist) used to say

you see, the state maintains

an enormous, excessive, in my view,

oversight apparatus that is supposed to

ensure efficiency and prevent

theft: the Accounts Chamber, the Control Directorate

of the Presidential Administration, Rosfinnadzor (the federal financial watchdog),

the Interior Ministry, the FSB, the relevant departments

they punish people for violating

formality, even though it is obvious to everyone, absolutely everyone,

that the result was not achieved and the money was spent

inefficiently, drained out of the state

thus hollowing out the core principle of personal

responsibility for

inefficiency. Navalny

268 billion rubles in canceled tenders by one

person

Great. Ten Navalnys won’t provide

a tenfold increase in that amount

at best, maybe a doubling. Even 100 Navalnys could hardly

manage one and a half times

Look, the current system is simply opaque

it does not make it possible to see

inefficiency and

bad faith. Like in the Indian

fable about describing the elephant by its left leg

Why does the position of

the FAS (Federal Antimonopoly Service) now have so many

supporters? Because it publicly

successfully and constantly exploits

the total

distrust of officials that has taken root in our society: let’s take away from them

responsibility, let’s take away their right to decide — that

plays very well with the public. But first of all,

guys, we have not taken away their right

to announce tenders and spend our money

and as long as the state exists, taking that away

is not going to happen

and secondly, the maximum amount of discretionary

power is now simply concentrated in

the FAS. It is selective oversight, it is a very

free interpretation

of the law. Well, I’ll give you an

example: the Higher School of Economics and the FAS had a falling-out. The Higher School of Economics,

so to speak, represented by the Institute for Public Procurement

was involved

for about

a year. And do you know what the FAS overturns? I’ll tell you:

it overturns the decision of a tender

commission that

refused to allow a bidder

to offer, where it was supposed to be

A3, because that was what was required, but the bidder instead

challenged our decision because he had offered

a printer

for A4 paper, which, as you know, is about seven times

cheaper

and he was not supposed to

win. Or another case, for which

our people were also fined

desktop: so, for this

if I remember correctly

we were buying a shelf-mounted projector, and again the FAS

fined people because we did not choose

a desktop one. I’m not saying that

there are villains sitting there — everyone makes mistakes

It’s just that the scope of discretionary

power, frankly, is off the charts

if this kind of thing is possible, if one can

interpret things this far

then where do you go from there? And now imagine

what is happening in the regions, where

a 40,000-ruble fine

is something the Higher School of Economics can pay off in no time

capable of ruining a family

Here is a letter—Irina

received it, yes, from a woman who earns 8,000 rubles

and has three children; her salary is 40,000 rubles

the FAS (Federal Antimonopoly Service) fined her; she is also a single mother

At the same time, everyone is trying in these

conditions to build relations with the local

FAS office, so overall, unfortunately, everything

Despite all the good intentions, Igor

Artemyev, I believe that although I criticize the FAS a lot

yes, I do, let me make sure I am

understood correctly: Igor Artemyev is an honest

man, and the people who work with him are

honest and decent

people, that is true.

There is nothing in what I am saying that contains any element

of doubt about their personal integrity. We

are not saying that someone personally is not

decent; we are talking about the consequences of those

decisions that we, guided by

our wonderful principles,

make, unfortunately. And behind

personally

decent FAS leaders there are

huge

tiers of regional FAS employees, and

what they do

is much harder to track

already. What is

the FKS (the federal contract system) in this context? It is mandatory

public discussion of procurement plans

for purchases, roughly speaking,

and it is tracking the fate of every

contract concluded. For example, through a two-tier

system. The first circle is experts. I would

pay them serious money, because otherwise

interested parties would simply hire them

themselves. The second circle is people like Navalny

an engaged blogger, engaged

people who actually care.

I have seen the mayor's presentation and the presentation

by the FAS; somewhat different methods of decision-making are being proposed.

They are somewhat different. At the university, so

let me show this using science as an example.

I think there are colleagues sitting here who

can also say something about science. The FAS

proposes that qualification is needed, because

well, it has become a byword: contracts are diverted

to unknown firms, which then also

run around universities and research institutes trying

to hire individuals

yes, in order to quickly

patch something together. Qualification is needed; everyone agrees.

The FAS proposes two options: either

objective indicators—a series of metrics, the number

of doctorate holders, an index—or else the selection

of a limited circle of universities

that would, as it were, be admitted to scientific

tenders. The Ministry of Economic Development, as I understand it,

proposes a procedure for forming

expert councils for each area and

field.

We will close off the path into science for young, newly

formed teams, simply

practically shut it down, if we adopt

the mayor's options outright. We are not

insured

against, well, nepotism, let us say—against the possibility that

people will favor their own. Although I must tell you that

under Fursenko (former Russian education minister), there were

competitions held, several stages of competitions under

Resolution No. 218 and the selection of research

universities, there is experience there,

but no one says that someone there

bought someone off. Why? Because there were

independent expert councils made up of people with

reputations, and the results were not

ideal. Yes, for example, in the research

universities, that commission was formed

from a large

number of scholars.

Aviation-related—no fewer than three aviation institutes

ended up among the national research universities,

but no one thinks that, well, yes, and

I think there is room for

this procedure, but again, I do not have

a preference. Frankly, as someone who is not

a deep specialist in this matter, I agree both with

the FAS and with the other side, with both options.

Let something be done, let

things move at least somehow.

Finally, two separate

stories. Story number one:

in my estimate, from one-third to one-half

of budget losses occur not because of

deficiencies in procurement law

but because of the provision in the Budget Code

that is fiercely defended by the Ministry

of Finance: the prohibition on carrying over

unspent funds under contracts

to the next

year. In almost all countries, such

carryover is allowed. What does this mean? The situation

is very simple:

you derail a contract, you fail to

finish building something, you leave something

unfinished, you fail to deliver something, and then plain

blackmail

of the customer begins. Blackmail. There is Sadovnichy there

there is Kuzminov

there is the Russian Academy of Sciences, which

can come to terms somehow. But, excuse me, 95%

of mass-market institutions

quietly submit things in March, while they formally close them

in December before a possible audit.

For budget-funded customers, this kind of payment for

fear—it really must

exist. I think more than half of contracts for

construction, major repairs, and the supply of complex

equipment have such, one might say,

execution-related elements.

That is the crux of it. Let us address this here.

I think

and this can be done simply by amending

the Budget Code. The issue is completely

ripe for action; it is just that procurement is often criticized over this

when the problem is not in

procurement. And second, the second separate story:

These are electronic trading platforms.

with a standing balance of more than 200 billion rubles.

Anyone even slightly familiar with the way

the domestic credit system works

will tell you that about one or half a percent

of that amount any bank would gladly hand over

in cash to whoever brings in the money.

I'm not saying that this is, this is

the case.

And besides,

the fierce effort to select them in a supposedly transparent way

and then limit their number, not allowing

new ones in, generally speaking,

raises doubts for me. God forbid I should say

that any of the colleagues I know

who were involved in resolving the issue of

electronic platforms received something personally

for themselves. I'm not Navalny; I have

basic intellectual

scruples that do not

allow me to do that. I would simply suggest the following:

I suggest we not try to figure out why it

turned out this way.

Maybe we should transfer the electronic platforms

to the Federal Treasury's infrastructure.

After all, the money

is budget money, simply so that no one anymore

suspects anyone of anything.

Alexei, you were against this, and now

you, so far...

Against it. I think your own

refined scruples do not allow you

to say who made the decision, and that you're simply

a little embarrassed when everyone knows that

five platforms were selected.

...there he is, that guy to whom you...

...entrusted Strategy 2025, he made those

decisions, that's it.

These were political decisions, the accusers say.

They really were made through collusion.

Without any... Me, like Navalny, I'm that kind of person—

without intellectual delicacy, I'll say it plainly:

someone made money there. Name these

people. But that's not what this is about at all.

I don't believe, you know,

that ideas about corrupt

interests among those bearing political

responsibility seem to me very

strange.

Well, corruption arises because of...

Corruption does not arise

from responsibility; corruption arises

from

...

from... what you're saying, because...

As you know, I do not take part in parties,

so, overall, my position

is this: let's agree that the FKS

will be... let's name it in its honor, in honor

of our colleagues' contribution—the FKS, in memory of... whatever.

Federal Law—it makes no difference to me which agency.

I believe that, overall, this is one of the

most open agencies, ready for public

dialogue.

And

every agency has its failures,

but let's remember that an agency exists

for the people and the economy, not that the people and

the economy exist for agencies.

[applause]

Thank you, thank you. I

am opening our meeting.

I failed to mention the time

allocated

to the speaker; in this regard, I apologize, Evgeny

Grigoryevich. That was your mistake. But if

there had been a proper procedure, as it were, then you would

not have been able to do that.

Please don't provoke me into barbs,

because on matters of procedure I also have my own

point of view and the right to speak.

I will not abuse that right, so I

simply ask you not to abuse

the time. Thank you very much, dear

colleagues. Many thanks to Yaroslav and FANO (the former Federal Agency for Scientific Organizations)

for giving me the opportunity to speak here. It is

a great pleasure for me to speak here,

a great pleasure, and of course HSE (Higher School of Economics) is a very

complicated venue for me, because

well, I think a significant number of

students and staff are generally aware of

my work, and some of them may

even support me. From these

people I received a huge number of

letters saying, well, Navalny, we

used to support you, but now you've

laid hands on something sacred—on Kuzminov—and

so now we don't even know how to

feel about you. It is wonderful that there is

a rector who enjoys such

support from students. And I had a similar

situation with Vladimir Mau,

who seemed to support my work, but

then we caught him precisely on this kind of

what did you call it—beauty contests for girls?

Yes, a big, hefty investigation in two days, and

he immediately stopped liking me. He said, I

thought you were Robin Hood, but it turned out you were

not Robin Hood at all.

But to say that we have no untouchables,

Yaroslav Ivanovich, and that precisely over you, over

people like you, whom we greatly

respect and value, there must be

additional oversight. Because if

you make a mistake, then things are truly hopeless. And

I want to say that it was precisely my love for

HSE and personally for you that brought me

here, and it is precisely my love for you that cries out within

me: Alexei, do everything to stop

him, please do everything.

I am here as an absolute

professional. There is no need to show me

Federal Law No. 94; for the last

few months I have been living with it practically in my arms.

Every day we analyze dozens of

tenders very carefully. We appeal them

to the antimonopoly service, to the courts, and so

on. I spent a year in Kirov Region.

As an adviser to the governor, I spent this year

devoting myself to studying how this

works from the government side, and I saw how

the procurement law (likely referring to Russia’s public procurement law) functions.

In these terrible, critical situations—say,

there is a flu epidemic, and something urgently needs to be

built, but there is no time; something has to be

constructed, and only one major

contractor can do it, and so on.

And in all these situations, I,

as an absolute professional in this area of

procurement law, want to state that what

you are proposing—this concept, whether intentionally

or unintentionally—is in fact

a federal corruption

system. What you are doing—

the key point of this concept—is

that

abolishing the procurement law entirely is not the answer.

It is far from perfect; it needs very substantial revision.

But you see, I have this

metaphor in mind: there is this procurement

law, like a

rail handcar, patched up all over, but it still moves.

At least we understand the direction we are moving in.

We can turn that handcar into a train that carries us

somewhere quickly. And then you come along, and

the Ministry of Economic Development

says: now we’ll smash the handcar to pieces, but

in exchange we’ll build you a flying

ship. So let me tell you this:

I do not believe in your flying ship, because

you have not built a single

flying ship yet. You moved on to

specific cases—you named four of them—and I want

to focus on one

that everyone has probably studied. It is exactly the case

that offended you so deeply—namely,

HSE’s online advertising (HSE, Higher School of Economics), and using

this example, we can clearly see that all

your words, your beautiful statements, and so

on—all of it crumbles into dust.

HSE has 2 million rubles (about 2 million RUB), and it

wants to buy online advertising, as

you wrote to me in your open letter,

because of the demographic decline, and it needs

to attract more students. What does

a conscientious customer do? A conscientious

customer announces a tender and says:

I need online advertising on

platforms with such-and-such

quality, sets various parameters, and

gets that advertising. Someone comes to him—

someone who sells advertising on quality

platforms, selling him good-quality advertising

at the optimal price. This is all

a matter of the technical specifications. All of this can be

regulated. But remind me, please:

HSE is an autonomous

non-profit educational institution. That means you are not

subject to that procurement law. You have an entire

department

for procurement; every road is open to you. You

could have organized such an ideal

procurement system here—some brilliant,

super-advanced, amazing one. But what did you actually do?

You went about it on a completely different principle.

When these 2 million rubles need

to be moved from point A to point B, you

simply, in an entirely arbitrary

manner, selected two random websites, the

most visited of which has

traffic three times lower than my LiveJournal (a blogging platform),

for example.

And you ran there

a set of banners. All right, no need to continue—I got the hint.

Colleagues, you got the hint, right? Keep that in mind,

and then everything will be fine for us. Now,

please let me finish. Therefore,

on that website, everything will be

just fine for you. Can you imagine a website

with seven static

banners hanging on it? It is as if the company

Gazprom, on its own NTV channel, bought up

all advertising for the entire year and kept running

“Gazprom: dreams come true.” Is there any

point in that? No. I do not in any way want

to say that as a result of this

extremely suspicious and dubious

scheme, you will be sitting in some café somewhere and

someone will hand you a crumpled

envelope containing 300,000 rubles.

Of course not. But I am sure that every time

such dubious things happen,

at some level, somewhere, a

crumpled envelope is involved. And what happened in your case

simply shows me

carelessness and sloppiness in

placing the order. You did everything according to—

you keep waving these wonderful concepts around. Well, here

is your concept. Why did you do everything

from the first step to the last in

contradiction to that concept? If you are not afraid,

Yaroslav Ivanovich, do you have

a faculty of advertising, or some kind of department?

No? Well, you do have PR and advertising,

don’t you? And public procurement too. Let’s

say right now: let a group

of students from public procurement and advertising

sit down, sign their names, and stake

their reputations on it, and analyze

this tender from the standpoint of its

adequacy, from the standpoint of its

correctness, and most importantly, from the standpoint of your

own

super-concept as applied to your work.

You will be very ashamed when it is

published and posted somewhere online.

That is why I do not believe that you can

create something like that, and that it will be your

flying ship. It does not fly because

you yourselves do not believe in it. And this

business of yours—what was it, a floor projector or

a desktop one? You simply cannot even draw up technical specifications properly.

That is sloppiness—

the traditional sloppiness that exists

in all our government bodies, and you have

the same thing—yet you are telling me what needs to be done.

to give you more freedom, what am I supposed to do

believe in your good faith?

Good faith is made up of

several things. Corruption has nothing to do with it here;

it’s simply negligence, excuse me.

And so, with all my deep affection for

you, I am not prepared to entrust, I am not prepared to give you

additional powers. I am not

prepared to entrust you with the right to

act entirely at your own discretion

in setting some kind of prequalification criteria.

Even now already, and

next, the Ministry of Economic

Development—a wonderful body, I can already see

the smiles in the room. I do not believe in your ability.

You built it yourselves—where are your free

economic zones? Yes, and who drafted the law?

The Ministry of Economic

Development, just in case anyone forgot. Wonderful.

So why are you abolishing it now, then?

Then you were mistaken. Then

you were mistaken back then, Alexander.

Quiet, everyone. There will be order here.

Understood, thank you.

[applause]

There were free economic zones.

You played with them, dropped them, and now you’re fascinated by

Skolkovo. I invite all of you to the city of

Zelenograd; we’ll go there and look at

the fence that is all that resulted from

the construction of your flying ship.

There is nothing else there. I looked at

the Ministry of Economic Development’s website, and it says that 10 billion rubles have already

gone into Zelenograd. There is nothing there.

Just a pit. That is why I think such super-

experts should, I believe, for the sake of

bringing them closer to real life, be

taken there once a month and made to sit for half an hour

in that pit so they understand the difference

between the truth of life and flying

ships. And I understand perfectly well that

this will all end now, and then we’ll be standing there

while everyone explains to me why nothing

happened. And where, by the way, is my

Affordable Housing?

An enormous number of

projects—the Higher School of Economics was involved in this too,

everyone was doing something there, and

the whole country, and Medvedev, who at the time had not yet

become president—everyone was talking about

Affordable Housing. Where is my Affordable Housing?

Where is your flying ship?

So in the corridors, you’ll give me

a million reasons why this is not so simple. You’ll

say, “Well, you see, Alexei, we don’t have courts,

everywhere we have crooks—in

the municipalities, crooks; governors,

crooks; the country is run by the Ozero dacha

cooperative (a well-known group tied to Putin)—that’s what you’ll tell me

in private, and I completely agree with that.

So here

the Ozero dacha cooperative absolutely

matters; the factor of the dacha cooperative

works against your concept in the sense

that it will not allow it

to happen. A very important point: Elvira

Nabiullina—I say this without any irony, without

any sarcasm—I say that I respect this

person greatly, and her opinion on

a huge number of issues is decisive for

me. But when Elvira Nabiullina

tells me that she fully

understands the fight against corrupt procurement, I

am sorry, but it is simply laughable. For the

simple reason that she sits

on Gazprom’s board of directors, which, when it comes to

its own gas procurement, repeats exactly

all this rhetoric, and that raises

a question for me: why is she entrusted with the direct

legal duty, as a board member,

to fight all these

schemes, if at Gazprom one and the same

pipeline segment—its German

section costs 2 million euros per kilometer, while

the Russian section costs 6 million euros per kilometer? I

read the board minutes. I do not

see Elvira Nabiullina there calling anyone out.

Nothing changes there either.

Nothing is happening inside the company.

No kind of

state regulation is even needed here. I simply

want this issue to be raised inside the company:

billions are being stolen from Gazprom

every day.

Billions—and yet for some reason no one here

wants to control corruption. All

these endless Rotenbergs and so on—

all of this is happening outside any law,

when the company could implement your concept

completely. Besides, I want

to say

that when we talk about state procurement, we say it is such an

enormous amount of money spent inefficiently.

How much is state procurement? 5.5

trillion rubles. Yes, if we take out

the military and everything else, then the real amount of money

there is 2 to 2.5 trillion. Can one steal there?

One can’t, one mustn’t. But when we

talk about

priorities in state corporations,

where money is allocated

—corporations, I’ll use that as a general term—yes, these

giant companies of ours, quasi-

private, spend 7.5

trillion rubles every year, and that is exactly where all

your innovations are built in, where

there is genuinely complex construction, where

that money is truly needed,

business needs that money, the country needs that money, and that

money could become a driver of development. But

for some reason, as a result of

the long work of the Ministry of

Economic Development, I see

a meager bill that has now been introduced,

where all oversight over Gazprom and

Transneft consists exclusively in

the fact that they are supposed to publish something on a website,

and they are quite openly allowed to do whatever they want.

It can be done through a tender, or without a tender.

Do whatever you want. But when

I criticize Transneft and say

that its procurement is non-transparent, they word for

word repeat what is written in your

concept. They say, come on, it's all

about price there; price doesn't matter, quality is what matters.

Everything has to be done properly; we have plans

for the year.

Quality isn't simple. They

monitor it, and

it is monitored by a large number of

state agencies, Rostekhnadzor (Russia's federal environmental, technological, and nuclear oversight agency) and

so on. All of this happens outside the

law; they are absolutely flexible, and so on.

Then can we ask how all this

led to billion-ruble contracts

being awarded

at twice the price, and now

everything is falling apart, and that same

Rostekhnadzor is issuing one order after

another. Why is all this

happening? And so the main thing,

well, the trick—let's call it a trick—

is that you are comparing

imperfect procurement under Federal Law No. 94

with some kind of procurement

that exists only in your head,

in a hypothetical imagination. But I

suggest that you compare the real

situation: procurement under Law No. 94

and procurement without Law No. 94.

And for all its, for all its

problems, I assure you that if

Transneft operated under some

analog of that law, it would not have been possible

for all the tender documentation to be

destroyed there; it would not have been possible for

contracts to be awarded to companies that were actually

simply registered using stolen passports.

None of that would have happened.

There would still have been a lot of it, and a lot of money would still have been stolen,

but this kind of lawlessness

that happened there—there would not have been that, there would not

have been. And I do not understand why, with

maniacal persistence, you are trying

to repeal Law No. 94. Even though here is

this enormous field right here: they are all sitting there,

these Surgutneftegaz, Transneft,

Rosneft—this is where the money is. Why do we not

see such active lobbying in the direction

of putting things in order there? That

is not happening. Your Medvedev, whom you

mentioned with great reverence

in your open letter—don't

tell me Medvedev is interested in

fighting corruption, because he, too, is in favor of Law No. 94.

I think so absolutely. I think Panfilova

is sitting here; ask her about the case

of Daimler, and she will tell you that President

Medvedev, at the Davos Forum, looking

the whole country straight in the eye, simply

brazenly lies that the Americans did not hand over

certain documents in the Daimler case,

when everyone knows that they

did hand them over, because he does not want these

investigations, because over these

investigations, people will end up in prison

from Medvedev's inner circle. Therefore

the case he spoke about is being investigated,

but your beloved Medvedev has said nothing on Magnitsky or on

that same Transneft. We do not have

the political will

to fight it. It simply does not exist.

And one important point—I am already

wrapping up—which I might not even

address to the people here, but rather to those who

are watching us online, because it is

very important to understand: there is an opinion

that the antimonopoly service is supposedly fighting

with the Ministry of Economic Development; that is not true, they are completely different.

Yes, the antimonopoly service is about oversight;

the ministry is about rulemaking, and so on. There is

a perfectly ordinary war going on,

the kind that happens in every country. It is a war

between the Ministry of Economic Development and the Finance Ministry.

It is, it is a normal confrontation, and in

the course of this confrontation, naturally,

the economic ministry tries to grab a few powers from

the Finance Ministry. That is absolutely normal for this

endless positional war, and

both sides hire institutes that

provide all this with an ideological

foundation, which is also completely normal. Who else are they supposed to hire,

thugs with

baseball bats, to write papers?

They keep throwing these endless papers

back and forth, but there is no need to present

this interagency confrontation, which

accounts for 60% of the meaning of your concept,

as some kind of struggle to seize the Finance Ministry's powers

for the sake of procurement efficiency and a fight

against corruption.

What needs

to be done? Well, most of what has been

said here

does need to be done. I can only say:

thank you, Captain Obvious. Absolutely

all of this needs to be implemented. Who would

argue that we have a huge, complex

procurement process, and Law No. 94 regulates only

the placement of orders?

We need to conduct monitoring,

we need to oversee implementation,

quality, and so on. In other words, we need to build

all the other elements onto this, to put onto this

matryoshka (nested doll) all the other pieces. But why do you

absolutely need, urgently and immediately,

to repeal it?

Yes.

Please note that at the same time, to declare

Law No. 94 no longer in force—you have not read your own

concept. That is your problem: you have not

read your own concept after the introduction.

Therefore now I

will quote it: this is the basis of the ideology here.

It states quite clearly that it must

be repealed. Therefore, all the correct

that are embedded here

Come on—who could possibly be against all of this?

So when I say that we need to work,

we need to work. Let’s keep adding to it,

to the law, all the sensible provisions—a huge

number of sensible provisions did not make it into

this concept. Ivan Ben is sitting here,

its traditional critic. Yes, his idea about

open data—let’s apply it.

A wonderful, brilliant idea—let’s

write it in immediately and include it somewhere,

in the law or elsewhere. Who is arguing with that? No one

is demanding that everything be abolished immediately.

So this needs to be done. I am absolutely

certain that

90% of the efforts that should be

directed toward normalizing the procurement system

should be directed toward

corporations, toward monopolies, and toward

this quasi-business that is, in fact,

actually part

of the state. This is not an easy path, of course.

It is clear that people at Gazprom or Transneft (major Russian state-controlled energy companies)

are not exactly eager to give up their right

to take a cut from every contract. The Rotenberg brothers (Russian businessmen closely associated with the Kremlin)

are not going to give up their money just like that.

But it has to be done. Let this roundtable

become the beginning of a wonderful

public lobbying campaign for everything

good and against everything bad—who could

be against that?

Thank you.

Thank you. So, here is what will happen now:

I will say a few words

simply because I need to leave. I

still have to speak

at a charity evening where

students from our International Institute

of Economics and

Finance will be talking, in addition to

the concert, about how they work with

the elderly, the sick, and so on. After that, I

will have to present them with prizes, including

this tie here.

And my first words will be words

of gratitude to Alexei Navalny for the

work he is doing. I consider it

exceptionally useful, exceptionally

important for the development of Russian

civil society and for the fight against

corruption in all its forms.

And from that point of view, I believe he

deserves every kind of

encouragement. But every struggle has certain

rules, and if you are counting on

what we are counting on as well, and what I,

for example, expect from you, then here the

rule is that the facts and

accusations you put forward must

be substantiated. This is absolutely not

an optional condition. Otherwise, sooner or

later, a certain layer of

distrust will emerge, and you, so to speak, will not be able

to perform your function. Then we will again have

to look for someone else—and that is not so easy.

Therefore, I ask you to treat this, this

mission of yours,

with respect and with proper

understanding of your public role.

Second, when I say this, I

must say that I carefully

read your

blog.

And I read everything that came before the direct accusations

against the Higher School of Economics (a major Russian university). There is

a certain explanation there that we live in

this kind of society. This is not an accusation, I repeat,

but it is a certain view

of our society as

a society of universal, all-pervasive cheating—

everyone is a crook, or if not everyone, then at least

those people who occupy

some sort of seats in the

bureaucratic apparatus, and so on. That is

certainly not something you can accuse me of believing.

Still, still, I

as they say, have no particular

renown in this respect, but I nevertheless understand well

that here in our

country there are very many decent and honest

people in all kinds of positions. I simply ask you

to read carefully what you have

written. The implication is that

if you so much as lift a finger like this,

then it will обязательно be stolen.

A brief remark: I was simply saying that

millions of people

work as officials, and evidently

most of them are, of course, normal

honest people. And in any case,

the overwhelming majority of them would be

normal and honest people in a

normal system. What I was saying was that since the

1990s, we have had

negative selection, and unfortunately

decent people very rarely end up in the

places where money is allocated. That is what

I was talking about. So now I repeat

once again that the target of attack there

is the presumption of good faith

on the part of the contracting authority, and you say: how can we

rely on a presumption

of good faith among contracting authorities if they are all

thieves? You have no other evidence, if we are to take this seriously.

If we are to seriously regard as evidence those

two million rubles that you present as an

accusation against HSE, then, my dear fellow,

could you really not find some

larger sum? Come now, what

is this, my dear?

You found that,

so to speak, and all that fervor immediately

evaporates. That is what I said.

Now, then, I want to tell you

not

as a person taking part in an argument, but

as someone who is genuinely

engaged in building institutions.

It is a very difficult matter, and whenever this issue comes up,

when we talk about it, you always try

something, it turns out badly, and then you

say: no, this is bad, let's change it

somehow.

Let's do something more sensible. And once again, I will cite

the bankruptcy law as an example. Let me

remind you that it was rewritten twice;

only on the third attempt did it become

reasonably acceptable. The first time it favored

debtors; the second time it shifted in favor of

creditors, and that is when there began

a campaign of buying up debts and bankrupting

enterprises. After that, it was changed again;

they tried to achieve a balance, and in the end

— I don't know — it seems to me that

they more or less did achieve a balance for

the environment in which we live. But of course

there were people who wanted

to continue taking over those very enterprises,

so they raised the question: let's once again

rewrite this same law on

bankruptcy. Now then, let me turn

to this law here.

You see, when a situation like this

arises, of course one can

try to come up with

ironclad laws that cannot be bypassed,

so there is no way around them — except to blow them up, so to speak. Well,

that is,

I agree: in the Budget Code there are

provisions that apparently will require

calling in the sappers (bomb disposal experts); and here too there are

for example, there is a provision stating that

only, so to speak, criteria

based on the minimum price. Well, that is clearly

a corruption-prone thing, generally speaking. Well,

Yaroslav Ivanovich has already spoken about this, but

in reality it simply does not work.

You see, you yourselves say that

we have very high corruption. So did it

stop it because of this, so to speak, cheap

law? No, it did not stop it at all,

there is not even a trace of that. Now then, my

personal position is this: if you want

to fight

corruption by means of laws like these,

nothing will come of it. That is, I would

put it this way: there is one such fighter, and I

respect him greatly — that is Alexei Leonidovich

Kudrin, who always advances the following

demand: we will create, we will establish such

bureaucratic hurdles that corruption

will not get through. But, my dear friends, it turns out

the opposite is true, because usually

the more rigid

the system is, the more bureaucratic obstacles there are, the

more corruption there is. And how inventive people

manage to adapt — I do not even

know; sometimes I almost envy them.

But, that said, I simply want

to express one simple thought:

corruption does not arise because there is

some

flexibility; it arises because

of

something else. But

this is a very complex cultural phenomenon;

yes, an exceptionally difficult matter, and I

thanked you not casually, but as someone fighting

for a new Russian culture,

one that cultivates honesty and helps. But

still, let us then agree

on the rules of the game and follow them.

It seems to me that this is very important, because

these rules — I simply recall that

time when we ran into the fact that we

were placing, through a

competitive tender, an order for

the services of an insurance company. Well,

we won — no, not we won, we

actually lost, but that company won the tender.

Before that, we had been receiving more or

less decent services that were

included in our social package, but

afterward that stopped. So this does not

work: the company saves money because it

now wins that way. That is, it

won with the lowest bid. I do not know

what offended it there; we are not among

the organizations that use

corruption to push things through. Well, do not count

2 million rubles (about 2 million RUB), and what you outlined there

that you are still describing — so I

simply

call on all of us

after all

to be guided not by the desire to win

applause, and not by the wish to generate, well,

so to speak, popularity with

the public — although you are a political figure. I

believe that techniques of this kind may, in other

cases, perhaps be useful. But let us

still think about how to

bring some benefit to the country. I

am deeply convinced that there should be no

revolutions in it; the country has already

had more than enough of that sort of thing. No one

needs it. What we need is to build institutions.

Of course, every single time, on every

occasion, one can raise the cry: down with

Putin, down with Medvedev, and those

people from Ozero Cooperative (a well-known dacha cooperative associated with Putin's inner circle), and so on. But I am not

against it — I always enjoy it — but

still, it does not help, you understand.

Do you want enjoyment, or do you want to fight?

As for me, let me do my own work,

because if all of us are going to

fight, there has to be a division of labor. At my age, I

do different work. If

Kuzminov wanted to leave the Higher

School of Economics, he too might

start doing that — but then who would take care of the Higher School of Economics?

That is needed too, and the country will need all of this.

So let each person

have their own job. But I will help you, I

tell you honestly, and Kuzminov will help too

wherever the issue is truly at stake.

about useful things, but we need to take into account

that this work will be gradual.

Against.

It will involve a large number of

difficulties, but in the end we

must win. You must win; as for me,

I no longer count on it. Thank you, I now

yield the floor.

[applause]

I now give up my

seat to Mr. Yakobson. Excuse me, but there

too, it is clear to us who disrupted the applause.

Gennady Grigoryevich did not want that; we know him better,

but every time someone disrupts it

for some reason, it turns out.

Uh, here is what I want to say. I

really did not expect

to chair this. Uh, well, I want

to say a few words to those who are in other

rooms. I know students were crowding here

and were upset, asking why this room—was there really

no larger one? There is only one larger room at the Higher School of Economics (HSE),

and that is precisely the one where a charity evening had

already been scheduled in advance. We

simply had no choice. I apologize to

those who could not get in here; I repeat,

there were no alternatives. And now, as

planned, there is a charity evening for sick children,

taking place, and I

think that we are not competitive in

relation to it.

Yes, please. Introduce yourself. Well, my name is

Ivan Begtin; I have already been mentioned here.

Yes, if anyone does not know the story about Latin letters

in public procurement, well, that was actually me who, in my

time, found it and made it public. And I am the

creator of the RosGosZatraty project (a Russian public spending monitoring project),

made on commission from the Institute

for Contemporary Development. It is a monitoring system for

all Russian state contracts within the framework of

a unified system. Well, to begin with, I want

to say that I have a negative view of

all these concepts, including Federal Law No. 94-FZ.

I believe that all of them

have a fundamental problem. And this

fundamental problem means that they

have not undergone constitutional review,

because both in the concept of the Federal Contract System and in

Federal Law No. 94-FZ, what we effectively have is

a situation where—move a little farther

from the microphone, it is causing feedback—right, yes—

where the federal executive branch,

specifically the antimonopoly service,

exercises control over the economic

activity of all government bodies, of all

branches of power and at all levels. That is,

in effect, the fact that we are a

federal republic, as stated in

Article 1 of the Constitution, and what

is set out in Chapter 8 regarding municipal

entities, is being violated. And this

completely contradicts, in effect, all

federations that exist in the world. And

for example, in the Federal Contract System concept, where world

experience is mentioned, and specifically the experience of the United States,

for some reason this is glossed over. It mentions

the U.S. federal contract system, but it does not specify

that the U.S. federal contract system applies only

to the federal agencies of the United

States of America. And the same applies to Federal Law No.

94-FZ. Therefore, when Alexei

Navalny praises Federal Law No. 94-FZ

or says that it is a good law,

I am surprised. Why is it, so to speak, that I

have this sense of déjà vu? If

Vladimir Putin had said it, I would understand. But when

Alexei Navalny says it, I find it a little

hard to understand, because in essence this law is

the foundation of the vertical of power (Russia’s centralized power structure), or at least one of

its

components. Now, the second key and important

point is that there is a substitution of concepts.

There is a conflation of the concept of competitive

control and public oversight.

Competitive control is precisely about

antimonopoly actions; these are actions

related to market formation and

ensuring the elimination of cartel collusion.

But when it comes specifically to public

oversight, and what, in theory, the PIF project should have been about, and for example what

the RosGosZatraty project is about,

that is a completely

different sto-

story, one based on the disclosure

of information about government spending.

This is what is now happening all over

the world; this is what international

organizations such as the World Bank are advocating,

such

as the European Union is gradually moving toward it.

The United States

and most of Europe are doing this through

the disclosure of data in machine-readable form and

the possibility of subsequent analysis. It means

increasing the volume of information and

providing it in the most convenient

form possible for analysis, because everyone

understands perfectly well that a contract

published as a scanned document and a contract

published as a database

that can be downloaded and

analyzed and compared with all the others

are two fundamentally different

things. And yet this is exactly what is now

being done elsewhere, whereas in Russia this,

for example, stopped being done from the moment

the new official website was introduced. This is

a major problem, because

before that, the Treasury disclosed all

the information in the contracts register, but now

that is no longer there. That is, now it is necessary

to browse through it manually, if the site is accessible at all.

And finally, I want to say that there is again

a certain misconception, because

price competition, as it were, and in

general a reduction in price, is seen as a good thing. And that

is considered good. Because I can confirm

exactly everything that Kuzminov said.

There really is a significant

problem with the quality of the supplied

products.

Suppliers have far too many opportunities to

make arrangements with

customers, saying: let us supply you, within

your current budget,

and then we’ll close things out a bit later,

sometime in March or April. But public-sector

customers also have fundamental

ways, after signing a contract, to then

squeeze the supplier.

If you want to deliver everything honestly, then

you supposedly need to bring over,

well, an envelope with cash. That happens too. And in

this case, the ideas of the FKS (Federal Contract System)

embedded in it are quite logical, but

again, the FKS concept is said to be

slightly more detached from reality

than Federal Law No. 94.

Federal Law No. 94 in its current version is not the same as

the original Federal Law No. 94 that was adopted in 2005.

These are two fundamentally different laws, and

the fundamental change to Law No. 94

that came through Federal Law No. 93 was

not just an amendment — I would call it

something pushed through secretly, almost covertly,

through the State Duma, the Federation Council,

and the president, under the guise of a law on

the APEC summit.

And if you look at the full history

of the discussion of that law in the State Duma and

the Federation Council, you will see that

nothing about public procurement

was discussed there at all. The law

was called the law on holding the APEC summit,

and so on and so forth, and on amendments to

certain regulations. But those

regulations had absolutely nothing

to do with the APEC summit. Yes, those

regulations related exclusively

to amending Federal Law No. 94, and

that is precisely why the public

discussion taking place now is

the main — you could say the key —

benefit we are getting from

the current situation, and nothing more.

I have a request, since

many people want to speak and the audience is

full. Yes, now, as for questions — well, maybe

perhaps first

we should take questions — no, if we listen to several more speeches,

we won’t have time for anything else.

And one more thing. Honestly, I

did not volunteer to be a mediator, but since

a mediator must be absolutely

neutral, let me just say this: when we

keep saying this is good or that is

good, we forget, in my view — and here

I will stop participating in the discussion —

that there are, in fact, different markets

and different goods, and what works well for

buying gravel works poorly for buying

science. And today’s disputes are not about gravel.

That is, there are people who say:

let’s abolish electronic

auctions and competitive procedures at all stages. I, for one,

personally was

in favor of them when it came to simple

goods; we stood shoulder to shoulder here,

with Artemyev and the others. The issue concerns

exclusively the procurement of scientific

products and complex equipment. Here I

will put a full stop to this remark of mine and

move on to questions.

Please — still, I am forced

to add something here.

As far as I understand,

regarding competitive tenders: in tenders you can

introduce as many of your own

qualification requirements as you like; it is all

spelled out there.

There, the quality and qualification component is

45 points out of 100 — all of that can be done.

Twenty to forty-five, only for

Sorry, but this is a matter of principle.

This is an important point: there is no need for this big myth that

it is auctions everywhere, price-cutting everywhere —

that is not true. Qualification requirements can be introduced everywhere.

As for qualification requirements, and as for

your innovative products,

well, your concept says

that an exception needs to be made for

innovative products and some kind of

mysterious technologies. But the most

innovative product being procured

is in my pocket right now.

It’s called an iPhone. And how is buying it

different from buying

laundry soap?

It is absolutely no different — not at all.

And if we are talking about buying an iPhone,

or a tomograph, its purchase is, in principle, no different

from buying, say,

a home theater system in terms of complexity.

It is roughly the same. And as for a synchrophasotron (a type of particle accelerator),

we buy extremely few of those. I would like

to show — I’m wrapping up — the structure. So,

let’s take a look. We keep talking about

science, some R&D projects, and so on. Here, in

our case, that is what the dispute is about.

Exactly. But then you are proposing

to abolish Federal Law No. 94 altogether.

As for us, in value terms,

72% goes through auctions and 24% goes through

tenders, and within that 24%, your favorite R&D projects

— it is hard to calculate exactly, but I

think they account for less than

10%. So when we say that our science and R&D

cannot be procured under this system,

I want to draw everyone’s attention and say

that, my friends, those who say this must

understand that they bear

a responsibility, because behind your

backs sit guys with expressions like this,

rubbing their hands together and wanting to procure

fuel oil, gasoline, and coal, you understand, at prices

20% above the market rate.

We'll get dragged into a squabble. Well, everything will fall apart.

Let's collect questions by going clockwise.

Short questions, please. We won't answer right away—

we'll write the questions down first, and then give brief

answers, please.

Go ahead. I'm actually one of those students

who wrote angry letters to Alexei

after his post. But my question is

more for Yaroslav

Ivanovich. Can we consider the FKS to be

a kind of imported institution, and if so,

how can the FKS be adapted to

current Russian conditions? Yes, including

conditions of corruption.

Okay, let me answer quickly, otherwise everything

will be forgotten. That's a very good question. This is not

an imported institution.

The American model—I've got a thick book over there—

the American one, the FKS there is based on

procedures. We have a weak state,

a very weak state, very

fragile institutions. We cannot rely to the same extent

on procedures carried out

by officials; we absolutely must introduce

public

oversight. The Higher School of Economics (HSE) model is based

on

constant

publication. What we have introduced is now

going to be discussed and developed, and if

these elements of public

oversight and public discussion are stripped away, then we

will not

stay silent. All right, let's continue around the room.

Yes, Alexander Malyutin, *Forbes* magazine and

Procurement.

I have two questions: one bigger, one

smaller.

The small question is this: we opened

your tender for banners—what are you going to do with it?

Will you cancel it, redo it somehow,

or what? The second question

concerns a possible Federal

Procurement Agency, or an agency for oversight of

procurement—that might be a good name,

so, what are the pros and cons? Should it

be created or not—a Federal Procurement Agency?

Yes, because procurement involves

different agencies with different functions.

Some save money, like the Finance Ministry,

some fight for competition, and someone

has to supervise, like the Accounts Chamber.

So why not combine it all into one body

and let it handle all of this?

Thank you. As for the second

question, I believe

there are pros and cons. Every creation

of a new agency means enormous

organizational disruption.

Enormous disruption. Frankly, I would assign this

to the FAS (Federal Antimonopoly Service). FAS has major shortcomings, but it is

an established agency, as I said, with

a very large public element—well,

a public-facing interface. FAS knows how to do that.

Maybe because

when it comes to the modesty of procurement—well, no,

procurement modesty—who should be dealing with that?

I believe the public

should be dealing with it.

FAS should stop abuses too, but we

simply need to adopt a code. You know, in

the States, all officials travel—if

if you want

to—well, I'm not talking about political

or representational cases—if you want a cool car,

buy it with your own money, and then

the ministry will reimburse you something for

using your own car. That's

one way to do it. Now, regarding

our procurement,

it seems to me that—look, one

moment, let me show you this autonomous institution's

document. The first thing we did, even before formally becoming one,

was develop and adopt this

procurement regulation. It contains all the

positive elements of the current federal law and

elements of public discussion of the terms.

This is what we were talking about with the FKS. That is,

it's a kind of mini-FKS. Right now we are

going to pilot it. We won't sign off on regulations

all at once, because no one can make a regulation

work properly off the top of their head, and in

this case, what is being discussed, what

Alexei saw there, is that we had already put our own

procurement out for

public review precisely

in order to provoke questions like these as well.

In this case, I believe that

the criticism is misplaced. I looked into this matter

and I can explain it again now.

We need a portal for practice Unified State Exam (EGE, Russia's standardized school-leaving exam) tests; it

exists on a very specific website.

By the way,

they say there are major sites devoted purely to

education. There's one—I forgot what

it's called—Uba, I think. There is

Uba, but it's aimed more at school students, so

it's less interesting, even though it has more

traffic. And then there are these two excellent sites

that come next. Specifically, we need to place our materials there.

In principle, we could have just signed a contract with them directly,

but we announced this tender because maybe

someone would come up with a way to offer it to us more cheaply

than their

standard price list. But unfortunately, we

do need it. We have data from last year

and the year before; we carefully

monitor exactly which portal

brought us the largest number of

new applicants. We have our own

marketing strategy; we're not hiding that

at all. I mean, I'm being completely serious.

I'm serious.

I am very grateful for any criticism, and

in the future, regarding our procurement, to think that

the rector, or even the director, honestly

speaking, makes the decision on every single procurement—

well, that's paranoia, guys.

So that’s why we monitor things, including through

public reaction to whatever

gets posted and discussed. This is a

perfectly normal method. We are very grateful

for any attention drawn to it, even

if it is unfair. The only thing is,

perhaps conclusions should not have been

drawn so quickly. Maybe it would have been better

just to say: “Guys, we have

some questions, so please

look into it.” Ah, once again I’m stepping slightly

outside the bounds of a mediator’s duties and will simply

say this: all sorts of people who read this,

who see it posted on the portal, will think to themselves:

“We have not repealed Federal Law No. 94

with regard to fuel oil, paper, and all the rest of it.”

Here we still have exactly the same law. And for

complex procurements there are different procedures, but

it is clearly written out in which cases, and everything is

transparent. But why towers, fuel oil, whatever—

fuel oil, towers—why? Well, not fuel oil, gasoline.

Guys, by the way, as for fuel oil, we

have some training center in

Voronovo, and it has a boiler house, by the way,

and it needs fuel oil. So we are

that broad in scope.

All right, next—yes, over to

the room. Thank you very much. Lev, a postgraduate student

at the Faculty of Law of the Higher School of Economics (HSE),

would like to ask a question to the esteemed

Alexei Anatolyevich. Alexei Anatolyevich, do you not think

that reform of public procurement

—the need for which is already long overdue—and

which no one would deny, whether among

experts, presumably, or among politicians,

could begin with the antimonopoly service? I’ll

try to explain.

Perhaps I am mistaken, of course,

but the antimonopoly service is a

federal executive

authority which, like other

contracting entities, places orders. So a logical question arises:

who, in fact,

oversees the antimonopoly service

when it places the relevant orders?

In practice, in this case, the antimonopoly service

is overseeing itself, and

frankly, that looks rather

strange to me. And my second question

to you, and to many supporters of electronic

auctions: of course they have many

advantages, but what do you think? This is a

question I would like

to put to you; perhaps it may seem

rhetorical: would you want to live in a house

built for you by a company about which

you know nothing except that it

offered the lowest price at an

electronic auction? I know there are

thresholds of 50 million rubles—yes, when—yes, yes, yes.

Thank you very much, thank you very much.

An excellent question. First,

we are not forcing open an unlocked door: reform

really is overdue. Second, as for

the antimonopoly service overseeing

itself—well, isn’t it the same with the courts?

Judges, broadly speaking, oversee themselves

and decide whom to strip

of immunity and whom not to. The same

goes for the Accounts Chamber, the same

goes for traffic police officers

who catch—or do not catch—other traffic police officers.

So, well, we cannot create

an infinite pyramid. And if, if within the

antimonopoly service there is simply

a system of state authority; if within the

antimonopoly service we know that this person

is a crook, we file a complaint with the prosecutor’s office, with

the police, and so on, with the FSB. Oversight bodies exist.

We do not live in a vacuum;

we live within a certain system of government

that exists, at least formally. That is

the first point. Second, as for construction:

here is another huge myth. I would like

everyone to understand this very clearly: yes, construction

goes through

auction, but right now there are every opportunity

to set qualification requirements for construction.

If you know—well, what do I mean?

There is a self-regulatory organization. We

have a law on self-regulatory

organizations. You have the right to require

that your company be a member

of a self-regulatory organization.

If not—

unless it is repealed. My dear colleagues, please do not

interrupt; that is not good manners.

By the way, despite his bad

reputation, he is sitting there and not interrupting anyone.

Is my reputation really that bad? Apparently it is.

Apparently yes, apparently. So now,

you can absolutely include this requirement:

you may require that the builder be

a member of a self-regulatory organization.

Next: if the builder is constructing, for example,

something costing more than 50 million rubles,

and most construction projects cost more than 50 million

rubles, you have every right to include

a requirement that they must previously have built something

in this region worth 20 percent of that amount. Yes, you

can include that—or you can choose not to.

For some reason, crooks do not include it.

A conscientious contracting authority does include it in the end,

and then no one can take on a construction

contract worth a billion if they have not previously

completed work worth 200 million. So this is a big

fiction. Besides, there are now every possibility

to introduce financial

security of up to 30 percent. Therefore, if you tell me

that some dubious

builder came and built something for us

worth a billion, a dubious builder cannot

provide a bank guarantee or

simply financial security of 300 million

rubles—they cannot do it. The mechanisms exist;

people simply do not want to use them right now.

And besides, we have statistics. Unfortunately, the statistics are only for Moscow.

Unfortunately, the statistics are only for Moscow, for

The same applies here to unfulfilled contracts as well.

There is a widespread myth that everywhere in this sphere

everyone gets cheated and then people disappear. But 99%

of contracts are fulfilled regardless. You

many of

us remember Federal Law No. 94 (the Russian public procurement law), and back then

a year ago, for example, any

contractor could bring in this kind of worthless slip of paper

as insurance-backed security, and that

really was a colossal mistake.

The antimonopoly service said it was just a worthless piece of paper; it was worth nothing.

Now there is no such fake paperwork anymore: you have to

put up money or a bank guarantee, that is,

some kind of collateral, something under which

they can very clearly recover from these contractors

300 million rubles, so they will not risk that.

They will not risk it. A question—but I have a request:

let's go around in order. We can do democracy,

one question here, another there,

but come on, we agreed on the rules.

We decided to follow them. Come on, colleagues. But I

think that if they don't cut the electricity,

we will all have time to ask a question, don't worry.

My name is Sergey Stra, I am the General

Director of the trading portal fabricant.ru.

Now, there has already been some discussion here about

those five platforms that were selected

and whose selection was challenged in all the courts,

and about who made that decision. I would like

to disagree with Alexei here. In my

view, the myth that this was a political

decision is actually something the antimonopoly

service very diligently, well, sort of

spreads everywhere across the country. In

my view, that is of course not the case, and

the only one who, in my opinion,

benefits from this law today is

the Federal Antimonopoly Service itself,

which, with its help, has generally

built up considerable muscle and continues

to build it up. And the leadership—even if it is

crystal-clear honest, the leadership of the

Federal Antimonopoly Service—

in fact, generally speaking, is of course covering up

grassroots corruption that has flourished everywhere

across the country. And today, employees of the

antimonopoly service are undoubtedly, like

judges in procurement placement—yes, that is the issue. And so,

the question is very simple: why

Alexei, do you realize that you

are pouring water onto the mill of the Federal Antimonopoly

Service, that in this case you are defending

their interests, while you, as an intelligent

person doing what you do,

know that the main source

of corruption is not in the agency itself but in

the supervisory body, and you perfectly

well understand that. And a second

brief remark, a question: so, would you

go to work for a company where

you are invited to work, and right away they tell you,

"We proceed from the assumption that you are

a thief"? It's a simple question.

First of all, I am definitely not

a big fan of the Federal

Antimonopoly Service. I have

a huge number of conflicts with them, I have

a huge number of complaints about how

they make certain decisions. I have

major complaints against them

regarding, for example, their amendments to 94-FZ

where they demand, for example,

the introduction of a fee for reviewing complaints.

In that way, they want to make life easier

for themselves, make it harder for us, or make it

impossible. In that sense, I will criticize them

very harshly and aggressively. But

you see, if there are grounds

to believe that these five platforms were

chosen through corruption—and I do have

such grounds—I believe that there really

was corruption there. I have not looked into it

in detail, but it is visible. So then why

don't you formalize this process?

For example, when I deal with Gazprom,

many people think I am rude,

but I put up a photo of the person and I

say: here is his name, I believe that he

should be dealt with by the prosecutor's office...

You do it simply—this is your business. Mine

is a little different. Yes, I am ready here to

cooperate with you.

Let's remember Evgeny Grigor, who from here

was persuading us—you will later...

Accordingly, he said that if we

bring an accusation,

make an accusation,

a false accusation, then against me

a complaint can always be filed for knowingly

false denunciation, so let's

proceed formally. If there are facts, yes,

bring them to me, and I myself will sue the

Federal Antimonopoly Service with

great

pleasure.

Next question, and then we will move to the right-hand

side. Please, just come up to the microphone.

Please step up. And the second part of the question: would you go

somewhere where they already assume that you are

a thief? Well, you see, we have a monitoring group

at RosPil (Navalny's anti-corruption project); 2,000

people work there, and a significant number of them

simply send me every procurement notice,

every procurement marked by corruption. There is no way other than

conscientious work that we will

change this. So I would go to work anywhere,

but I would know that I am not going to steal,

and everyone around me would gradually come to know that

I am not going to steal. That's all. It's a very

simple

thing. The microphone, please. Introduce yourself and your

outlet—slon.ru. When Alexei

Navalny was saying that you

are planning to repeal the federal law

94-FZ, well, yes, you kind of murmured that

you were not, so to speak, going to do that,

and that it would simply be an addition

to it. So after all, will it be repealed?

whether this law will be repealed or not—I still haven't understood.

Well, since I was mentioned earlier, I’ll say right away:

I am not planning to repeal anything.

We prepared amendments to the law on—

not the ones that were adopted, but the ones

that were proposed but not adopted. That’s what

I was personally involved in.

But, incidentally, the position of our

opponents, both in the Ministry of Economic Development and in the Federal Antimonopoly Service, has in many ways

changed. Those amendments concerned exactly

what I was talking about. You see, they’ve piled all sorts of things in there.

There’s a whole mess thrown in. All right, I’ll now

give the floor to Alexei Yevgenyevich.

That’s what I’ll do, but I can’t have people later

saying that I dodged the issue. No, I didn’t dodge it.

Let’s separate flies from cutlets (a Russian expression meaning not to mix unrelated things). The law on—

it works well for purchasing fuel oil or gasoline, but

for purchasing many other things, in its current form,

it is not suitable. Call it

Law No. 94, or 98, or

the federal contract system—whatever you like. But procurement of complex

items in complex markets has to

change. Whether the name of the document

changes in the process—I couldn’t care less. What

is complex procurement? You see, that’s

such a broad, inflated term—“complex procurement.”

Explain it. I will, right now. It is,

for example, culture, for which they introduced

complete

freedom—which should not have been done—and

a procedure was needed; and science, where

the level of complexity is just as high, but the procedure

is roughly the same as for fuel oil. Now, as for the iPhone—innovation...

As for the iPhone, innovativeness—

Uh, yes, I’m being reminded that I’m

the moderator. Quite right. Innovativeness

is not when something is made out of little bits of wire or something like that.

It is when something is

fundamentally new, you understand. And where something is fundamentally new,

there

putting it up for auction is pointless. But I could

talk about this for a long time, except that I am

the moderator and have received a disapproving note.

Lev Ilyich, though, was honestly responding to

the remark. Once again: we have auctions, we have

competitive tenders, and all your innovative things, whether with

wires or without, and science as well, all go

through competitive tenders, not auctions. Let’s not

mislead people.

I’m not going to talk right now about how

these tenders are structured, uh, but the floor really does go

indeed

to Alexei. Is the Ministry of Economic Development planning to repeal it?

Is it planning to? In my view, this question is

simply... Likhachyov here should represent—

Likhachyov from Economic Development—but this is a fundamentally

important question, especially so that

the younger generation of journalists sitting

here leave with a precise understanding. That is,

the concept, of course, did not contain any requirement

for the urgent, extraordinary, immediate

repeal, as of tomorrow, of Law No. 94.

Moreover,

your humble servant personally, including with

his own bonus—if there is one at all—

is responsible for ensuring that during

the first quarter, roughly

15 amendments—about 15—are introduced into

the current Law No. 94. If you want,

an entire lecture could be devoted to this topic alone.

What Alexei Anatolyevich is talking about in this case

is the fact that there is a page in your document—

he says, “I haven’t read it”—but there is such a

page there,

page three, and it contains a section

called “The place of the draft law in

the legislative framework,” and it says there that the

law we are drafting to replace

Law No. 94, following the president’s instruction,

that’s right, following the president’s instruction,

implies introducing a whole series of

amendments to related legislation,

and naturally repealing the old Law No. 94,

insofar as it exists in the wording of the new one.

And there is no

revolutionary change envisaged here.

I have never seen two laws operating simultaneously

within the same

legislative area—two laws on

public procurement. So

this is getting more and more interesting.

You see, either someone here has poor

eyesight, or we are talking about different things altogether.

At first you said

the law is just a small element

of procurement placement, and we want to build

some kind of mega-system. Now you are directly

saying that this is a new draft law

which, instead of Law No. 94,

regulates only that. I am reading from your

favorite page—page two, not

page three: amendments are made to

the Civil Code, the Budget Code, and other

legislative acts, while at the same time recognizing

Law No. 94 as no longer in force.

So there you have it.

I solemnly declare this discussion interrupted.

The possible answers have been received.

And now, the next

question. Did you understand? So, you were answered.

I’m simply trying to interpret this, in this case,

as the moderator: there are two

possible interpretations of what is written here

on page two. One

interpretation

is that the costs... well, that those provisions which remain

will become part of another law.

Alexei Anatolyevich’s interpretation, meanwhile,

is that the norms which

today are contained in Law No. 94 will

simply be repealed and replaced by nothing. Isn’t that so?

Roma, you asked whether

Law No. 94 would be repealed, because

Yaroslav Ivanovich really did, at the beginning

of his remarks, put it somewhat broadly.

Law No. 94 will be repealed.

Yaroslav Ivanovich will now say that we

have built our own system, and that the law...

If it remains an element of this system, I

will immediately stand up and kiss him right

here.

So I can state my opinion. I

am not building any systems,

while refining this law in the form in

which it exists.

And, well, let's say 70 or 80% of its

content will be incorporated into

the concept of the

Federal Contract System.

Accordingly, this should be included in the new

law. I am ready to discuss which

[music]

things you consider especially necessary

to preserve. Let's speak specifically, just about

that, instead of throwing around

slogans.

And if it gets renamed, what exactly will change

if its substance stays the same? Well, we

are arguing, and I do not

understand it — it's a rather strange conversation.

We are adults — do we really not

know how laws are changed? They

change their numbers five times over, while the content

remains the same. Others keep the same number, and like

Federal Law No. 94 — 75%

of the content. What difference does it make?

Let's not throw that in the furnace — let's discuss it instead.

After all, it seems to me that in this

case, you as a journalist are simply

— forgive me — provoking this pointless tossing

of words,

which distracts people's efforts from the real

problems that need

to be discussed. Sorry for that kind of reproach.

Let's ask specifically: what kind of

provisions exactly

will be abolished? Will auctions remain?

Electronic auctions? I believe that

electronic auctions are a good

format, a good format. This format solves a whole range of problems related to

market entry, but

by itself alone — as I was trying

to explain my view to you — it does not work in

full, and not only because of

the imperfections of Federal Law No. 94 or the fact that

some issues are not regulated, but also because of

the budgetary element.

Well, listen, I am sitting here listening, and

so to speak, we have once again started drifting into

some kind of verbal sparring. But I will leave

then, because it is boring for me to be present at

this tossing of words. Everyone here is serious.

There is a question back there, and I still want to get to

the right side. Please.

A question — go ahead. I know that you are probably not

on the left, Yaroslav Ivanovich. You say

you want specifics. The microphone — hello?

Hello, Yaroslav Ivanovich, you say,

let's do that. Yes, of course. Alexandra Pisareva,

project manager, Levada Center (an independent Russian polling and sociological research organization),

graduate of the Sociology Faculty

of the Higher School of Economics. You say

let's move to specifics. Well, precisely

on specifics, I have a question. As a

sociologist, what interests me most is this

situation with the banners: whom did you ask? You

said you had looked into this situation.

Whom did you ask, and how exactly did you ask?

What did you get in the end? Is it really true that

there was nothing of that sort there,

nothing improper present? Well, initially I

kind of

became interested in the situation with the banners.

I even wrote about it, saying that the amount seemed

to me

a bit too high for that kind of thing. Well, I

spent about an hour, I think,

looking at both the arguments and the

background.

They showed me last year's results, so to speak.

The question is the effectiveness,

the effectiveness of placing ads specifically on

that website — that is, from that site

a fairly large number

of applicants came to us.

So what exactly do you mean — who else

did I question specifically? There are

specific people: there is a director,

a department head, I do not know exactly what the

title is, a deputy director —

Anton Molodtsov is standing there; he can

tell you about it.

You can interview him separately about this

matter. But honestly, guys, I will say once again:

I simply do not see, in this

particular

case, either

corruption or inefficiency.

This is a normal targeted procurement.

Please, look for such things here. I am serious.

In the administrative and facilities unit, right now all

our operational procurements will be

posted on our portal in advance.

Discuss them — I am very interested in having

more companies come, because year after

year we keep trying, and we end up bringing in the same

same feeders in different incarnations,

just renamed.

You understand, it is very hard to fight this.

The environment is such that it itself generates

all sorts of

strange things.

We are a large institution, and we are interested in

making sure

that our students, our graduates, and

internet users help us

expand our circle of suppliers

and obtain optimal prices for the services we buy.

Right now we are not constrained by formalities;

we are now going to work through this

optimal model ourselves, and the main

element of that model is transparency.

And you, Vladimir Anatolyevich — Vladimir

... Salenko is sitting here, the vice-rector who

is responsible for facilities management, and all the

current procurements there, so to speak, whitewashing...

painting, repairs, and so on. Now then,

so to speak,

you will be handling it.

Yaroslav Ivanovich, this is a typical

example proving why we should not

repeal Federal Law No. 94. You

asked about the substance. And she says, well, according to

formal criteria, and so on and so

forth. We—I am not a specialist in

internet advertising, although I spent more than an hour

looking into this tender. I spent

time on it, and you are not a specialist either. I suggested:

let's create a group of your students

who will review all of this from the standpoint of

practical usefulness. We are not talking about

the formal side. Let's look at it

from the standpoint of whether it makes sense. It is very

simple.

That is why I want to say that this

concept implies that a hypothetical

Yaroslav

Ivanovich will be given unlimited authority.

Yaroslav Ivanovich is wonderful, and we all

like him. But I am not prepared to replace all

procedures with a principle consisting of

two words: "I want it." I want this money to go here,

I want this money to go here. That is exactly the

principle being proposed. I do not trust it, I do not believe in

this.

Fine, let your group of students go

and review a procurement worth 2 million and publish

it on

the internet. My hand has been up for a while already. I am Rodovsky,

Mikhail Borisovich, from the company Unified Trading

Systems. I work with information

systems. So,

there are, I think, around

ten different tenders. So, having learned

that you received

public money—5 million rubles (about 5 million RUB), or

perhaps even more by now, I do not know how much you

currently have—I have the following

question and proposal for you. Since you have

public money after all, do you want

to report on how it is being spent in some way?

Will you introduce this kind of

procurement and hiring procedures?

How will you pay for all of this and

so on? And which

procedure will you choose for it—an auction, a tender,

or will you draft your own? It would be very

interesting. Thank you, an excellent question.

It is a bit of a trick question, but I want to say

this: by all means. This certainly concerns the Higher

School of Economics (HSE). Take me as an example,

because what I have done is absolutely

transparent. That is exactly why 10,000 people

sent me 500 rubles each (about 500 RUB), because

from the very beginning I made it completely clear

and specifically set up a two-key

system, and people entirely unrelated to me

have a password that allows them

to see where the money came in and what

the money was spent on. It is all absolutely transparent.

From the outset, we said that we would pay

all taxes, even if we had to

pay more than necessary. Out of every

100 rubles collected, no less than 47

rubles go, under the rules, to taxes. This is an

absolutely transparent system. And I can see—I

do not want to overestimate my modest

abilities—that people trust me and send money.

Excuse me, try

raising it yourselves, and then we will see where one can

look at all your transparency.

For now, the money is just sitting there—we have not spent a single

kopeck. We have four

people who have these

keys. I have written about them; everyone knows who they are.

Anyone can call them. Right now all this

money has been collected and is sitting in one place; not

a single kopeck has been spent. When

it does start being spent, everything will

be published in full, with all

screenshots, statements, and so on. And more than that,

we are ready—if you want, I will include you in it.

I very much want that. Well then, when

will you include me in the Higher School of Economics tender committee?

He would never say something like that,

but I can include all of you here.

You see, that is not the case at the Higher School of Economics.

So if you do not include me because

I am not affiliated with the Higher School of Economics,

that would be unfair. As for you, Yaroslav

Ivanovich, it would be a great honor for me.

By the way, if Yaroslav Ivanovich is in

this system of overseers—so, am I

understanding correctly that you had certain plans,

specific plans, and you

published them, society gave you

money, and the process that will take place for you

is precisely the Federal

contract

system, is it not?

No, it is not. You see, that is of course a very

nice rhetorical device.

In your Federal contract

system, there is provision for changing

an already concluded contract by 20%. For example, I

said that I pay a lawyer 60,000 rubles (60,000 RUB)

plus taxes. I am not going to pay him 66,000 or 72,000

instead. But your federal contract

system provides that one can

shift a little here and a little there.

Then please, under what law will you

conduct all these procedures that you

want to conduct in the form of auctions for

the services provided to you by lawyers, and

post these services on five platforms.

Absolutely—posting them on a platform is not a problem. I

am ready: everything we procure or purchase,

everything will absolutely go through procedures.

[applause]

I said at the very beginning that Law No. 94

is imperfect; there is a lot that needs

to be fixed. I know what needs

to be fixed there. I do everything according to an improved version of

that law.

to ask a question.

to Lena Pamfilova.

I have, first of all, a question—my first point is this:

this is all a wonderful

discussion about procurement, but probably

when we discuss

Federal Law No. 94 and the Federal

contract system, we should not forget that

corruption in public procurement is not separate

from corruption in many other areas. And

even if, with the help of any system, we defeat

corruption in public procurement, we will not defeat the

corruption that comes from

oversight bodies,

law enforcement agencies, and many

other bodies—it will still penetrate there as well.

A single law and some kind of system will not fix anything.

I have a question for the creators

of the Federal Contract System, first

and foremost: when it was being developed,

aside from the need to improve things—and in fact

I believe everything needs

improvement—and I even have a certain

sense of déjà vu, because in 2012

with the same enthusiasm with which we are now

discussing the Federal Contract System, we discussed

Law No. 94, and back then everything was also

bad, and this was all being done, yes, somewhere right here

in roughly these same rooms; everything

was happening in approximately the same way.

Please tell me,

have you already checked this very system,

this concept, for corruption risks

in accordance with legal requirements?

That is my first question, because there are

legal requirements to review

what will become law for

corruption risks. And have we also done at least a preliminary check of

the public procurement requirements contained

in the UN Convention against

Corruption, which Russia has ratified?

There are requirements there that differ somewhat

from certain provisions

of the Federal Contract System, specifically

in Article 9, in the part concerning

established objective criteria

for decision-making on public

procurement. If this has not been done, and you

want all of this to comply

with the major established

pillars of anti-corruption

legislation,

Let me answer. Thank you—I will make sure

that what you mentioned is checked,

and we will provide

you with what we have done. Well, I don't know—

let the Ministry of Economic Development do its own; their version has already

gone off in its own direction. Let it decide

for itself. Yes, as it were, there have already been

major changes made to what, so to speak,

we presented.

It seems to me that right now we should not

focus on a particular

agency, because what

has happened, let's say, that links us here—

well, it's clear, Kuzminov and Nabiullina, so to speak,

husband and wife—same outlook, as the saying goes.

But honestly, we always work with

all interested agencies, as it were.

The more there are, the easier it will be for us, without

bureaucratic approvals,

to articulate the things that we

consider absolutely fundamental. I

repeat: our state is rather weak

compared with other

countries. We need much greater

involvement, much greater transparency,

much greater involvement

of the public, and the mandatory—well—

mandatory nature of these public discussion procedures

must not become a mere formality. If

you like, we should have paid

expert teams, because unpaid

teams—well, their fate is obvious

from the second day onward.

There are a whole range of things we must set aside

as special cases, but you are absolutely right that

if Russia has signed something,

we must automatically take it into account.

[music]

We will advise our colleagues to do that as well.

And as for whether it was checked—

of course not, because

the document does not yet exist

even in a first approximation agreed

upon by anyone. Without a doubt, in the

procedure, the concept will be sent to

the Ministry of Justice, including for anti-corruption

review. And I am not even mentioning public oversight,

but let me say one more thing now.

Literally 30 seconds, if you allow me.

In fact, the Federal Contract System is alive and advancing in

what sense? We have an action plan for

adjusting legislation in the area of

public procurement; it is a separate plan

approved by Putin, and it also

consists of regulatory acts. In particular,

a Government Resolution

on the principles for drawing up

procurement schedules—these documents

necessarily go, among other things, for

review, including

anti-corruption review—anti-corruption review.

People just regularly forget about it; no one

remembers it, and then we come back to it.

Whoa, that's not true. If you read our

latest update, there is

a reference to that UN Convention there as well,

including on the issue of conflict of interest; in terms of defining

conflict of interest, we

will definitely pay attention to the

article you mentioned—Article 9.

Take a look. Well then, I have

you see, changed the rules myself, exactly as

Denis's law keeps changing all the time, but

now we'll go from right to left. Ah, yes.

Excuse me, I have a very short

question for Alexei Anatolyevich. Well, a question.

A suggestion: you have this image

of a bespectacled professor people use as cover

for some unsavory people. Well, never mind who exactly.

So, I’m Yevgeny Onishchenko, from the Physics

Institute. I would like, later on, if there is

an opportunity, since a lot is being said here

about R&D, to talk about certain

problem areas, about the things that are simply

not being mentioned here. Because there are

problems that people fail to see in the course of the discussion

and do not take into account at all. At the very least, they should

be mentioned, because they create extremely acute

situations. Thank you. I will listen with great interest.

I’ll be glad to hear you out. Without any doubt, this is

some kind of nonlinear process, with a huge

number of problems, and they need to be fixed.

No one is saying they should be

ignored. Yes, of course, let’s improve things.

If you are from the Physics Institute, then I

assume that what interests you most is

this part concerning tenders, and without any

doubt Federal Law No. 94 needs serious

revision in that particular area you mentioned.

Let’s talk about that. Still, I want to

remind you that behind that bespectacled man stand some rough

guys who smell of diesel fuel.

Those diesel-smelling guys have long since climbed out of their boots

and into the open.

[unclear fragment]

Oleg Solodukhin, vice president of the company

for public relations development.

Accordingly, this represents such a

strange field as PR, and at the same time I am a state-sector

PR specialist—in the sense that for eight years I have been

the vice president for state contracts at my

company and deal exclusively with them. And

what I would still like from you is

to hear a clearer position, Alexei

Anatolyevich, specifically on the tender-related part.

Because somehow you seem to be creating some kind of

myth around it, that is, a picture in which

most tenders are... but

just a second—R&D is not a work of art.

But the vast bulk of tenders consists of

—as you rightly said—not R&D and not

works of art: 20% quality, yes, and 80% price.

Thank God Resolution No. 722 has appeared,

which has created at least some room

for maneuver for the customer. Second, the question is this:

I have the feeling that what you are really creating

is based

on the image of a conscientious contracting authority,

which is exactly what the Higher

School of Economics was talking about when presenting

the draft from the Ministry of Economic

Development. But you understand, in reality

it is so far removed from practice.

You are speaking about an ideal, but it

cannot exist in nature. Errors in

the technical specifications are inevitable.

And remarkable solutions do happen. Can you

imagine, for example, that the Federal Antimonopoly Service (FAS)

—after all, you are quite well

aware of this—interprets a decision on a quantitative

criterion this way: one advertising campaign—well, those

who understand me will understand—yes, that is, one

advertising campaign is not spelled out in the

technical specifications. What you

were aiming for—FAS rejects my complaint

on the grounds that the quantitative

criterion has been observed.

And, Alexei, regarding what is happening with tenders in

the draft, I have a question for you, because I know that

according to some information, PR

has for some reason been placed in the same category as valuation

and auditing—that is, what is internal and what is

external have somehow been lumped together. At least,

when RASO (Russian Public Relations Association) was in talks—RASO

was cooperating with you—then for some reason we were

considered in the same sphere as valuation

and auditing. Right. Well, let’s respond then.

I’ll answer now. So, I don’t understand who exactly

is creating a myth here. Do you agree that in tenders there is

a range from 20% to 45%?

Do you agree with that? But I—wait a second.

Just a second. Then I would say that

for tenders involving R&D and similar categories, 45% goes to

works of literature and art. I

don’t remember the exact figure; I’ve never dealt with that area in my life. But for

the main body of tenders, it is still 20%.

Well, so in the places where it is needed most,

there is 45% for those categories. Do you think

that it is needed only there? For example, I

believe that 20% for quality and qualifications

is not enough. Please listen to me—I believe

that tenders are completely different. I, for example,

am a lawyer myself. If I were bidding in a tender

for legal services—well, that too

is quite difficult to evaluate—but

there 20% seems sufficient to me. They

buy different things—completely different things,

you understand—from the services of

some clown all the way to

a theatrical production. These are

individual matters; you cannot force everything into a strict system.

But a significant share of things can be

fit into one. That government resolution

has been issued; 45% is quite sufficient. I’ll repeat once again:

why are we forcing an open door?

This part does need to be corrected, and it

will be corrected. I simply want to

—since the conversation has turned to

tenders—Yaroslav Ivanovich was showing such a huge tome

to me; let me show you this piece.

Let me show it. So, does everyone here agree that

between the Ministry of Economic Development

and RAS there is a conflict of interest? Well, it is obvious, yes.

There is a conflict of interest.

Now, in 2008

let’s look at this piece: what do we see?

That family ties between

the heads of the organizations—

listen, they do not need to

get divorced for this to be recognized as

a conflict of interest. This is an absolutely

obvious matter; it must be recognized

and spelled out everywhere. Yaroslav, there are no

objections to that—the conflict of interest is obvious. I

I think there’s really no point in arguing here.

Just look: in 2008, the Higher

School of Economics, in the tenders that

the Ministry of Economic Development announced, won 9 lots out of 49

all at the initial price. In 2009,

it won 12 out of 55, again all at the initial

price. In 2010, last

year, it won 16 out of [unclear], all at the initial

price. What a large slice of pizza—a slice

of pizza that the Higher School of Economics keeps getting larger and larger,

the slice that the Higher School of Economics is taking.

Without a doubt, you’ll tell me:

no one else could have won those tenders,

and we would create the very best conditions.

I absolutely believe that no one but HSE

could have done it. But what I’m talking about is this:

right now, Miroslav Ivanovich, I’m

wonderful; but tomorrow, if an evil Putin or

an evil Medvedev drove him out, and some other

person started eating that slice of pizza

dishonestly, then what? Our task

is to put some restrictions in place so that

some villain can’t come along and eat the whole pizza. You

have a good HSE, but there are bad people

who take part in tenders—such people

do exist. There are bad organizers, there are

bad contracting authorities, so what exactly are you

proposing to me? If we introduce your

famous freedom of discretion that you’ve

written in here—competitive negotiations, yes, and

those two-stage tenders of yours, and

the presumption that the contracting authority is acting in good faith—

then a huge number of such pizzas across the country

will be devoured improperly in three seconds.

I don’t know if there’s any desire to comment on that

or move on to the next point. No, no—this is

a serious matter. Alexei, still, you

you know—when joking, you should know your limits.

So we need to look carefully at

one point. Colleagues, I just want you

to keep all this in mind.

The point here is not that I’m

the deputy minister of economic development or anything like that.

It’s just that there are stubborn facts. So, you have

one pizza, and you can draw it that way,

and in front of you is a presentation

from a year and a half ago; the Federal Antimonopoly Service (FAS) was reading it too,

and it’s been making the rounds everywhere, so it can be presented that way as well.

You can always draw it differently—there are always two sides to the story. Draw your own

pizza, and we

will see. The point is this:

with the exception of one issue, which I’ll address

separately—with the exception of that one issue,

namely HSE’s participation in research work

for the Ministry of Economic Development: in the fourth year under Gref, 6.9%

under Gref,

10.4%; under Gref, 7.5%;

then Nabiullina comes in: 5.8%, 6.9%, 5.3%.

44 percent—these are percentages, which means we are talking

about a somewhat larger pizza. Obviously, in

the seventh year, one more thing happens:

HSE ceases to fall under the authority of

the Ministry of Economic Development

and becomes a government structure.

And Sobyanin receives the authority to implement

a huge set of projects on administrative

reform,

approved by the Commission on Administrative

Reform, which historically have been routed through

the Ministry of Economic Development for funding. So

there are always two truths, Alexei. You are

a good, promising young politician,

so don’t cross the line. Once again, who

is saying that there is some kind of

corruption here? In this situation, I am

not claiming that at all. I see only one thing:

there is an obvious conflict of interest.

There is a clear role conflict here.

If it were not you sitting here, and

if the wonderful Yaroslav Ivanovich were not sitting here either, but

completely different people were in your places, then

there might well be corruption. And that is why

to give Yaroslav Ivanovich the ability

to organize everything based on

the presumption of his good faith means

that an evil Yaroslav Ivanovich,

a bad Yaroslav Ivanovich 2.0, would do

everything by thoroughly corrupt methods.

That’s all, Alexei.