Digitalisation and standardisation: Moscow as the most efficient region in Russia’s contract system

Digitalisation and standardisation: Moscow as the most efficient region in Russia’s contract system
Procurement standardisation and introduction of a suppliers’ website makes procurement easier for businesses.

Moscow is one of the most efficient regions in Russia in terms of a contract-based procurement system, said Russian Accounts Chamber auditor Maxim Rokhmistrov during the Moscow Financial Forum’s Digital Public Procurement session.

“Several regions are very much interested in the developments in Russia’s contract-based procurement system, and are now creating new efficient tools to increase procurement accessibility and promote competition,” Rokhmistrov said. “These include Moscow and Tatarstan.”

Rokhmistrov believes smart-contracts (computer algorithms designed to award and maintain commercial contracts with the help of blockchain technology) to be the future of the procurement market, and those who have started working toward this are the visionaries.

Digitalisation is the future

Digitalisation is a challenge to the country’s contract-based system, said Gennady Dyogtev, Head of the Moscow Department for Competition Policy.

“Today, digitalisation has become a challenge to the contract system; it is aimed at improving efficiency and competition and minimising risk in order to meet the needs of the city,” Dyogtev said.

Digitalisation allows Moscow to efficiently coordinate the work of the agencies involved in the procurement process, Dyogtev noted. The programme automatically compares the relevant digital indicators while at the same time minimises the workload for the expert preparations needed in procurement procedures.

Moscow’s Integrated Automated Trading Sessions Information System ensures compliance with all the necessary standards in a digital format and constantly monitors and prevents violations, Dyogtev added.

Procurement standardisation

Procurement standardisation is the department’s main priority, Dyogtev said. Previously, Moscow customers had to use over 4,000 contract forms; today, they can automatically make purchases with just 130 standard documentation packages.

The average number of bidders per lot increased from 2.8 in 2011 to 4.9 in 2017, he added. The share of procurements with a single bidder dropped from 34 percent in 2011 to 11 percent in 2017.

Moreover, now that the documentation packages are automatically compiled in the electronic format, standardisation has also made the work of contractor services easier. Price limits eliminate moving past further comparing of deals and requesting the suppliers that are not really up for the challenge for their quotes. Dyogtev believes the business community supports the process of standardisation as well.

Success of the suppliers’ website

Digitalisation results in consistency, which makes Moscow’s procurement market more transparent and clear, Dyogtev said.

“The cross-cutting model of today’s contract system requires that clients log in, either to the suppliers’ website; to the Business Navigator website; or to the Integrated Automated Trading Sessions Information System. They will be able to go through every section of the website that interests them and find all the necessary information in just two or three clicks,” he explained. “This is important. Moscow’s procurement system is now based on this method; it makes it as convenient and comprehensible as possible.”

To demonstrate an example, Dyogtev used the Moscow suppliers’ website to make small purchases. With the help of the website, Moscow’s procurement market has become available to regional entrepreneurs.

“Over 102,000 users from all Russian regions are now registered on the suppliers’ website,” Dyogtev said. “Since the beginning of the year, a total of 22,000 new entrepreneurs have registered as well. We owe this increase to hosting requests for quotation sessions, attracting regional customers as well as hosting training events. Largely due to the introduction of this website, the volume of purchases made from small businesses by vendors located in Moscow has increased tenfold over the past six years.”

The Moscow Financial Forum is a platform for professional discussion on Russia’s financial and economic policies. This forum is organised by the Russian Ministry of Finance and the Moscow Government.