BOFIT Viikkokatsaus / BOFIT Weekly 2019/20

Russia’s finance ministry reports that public sector contracts made last year under procurement oversight were worth about 24 trillion rubles (about 320 billion euros). Most of the contracts were made by public agencies or government-owned firms.

Federal, regional and local governments last year made procurement contracts worth 6.9 trillion rubles, or over 90 billion euros. In ruble terms, growth in procurements slowed to about 8 % y-o-y. The federal government level last year sealed contracts worth 32 billion euros, regions 42 billion euros and municipalities 19 billion euros.

Public agencies and firms in which the state holds a stake of over 50 % made contracts under procurement oversight worth 17.2 trillion rubles, or 230 billion euros. Oversight of this category has declined. Largely due to this, the amount of reported contracts fell significantly (even in nominal ruble terms) for the second year in a row. The reporting requirement has been dropped for e.g. real estate sales and rentals, as well as services related to bank loans and deposits. The ten largest buyers made contracts worth 75 billion euros, led by Gazprom and its subsidiaries (33 billion euros), Russian Railways (22 billion euros) and Rosneft (16 billion euros).

Not all procurements are subject to oversight, and annual oversight reports do not try to estimate oversight coverage. Comparison to government sector budget figures suggests the oversight covers federal, regional and municipal procurements rather well. Oversight of public agencies and state-owned firms may be less than half of their total, even assuming the supply contracts are for not longer than a year.

Online auctions accounted in 2018 for 64 % of the value of federal, regional and municipal procurement contracts, as in 2017, while no-competition contracts with single suppliers accounted for 23 %. The latter method accounted for close to half in contracts made by state agencies and state-owned firms. Methods reported as unidentified were very common.

Russian public sector procurements subject to oversight relative to the economy’s gross output, 2014−2018

Sources: Ministry of Finance and Rosstat.