Bank guarantee will become not binding

The Government will soften requirements to suppliers and contractors on public contracts. These measures were listed into the bailout plan presented by the Government of the RF on the 28th of January 2015. 

Suggested easing is meant for the year 2015. As for government contracts, which should be completed till the end of the current year, customer and supplier have the right now to come to an agreement about the change of price, volume of work or amount of goods, as well as of the time of performance. Governmental customers will also get the right to postpone the payment of forfeitures, penalties and fines.

Key changes were undergone by the stance on a bank advance payment guarantee. As a reminder, according to the law on federal purchasing system a winner of the tender (auction) is obliged to stand security of a contract - to provide a bank guarantee or transfer caution money to a client. The amount of collateral varies from 10 up to 30% of contract value. In accordance with introduced changes the amount of collateral will be reduced to 10%.

Bank advance payment guarantees will become not binding. Thus it will be prescribed by the government regulation a number of cases, when a governmental customer has a right, but is not obliged to require security of a contract.

Since 2015 it is suggested to withdraw from bank advance payment guarantees on state contracts priced at more than 1 bln RUB, because advances on these contracts can be transferred only to accounts opened in the Federal Treasury.

Moreover, bank guarantees won’t be required for contracts, on which a customer retains a part of the sum by payment for executed works. In these cases the amount underpaid serves as security.

It was also suggested not to require collaterals, when a state contract means banking support, i.e. all settlements are carried out through special account in a bank, as well as for small contracts. However, concerning small contracts the price threshold is under discussion. Now therefore, it remains extremely small number of cases, when bank guarantees will be in use.

Bank guarantees became a problem for contractors as far back as in the previous year. So that, their price on building contracts increased from 1% up to 5% of contract value for the year, and now it can reach 11-12% at all. The experts suggested to withdraw from bank guarantees on small contracts long before, because many of them become unprofitable due to this, what is additional attack on small business.