Challenging the Reconsideration of Tender Results

State and quasi-public procurement in Kazakhstan make up a significant portion of the market for goods, works, and services (GWS). While these procurement processes are governed by specific laws and regulations, and despite constantly changing and updating procurement rules, there are still many gaps and ambiguities in the system that inevitably lead to disputes.

For instance, we recently represented a client in a case against a national company challenging the reconsideration of the tender results. Our client had originally been declared the winner, but after other participants filed complaints, the results were reconsidered.

The reason for the reconsideration was that the client allegedly did not meet the qualification requirements, specifically because the availability of the required specialist in the client’s team was not properly confirmed. Instead of submitting a formal hiring document, the client provided a transfer order to a different position. However, the specialist's qualifications, including the education and relevant work experience, were supported by the diploma and work record book, which were not challenged.

The buyer based its position on a literal reading of point 5 of Appendix 5 in the “Procurement Procedure…”, which states that the presence of the required specialist must be confirmed by the potential supplier’s hiring document for the specialist.

Our client disagreed with the reconsideration of the tender results, however, attempts to settle the issue amicably were unsuccessful, and the matter proceeded to trial.

The case went through all three levels of courts over the course of 8 months, with the final ruling coming from the Supreme Court of Kazakhstan.

The Supreme Court found that the rejection of the tender was based on formal grounds, as the buyer failed to prove that the transfer order for the specialist did not meet the tender documentation requirements or the “Procurement Procedure…”.

Interestingly, during the court proceedings, amendments were made to the “Procurement Procedures…”, specifically in point 5 of Appendix 5. The updated version now states: “The presence of the relevant specialist(s) for the potential supplier is confirmed by an electronic copy of the document proving the specialist’s identity, along with either the hiring document or the transfer order for the declared specialist…”.

What seemed like a minor issue led to a lengthy legal battle involving multiple parties (the Client, the buyer, the Centralized Procurement Control Service of Samruk-Kazyna JSC, and other tender participants), and the procurement of GWS worth billions of tenge was delayed – meaning that a publicly funded project could not be carried out. The courts had to address the case across all three levels of the judiciary (it’s unclear why buyers, except in cases of participants in fault being included in the blacklist, often carry these cases to the highest court).

We believe that such cases reflect a clear reluctance from officials to use their administrative discretion and a tendency to seek a judicial ruling (even when it’s not in their favor) on any unclear issue. We hope that the evolving case law in this area will encourage (or force) officials to apply administrative discretion more often.