Responsible Procurement

In the procurement of goods, works and services Transneft is guided by the Civil Code of the Russian Federation, Federal Law No. 223-FZ On the Procurement of Goods, Works and Services by Certain Legal Entities (Procurement Act) dated 18 July 2011, other national laws and regulatory acts of the Russian Federation as well as the Regulations on the Procurement of Goods, Works and Services of Transneft approved by the Company’s Board of Directors. Information about the procurement activities of Transneft must be both placed in the procurement section of the unified information system and uploaded onto the official website of Transneft.

Information on procurement includes:
  • The regulation on procurement and amendments thereto
  • The plan for procurement of goods, works, services
  • The plan for procurement of innovative and high-tech products as well as pharmaceuticals
  • Procurement information, including a notification of any specific procurement, excluding the quotation inquiry, draft agreement, etc.
Transneft is guided by the following principles in the procurement of goods, works and services:
  • Information transparency
  • Equality, fairness, no discrimination or unreasonable restrictions of competition in relation to procurement parties
  • Targeted and economically efficient procurement of goods, works and services (if necessary, the cost of the life cycle of the products purchased is taken into account) and initiatives aimed at reduction of the purchaser’s expenditures
  • Unlimited access to participation in procurement activities due to absence of immeasurable requirements for participants

On the basis of Article 3 of the Law on Procurement, Resolution of the Government of the Russian Federation No. 616 On Approving the List of Goods, Works and Services to be Procured in Electronic Form dated 21 June 2012 stipulates the list of goods, works and services to be purchased online.

Transneft also conducts online procurement of goods, works and services which are not included in this list; thus the share of Transneft’s online purchases is even greater.

Confidentiality of the information provided by procurement participants is one of the principles of online procurement. In practice, online procurement is organised by operators of online platforms who transfer documents and information between procurement participants and the purchaser in a timely manner, in full, ensuring the confidentiality of submitted bids.

The operators of e-commerce resources are independent from Transneft. The whole process promotes conscientious competition, publicity and transparency of procurement policies, preventing corruption and other abuses.

Dynamics of Group’s Procurement in 2017-2018
Indicator 2017 2018
Number of acquisitions by the Company and its subsidiaries 43,517 47,027
Initial lot price (the maximum starting price), RUB billion, VAT included 431.6 326.3
Cost of contracts signed, RUB billion, VAT included 413.4 307.5
Share of e-commerce procurement As per Resolution No. 616 dated 21 June 2012, procurement from a single supplier is not accounted for in our calculations. 42 % 60 %
Share of bidding procedures in total procurement (from the maximum starting price) 73% 88 %
Share of acquisitions from a single supplier in total procurement (from the maximum starting price) 27 % 12 %
Share of acquisitions from SME in total procurement In estimating the share of acquisitions from small and medium-sized enterprises (SMEs), the procurement of air patrol services, supplies of large-diameter pipes and other procurement types were deducted from the total value of contracts signed on the basis of procurement in the reporting period, in accordance with Clause 7 of the Russian Government Resolution No. 1352 On Specifics of SME Participation in the Procurement of Goods, Works and Services by Certain Types of Legal Entities dated 11 December 2014. 49 % 65 %

The standard contract for the procurement of works, included in the procurement documentation, contains a clause that all works at the client’s facilities shall be performed by the contractor in compliance with all standards and requirements for occupational health, industrial, fire and electric safety in accordance with statutes and regulations of the Russian Federation as well as the client’s regulations.

The anticorruption measures are also included in local acts regulating the procurement activities of Transneft:
  • Transneft’s Regulations on the Procurement of Goods, Works and Services
  • The procedure of organising and holding tenders for the sale of property owned by Transneft entities and subsidiaries, etc.
  • Transneft’s Regulations on the Procurement of Goods, Works and Services, based on the results of legal expert evaluation, including the expert opinion about the presence/absence of corruptogenic factors provided by the Institute of Legislation and Comparative Law under the Government of the Russian Federation, does not contradict the Federal Law and does not contain any corruptogenic factors.

To enhance procurement transparency, Transneft checks the information provided by counterparties in contract execution regarding the entire chain of owners and beneficiaries.