PUBLIC PROCUREMENT LAW OF MONGOLIA

CHAPTER ONE

GENERAL PROVISIONS

Article 1. Purpose of the Law 1.1. The purpose of the Law is to govern matters of planning, organizing, overseeing, and

settling disputes pertaining to public procurement of goods, works, and services with state and local funds and of holding responsible the violators of the law.

Article 2. Legislation on Public Procurement 2.1. Legislation on public procurement consists of the Constitution of Mongolia1, the Civil

Code2, this law and other legislative acts issued in conformity with them. 2.2. If an international treaty, to which Mongolia is a party, is inconsistent with the Law, the

provisions of the international treaty shall prevail.

Article 3. Scope of the Law 3.1. The Law shall be applied to the public procurement of goods, works and services. 3.2. In case of procurement of goods, works and services funded by foreign grants or loans, this

law shall apply unless the relevant international treaty expressly specifies different procedures and/or conditions for the procurement.

3.3. The Law does not apply to procurement of special purpose equipment and facilities,

works, services, and weapons by law included in the state secret and pertaining to national security provision.

3.4. The Law does not apply to procurement of works and services related to maintenance of

national roads, executed by the state owned legal entity pursuant to its powers by law. Article 4. Procuring entity 4.1. The following bodies shall be the "Procuring entity":

4.1.1. legal entity with state and local ownership; 4.1.2. legal entity with partial state and local ownership of 50% and more; 4.1.3. the project implementing entity defined in provision 3.1.5 of the Law on

coordination of foreign loans and assistance3; Article 5. Terms of the Law 1 The Constitution of Mongolia – published in “State bulletin” compilation No. 1 of 1992. 2 The Civil Code – published in “State bulletin” compilation No. 7 of 2002. 3 The law on coordination of foreign loans and assistance - published in “State bulletin” compliation No. 24 of 2003.

2

5.1. In this law the following terms shall have the following meanings:

5.1.1. a “tender” means a proposal of an interested entity to execute goods, works, and services, worked out in accordance with the terms and conditions set out by the procuring entity and submitted to it;

5.1.2. “Tendering” means selecting the best evaluated tender in accordance with the procedures set forth in this law, authorizing a contract to provide goods, works or services and signing the contract;

5.1.3. “Threshold Value” means a maximum or minimum ceiling of the value to be followed in the tendering in accordance with procedures of this law subject to the budgeted bost of goods, works, and services;

5.1.4. “Invitation to tender” means a document through which the procuring entity gives a notice of tendering or informs through mass media;

5.1.5. "Tender document" means a document prepared by the procuring entity for potential tenderers defining tendering conditions and requirements;

5.1.6. "Tenderer" means the following entities independent from the procuring entities: 5.1.6.a. a sole tenderer; 5.1.6.b. several entities who submitted one tender on the basis of a cooperation

contract; 5.1.7. “Tender security” means a bank guarantee, Treasury bond, and/or Government

authorized securities submitted by the tenderer to the procuring entity as a guarantee to maintain the validity of the tender until the contract is signed or until the expiration of the tendering period, and to sign a contract in case of qualifying in the tendering ;

5.1.8. “Advance payment security" means a bank guarantee, Treasury bond, and/or Government authorized securities submitted by the tenderer to the procuring entity as a guarantee of the former’s obligation to dispose the advance payment according to the purpose stated in the contract when such an advance payment is made by the procuring entity;

5.1.9. “Evaluation committee” means a working group established by the procuring entity for the purpose of organizing the tendering in accordance with procedures of the Law;

5.1.10. "Goods" mean items with an economic utility and/or value, which can be exchanged or traded and works necessary for supplying those goods. Where the cost of the works exceeds the cost of the goods, the contract shall be regarded as a “contract for works”;

5.1.11. "Works" mean construction works, assemply, installation, and configuration and trial operation of construction equipment, and procurement of goods required for execution of those works. Where the cost of goods procurement exceeds the cost of the works, the contract shall be regarded as s “contract for goods”;

5.1.12. "Civil works" mean activities involving construction, extension, rehabilitation, capital repair and/or works of drilling and prospecting requiring combined use of labor, machinery, inventory, and technology;

5.1.13. "Assembly, installation, configuration and trial operation of equipment" means an activity involving equipment assembly, installation, and configuration and trial operation other than specified in provision 5.1.11 of the Law;

5.1.14. "Services" mean consulting and other services; 5.1.15. "Consulting services" mean expert services provided by the contractor based on

specialized expertise and skills as to prepare and implement a project, conduct training, provide technical assistance, conduct a research and analysis, work out a design, and supervise the contract execution;

3

5.1.16. "Key turnover contract" means a sole contract under which several goods, works, and/or services involved in preparing a design, doing engineering estimations, supplying and installing equipment, and completing a building and/or facility;

5.1.17. "Performance security" means a bank guarantee, Treasury bond, and/or Government authorized securities submitted by the tenderer, authorized to sign a conctract, to the procuring entity prior to signing the contract as a guarantee to fully perform contractual obligations;

5.1.18. "Authorizing a contract" means the notification of the procuring entity’s decision to sign a contract to a tenderer who submitted the best evaluated tender;

5.1.19. “Technical specification” means a set of documents whre the procuring entity indicates technical specifications, production and operational methods and technology, technological requirements for the goods, works or services to be procured;

5.1.20. "Goods of Mongolian origin" mean goods that are extracted, grown, reared, produced, processed, and/or created in Mongolia and/or new goods majority of whose parts were assembled and whose basic characteristics, quality, purpose, and utilization modes were explicitly altered;

5.1.21. “A foreign body” means a foreign and/or international organization, foreign legal entity, foreign individual, and stateless person that is registered with taxation and other agencies authorized to register in accordance with the Mongolian legislations and that is defined as a taxpayer under the taxation legislation;

5.1.22.“Least-cost method” means selecting a consultant offering the lowest price among those consultants who got the minimum or higher scores for technical proposals set by the procuring entity;

Article 6. Principles of procurement 6.1. Transparency, equal opportunity to compete, economy and efficiency, and responsibility

are the principles which shall be pursued in Public Procurement. Article 7. Procurement procedure 7.1. The procuring entity shall select a contractor and enter into a contract guided by the

following procurement procedures in procurement of goods, works or services: 7.1.1. open procurement procedure;

7.1.2. exceptional procurement procedure; 7.1.3. selection of a contractor of consulting services. 7.2. All procurement shall be carried out in accordance with open procurement procedure

unless a provision indicates the use of procedures specified in provisions 7.1.2-7.1.3 of the Law.

7.3. The procuring entity may directly procure goods, works and/or services when their cost estimates are less than the threshold value stated in provision 8.1.2 of this law not following the procedure set out in provision 7.1 of this law.

Article 8. Selection of procurement procedure

8.1. The Cabinet shall determine the following threshold values distinguishing between

goods, works and services:

8.1.1. upper ceiling for cost estimate of goods, works or services available under comparison method;

4

8.1.2. upper ceiling for cost estimate of goods, works or services available under direct procurement;

8.1.3. upper ceiling for cost estimate of consulting service available under least-cost consultant selection procedure;

8.1.4. lower ceiling for cost estimate of goods, works or services that require authorization from the state administrative body for budgetary matters;

8.1.5. lower ceiling for cost estimate of goods, works or services whose invitation to tender is posted onto a web site mentioned in provision 52.1.12 of this law;

8.2. The open procurement procedure shall be applied to procurement of goods, works and/or

services whose cost estimates exceed the threshold value set forth in provision 8.1.1 of this law unless the law provides otherwise.

8.3. The threshold value set forth in provision 8.1 of this law shall be reset by the Cabinet

subject to recommendations of the state administrative body agency for budgetary matters on each occasion of the consumer price index fluactuating by more than 25%.

8.4. The selection of the procurement procedure shall be based on the total cost estimate of

the goods, works or services. 8.5. It is prohibited to conduct several tendering s by splitting the total cost estimate for the

purpose of satisfying the threshold value requirement set forth in provision 8.1 of this law or for the purpose of refraining from the use of the open procurement procedure.

8.6. For the purpose of promoting competition, the procuring entity may split the goods,

works or services into a series of packages and conduct a number of tenderings by type and similarity subject to their purpose, types, and geographical locations.

8.7. The procuring entity shall meet the following requirements in case of conducting

tenderings in packages as specified in provision 8.6 of this law: 8.7.1. the total cost of all packages shall be used in determing the procurement

procedure to apply; 8.7.2. the procuring entity shall indicate the existence of packages in the invitation to

tender and tender documents and the right of tenderers to submit their proposals on one, some, and/or all of tender packages;

8.7.3. evaluate each package; 8.7.4. opt for the procurement procedure in which the total cost of all contracts to be

signed is at its minimum; 8.8. Authorization to enter into a contract may be given for each package, a number of

packages and/or all packages. 8.9. If it is decided to authorize to one tenderer to enter into a contract for more than one

goods, works or services, the matter shall be mentiond in the procurement report. Article 9. Foreign tenderers participating in tenders

9.1. A foreign body is entitled to participate in the tendering in accordance with procedures of

this law. 9.2. The procuring entity may not exclude foreign tenderers in tenders for works with cost

estimates of more than MNT 1,000,000.001 and goods and/or services with cost estimates of more than MNT 100,000.001.

5

9.3. The procuring entity shall decide whether to accept foreign tenderers in other tendering

s except those specified in provision 9.2 of this law. In case of excluding foreign tenderers, the matter shall be indicated in the tender documents and invitations for tendering.

Article 10. Granting a margin of preference to tenderers 10.1. The procuring entity may grant a margin of preference to the following bodies in

evaluating tendering proposals: 10.1.1. A tenderer tendering to supply goods of Mongolian origin; 10.1.2. The following bodies tendering to execute at least 50% of works independetly:

10.1.2. a. citizen or legal entity of Monglia; 10.1.2. b. foreign investment legal entity registered in Mongolia whose at least

50% of equity is owned by a Mongolian citizen and/or legal entity; 10.1.3. has the largest use of locally produced goods, materials and services; 10.1.4. employs tha largest share of local labor. 10.2. In case of granting a margin of preference to tenderers specified in provisions 10.1.1 and

10.1.3 of this law, the tendering price shall be discounted subjectively by 10 percent for goods of Mongolian origin and by 7.5 percent for works executed by tenderers specified in provisions 10.1.2 and 10.1.4, respectively for the purpose of comparing with tendering prices of other tenderers.

10.3. The subjective estimations of prices for goods to be supplied and works to be executed,

as specified in provision 10.2 of this law, shall not be a justification to decrease and alter the tendering price of tenderers specified in provisions 10.1.1-10.1.4 of this law.

10.4. In case of granting a margin of preference to the body specified in 10.1 of this law

during evaluation of tenders, the matter shall be clearly indicated in the tendering document. A tenderer interest to obtain a margin of preference shall deliver information on origin and cost of goods or a document to prove the provisions set forth in provisions 10.1.2-10.1.4 of this law.

10.5. The Cabinet member for budgetary matters shall adopt the methodology and instructions

to be followed in granting a margin of preference.

Article 11. Technical Specifications 11.1. The procuring entity shall satisfy the following requirements in setting out technical

specifications: 11.1.1. define given goods, works or services not in terms of their design or descriptive

characteristics but in terms of their purpose, application, use, quality, and technical merits;

11.1.2. define subject to international standards accepted in Mongolia; if such standards do not exist, subject to national standards, technical requirements, regulations, and instructions;

11.1.3. not specify particular requirements and conditions indicating a trademark, name, design, type, origin, manufacturing method, and manufacturer and/or supplier;

6

11.1.4. if it is required to specify the requirements and conditions set forth in provision 11.1.3 of this law, the requirements and conditions shall be followed by "or its equivalent".

11.2. In defining technical specifications the procuring entity is prohibited from obtaining

advice that may restrict the competition among bodies interested in the tendering. Article 12. Qualifying tenderers’ capacity 12.1. For the purpose of providing equal opportunities to tenderers and securing fair

competition, overall, financial, and technical qualification and expertise of tenderers shall be examined and evaluated by indicators set forth in provision 14-16 of this Law.

12.2. The procuring entity shall set out and enclose to the tendering document the criteria and

requirements for qualification necessary in the tendering consistent with Articles 14-16 of this law.

12.3. Tenders that do not satisfy the procuring entity’s criteria and requirements as set forth in

provision 12.2 of this law shall be declined; the matter shall be informed to the tenderer in writing.

12.4. Prior to authorizing the “qualified” tenderer to enter into a contract, the procuring entity

may reassess the qualification criteria set forth in provision 12.2 of this law. 12.5. The procuring entity shall maintain privacy of technical and business information of

tenderers obtained during the assessment of their qualification. Article 13. Pre-qualification 13.1. The procuring entity may conduct a pre-qualification prior to submittion of tenders

for the purpose of assessing the capactity of bodies interested in the tendering. The following procedures shall prevail during pre-qualification: 13.1.1. Prepare a pre-qualification document to indicate the criteria for qualification of

bodies interested in the tendering, requirements, and proof of satisfaction of requirements;

13.1.2. Make an announcement of pre-qualification as specified in provisions 21.1-21.4 of this Law;

13.1.3. Inform only those tenderers who satisfied the criteria for qualification specified in the pre-qualification document to submit a tender;

13.2. During pre-qualification, the "invitation to tender" specified in provision 17.1, 21.1, 21.3 and 21.4 of this law and "tendering document" specified in Articles 19, 22, and 23 of this Law shall be understood as "invitation for pre-qualification" and "pre-qualification document", respectively;

13.3. The Cabinet member for budgetary matters shall adopt procedures and instructions for

conducting pre-qualification.

Article 14. Assessing general conditions 14.1. A tenderer shall be regarded as not qualifying general conditions if the following

circumstances are proven:

7

14.1.1. became insolvent, in receivership, entered into an arrangement with creditors to escape bankruptcy; business operations were suspended, or is in an analogous situation as mentioned above pursuant to the legislation of the country of establishment;

14.1.2. not fulfilled its tax, fee, and payment liabilities pursuant to the legislation of Mongolia or the country of establishment;

14.1.3. operations of a legal entity with whole or partial state ownership йжу are dependent on the procuring entity;

14.1.4. while engaging in procurement in recent three years, critically violated and did not execute contractual obligations, or the court and authorities have proven an oversight in professional operations;

14.1.5. the tenderer has common interests with a body who prepared the design, technical specifications, and other documents of goods, works or services or who was nominated to supervise the contract execution and provide consulting services;

14.1.6. authorities have proven the submission of a tender with false information; 14.1.7. the court has proven the fact of committing a corruption crime in recent three

years; 14.2. A legal entity may participate in tendering s related to its key operations no more than

six times during a given year and shall be prohibited to participate if it was qualified three times a year.

14.3. The tenderer may establish the evidence of occurrence of circumstances set forth in

provision 14.1 of this law with the following documents appropriate for Mongolia and the country of establishment: 14.3.1. a court ruling and/or official document issued by the competent public

administrative authority; 14.3.2. a certificate and/or other equivalent documents issued by the competent

authorities of the country of establishment; 14.4. Those documents that must be submitted for the tender among the documents

specified in provision 14.3 of this law shall be outlined separately in the tender documents.

14.5. On the basis of decisions from competent authorities establishing the occurrence of

circumstances specified in 14.1.4, 14.1.6 and 14.1.7 of this law the state administrative body for budgetary matters shall keep the register of bodies whose rights to tender were restricted and disclose publicly.

14.6. The tenderer shall notify in writing the absence of circumstances under provision 14.1

of this law. 14.7. Upon demand from the procuring entity, the tenderer shall deliver in writing

information on the contract being executed and/or authorized for execution. 14.8. The procuring entity shall take account of the information specified in 14.7 of this law

in evaluating financial and technical qualification of the tenderer in executing a given contract.

Article 15. Evaluating financial qualification

8

15.1. The procuring entity may require tenderers to furnish evidence of their financial qualification to fulfill contractual onligations.

15.2. The procuring entity shall indicate requirements for financial qualification in the

tendering and/or pre-qualification documents. 15.3. Evidence of financial qualification may be established by the following documents:

15.3.1. statements by a correspondent bank; 15.3.2. tenderer’s self-confirmed financial statements, if required, along with an audit

opinion; 15.3.3. table of consulting staff, remuneration, and other cost estimations; 15.3.4. reports on tenderer’s annual sales of works, goods or services similar to a given

contract executed in upto last five years. 15.4. Those documents to be submitted for the tendering among the documents specified in

15.3 of this law shall be indicated in the tender documents.

Article 16. Evaluating technical qualification and expertise 16.1. The tenderer's technical cpacity and expertise shall be determined subject to any of

the following indicators depending on the nature, specifics, and quantity of the works, goods or services: 16.1.1. education and professional qualifications of management, supervision, and

execution staff of the tenderer; 16.1.2. a list of works carried out over the last 5 years, cost, timeframe, and location of

similar works, reference on complete execution issued by previous clients; 16.1.3. a list of goods and services delivered over the last 5 years, their total cost,

timeframe, and buyers, if required, a reference on execution of goods and services by previous buyers;

16.1.4. specifications of tenderer’s instruments and technical facilities, list of of plants and equipment;

16.1.5. quality control measures to be carried out directly or under sub-contracting; 16.1.6. samples, descriptions and/or photographs of the goods to be supplied, and

certificate of authenticity; 16.1.7. in case of goods, quality certificates issued by competent authorities and

producer’s proxy; 16.2. Those documents to be submitted for the tendering among the documents specified in 16.1

of this law and requirements to them shall be indicated in the tender documents.

CHAPTER TWO

OPEN PROCUREMENT PROCEDURES

Article 17. Open tendering 17.1. Invitation for open tendering shall be announced in accordance with Article 21 of this

law, and all interested tenderers shall be given an equal opportunity to participate. 17.2. Interested tenderers shall submit their technical and financial proposals concurrently by

the deadline fixed by the procuring entity.

9

17.3. Open tendering shall be carried out in one stage except as provided in Article 18 of this Law.

Article 18. Conducting two-stage open tendering 18.1. The two-stage open tendering may be adopted by the procuring entity in the following

ciscumstances: 18.1.1. the procuring entity considers that the scope of works is large, cost estimates are

high, there is a need to conclude a contract to supply a number of goods, works or services interrelated with each other, technically unequal proposals are likely to be submitted, or two and more technical solutions will satisfy the applied requirements and are equally acceptable;

18.1.2. the procuring entity is unable to establish technical specifications in advance and needs to assistance from experienced contractors and suppliers in order to finalize the scope of work and establish technical specifications;

18.2. Two-stage open tendering shall be conducted as follows:

18.2.1. tenderers are first invited to submit their technical proposals, which are then assessed by the procuring entity, and revisions and clarification to which are agreed with individual tenderers.

18.2.2. tenderers are then invited to submit their financial proposals based on clarified and revised technical proposals, and the procuring entity shall do the evaluation.

18.3. The procuring entity shall indicate two-stage open tendering in the invitation to tender

and tender documents. Article 19. Preparing tender documents 19.1. The procuring entity shall prepare tender documents pursuant to template tender

documents, contract templates, other procedures and methodology pertiaining to tendering adopted by the Cabinet member for budgetary matters.

19.2. Tender documents shall include all information required for tenderers to submit a

satisfactory tender, inter alia requirements to tenderers, instructions for tenderers, criteria and methods for selecting qualified tenders, contract terms and conditions offered by the procuring entity, technical specifications, designs, templates of tender documents, and terms of reference in case of consulting service.

Article 20. Tender security 20.1. The procuring entity shall require tenderers participating in tenders for goods, works or

services to be procured at a cost above the threshold value specified in 8.1.1 of this law to submit a tender security.

20.2. A legal entity of Mongolia may submit a bank guarantee and Treasury bonds, while a

foreign legal entity a guarantee from a Mongolian or foreign bank or Treasury bonds of Mongolia, or securities authorized by the Government of Mongolia,.

20.3. A list of securities that can be used as a tender, execution, and/or advance payment

security of foreign legal entities shall be adopted by the Cabinet. 20.4. The procuring entity may set the amount of tender security as follows:

10

20.4.1. indicate in the tendering document that the tenderer is required to submit a guarantee estimated at 1-2% of its tender price;

20.4.2. if required, the procuring entity may set tender security to be equal to 1-2% of the cost estimate given goods, works and/or services and indicate in the tendering document.

20.5. Tenders shall be declined if no guarantees were submitted or the submitted guarantee

does not satisfy requiments set forth in this law in cases where the guarantees were required.

20.6. The tender security shall be made void after the procuring entity signs a contract with

the qualified tenderer. 20.7. The tender security shall be taken into budget revenue in following circumstances:

20.7.1. a tenderer withdraws its tender after the tendering was opend and has not expired yet;

20.7.2. the qualified tenderer fails to furnish the execution guarantee within the time specified in the notification of authorization to sign a contract or refused to sign the contract.

Article 21. Public announcement of invitations for tendering 21.1. The procuring entity shall announce publicly the invitation to tender through nation-

wide daily newspapers and other forms of mass media. 21.2. The procuring entity shall announce detailed information on the tendering openly and

transparently and provide to any interested body without delay. 21.3. For works with cost estimate exceeding MNT 1,000,000.001 and goods or services with

cost estimate exceeding MNT 100,000.001, the invitation to tender shall be published through mass media in the language widely used in international trade.

21.4. The procuring entity shall put the invitation to tender whose value exceeds the

threshold value set forth in 8.1.5 of this law on the web site specified in 52.1.12 of this law and brief on tender selections as they take place.

21.5. The invitation to tender shall indicate the following information:

21.5.1. identity of the procuring entity; 21.5.2. brief summary of the works, goods or services to be procured; 21.5.3. address at which tender documents and other information are available and to

which tenders should be submitted; 21.5.4. cost of tender documents;

21.5.5. special requirements to tender selection; 21.5.6. deadline for tender submission; 21.5.7. time of commencing the tendering ; 21.5.8. participation of foreign tenderers allowed or not; 21.5.9. granting a margin of preference; Article 22. Tender documents and provision of related information 22.1. The procuring entity is obliged to make tender documents available prior to the day of

publishing the invitation to tender.

11

22.2. The tender documents shall be priced at the cost of reproducing and delivering the

documents, and organizing the tendering and given without unreasonable delay to any interested tenderers at the price.

22.3. Additional information or clarifications of the tender documents may be requested from

the procuring entity in writing by tenderers at least 5 working days prior to the tender submission deadline.

22.4. The procuring entity shall provide the additional information and/or clarification along with a

copy of the request specified in 22.3 of this law to all interested parties who have bought the tender documents simultaneously in writing; the additional information or clarification shall be considered as delivered after its submission to the post office.

Article 23. Preparation and dissemination of tender documents and invitation to tender in foreign language

23.1. The tender documents and invitation to tender shall be prepared in Mongolian language

as well as in the language widely used in international trade in the following cases: 23.1.1. participation of foreign tenderers is allowed in the tendering in accordance with

Article 9 of this law; 23.1.2. the procuring entity considers that the cost estimates and characteristics of goods,

works or services would attract interests of foreign parties. Article 24. Deadline for submission and validity period of tenders 24.1. The procuring entity shall provide tenderers a sufficient and equal time to tenderers to

prepare and submit their tenders. 24.2. The procuring entity shall determine the submission deadline of tenders from the day of

initial announcement of the tender. 24.3. For open tendering, the deadline timeframe shall be 30 days or more. 24.4. If it is required to make a field visit for tender preparation, the time necessary for the

visit shall be included in the deadline timeframe. 24.5. The procuring entity shall set the timeframe for organizing the tender after its

openment; the time shall be specified in the invitation to tender and tender documents. The tender shall be valid during that time.

Article 25. Submission of tenders 25.1. Tenders shall be submitted within the fixed deadline, to the mentioned addressed, and

in the form specified in the tender documents. Tenderers may submit their amendments and withdrawal request during this period.

25.2. Any tender received after the deadline specified in 21.5.6 of this law or in a

form not consistent with that specified in the tender documents shall be returned to the tenderer at their address.

12

25.3. Information other than specified in Article 26 of this Law, related to the content of tenders, evaluation and qualification of tenderers’ capacity shall remain confidential until a contract is signed.

Article 26. Opening tenders 26.1. The procuring entity shall open all tenders, it has received, publicly at the place and

time stipulated in the tender documents. The time for opening tenders shall be scheduled as to be within 1 hour after the deadline for submission of tenders.

26.2. Tenderers or their representatives and other interested bodies shall be entitled to

attend the tender opening. 26.3. At the opening of tenders, the procuring entity shall announce and make relevant notes

of tenderers’ names, tendering price, if alternatives have been permitted, alternative tendering price, price discounts offered, whether the tender security was submitted or not, and any changes to the tender and/or withdrawal request.

26.4. The body specified in 26.2 of this law and representative of the procuring entity shall

sign the notes specified in 26.3 of this law. 26.5. The notes specified in 26.3 of this law shall be made available to any interested party. 26.6. At the opening of tenders, it is prohibited to conduct activities and make decisions

except those provided for in 26.3-26.5 of this Law. 26.7. Any tendering price, price discount, and alternative tendering price not announced at the

opening of tenders shall not be considered in tender evaluation. 26.8. The procuring entity is prohibited from making negotiations with tenderers on the

content of the tender and price following the opening of tenders. 26.9. The procuring entity may demand a tenderer to provide explanatory notes in writing

on issues except the content of the tender and changing the price. 26.10. The procuring entity shall register and safekeep explanatory notes provided from

tenderers as specified in 26.9 of this law.

Article 27. Review of tenders 27.1. Following the opening of tenders, individual tenders shall be reviewed to check

whether they satisfy the following requirements: 27.1.1. capacity qualifications set by the procuring entity subject to provisions of

Articles 14-16 of this Law; 27.1.2. technical specifications; 27.1.3. other terms and conditions set out in the tender documents;

27.2. Following criteria shall prevail in the review of requirements specified in 27.1 of this law:

27.2.1. negative influence on the scope, quality and performance of goods, works or services;

27.2.2. whether, the contract terms offered by the procuring entity have any inconsistency with the law;

13

27.2.3. whether accepting provisions in 27.2.1, 22.2.2 of this law would have unfair influence on competition of other responsive tenders.

27.3. A tender shall be considered as a responsive tender when it satisfies all conditions under

27.1 of this law. 27.4. Other tenders except those specified in 27.3 of this law shall be considered as irresponsive

and rejected by the procuring entity. Article 28. Evaluation of tenders 28.1. During the one-stage selection, a review shall be carried out in accordance with

Article 27 of this Law, and potentially responsive tenders shall be evaluated. 28.2. The evaluation of tenders shall be completed in a time as short as possible within the

tender validity period. 28.3. The key criterion in evaluating responsive tenders shall be the tendering price. 28.4. The procuring entity may select appropriate factors that affect its economic efficiency

mentioned below taking into account the feature of goods, works or services to be procured except consultant services. The factors shall be shown in monetary terms and included in the tendering price: 28.4.1. the time of completion of works and services and/or delivery of goods; 28.4.2. current expenses or cost and efficiency estimations; 28.4.3. after-sales service and technical assistance; 28.4.4. commitments to supply spare parts and the price thereof; 28.4.5. quality and technical merits of works, goods and services; 28.4.6. other criteria consistent with this law;

28.5. The additional evaluation specified in 28.4 of this law is done only for the purpose of

comparing tenders and shall not be a justification for changing the tendering price. 28.6. The tendering price shall include taxes, insurance, transportation and all other expenses

associated with the execution of the contract unless the tender documents provides otherwise. The procuring entity shall consider these costs be included in the tendering price if their estimations are not made specifically in the tendering price.

28.7. Responsive tenders shall be evaluated by the following comparison:

28.7.1. in case of adjusting an arithmetical error and/or small amount of discrepancy in the tendering price, reducing the tendering price subject to the price discount, and the procuring entity’s selecting other evaluation criteria as provided under this law, the corresponding estimations shall be shown in monetary terms, and the tender evalutation price shall be determined by adding them to the tendering price;

28.7.2. in case the tender document provides for a margin of preference, the comparison price of a tenderer eligible to a margin of preference shall be adjusted to include the persentage stipulated in 10.2 of this law;

28.7.3. all tenders shall be ordered from the lowest to the highest comparison price with a tender with the lowest price being selected;

28.7.4. a tender with the lowest price shall be considered as the «best» evaluated tender.

14

28.8. Proposals of consulting services shall be evaluated following provisions set out in Article 37, 38 and 39 of this law.

28.9. In case the procuring entity is to use some of criteria stated in 28.4 of this law, the

criteria shall be denominated into monetary terms. The conditions and methodology to be taken into evaluation shall be set consistent with this law and stipulated in the tender document.

28.10. Qualification indicators of tenderer shall not be included in the criteria specified in 28.4 of this law. Satisfaction of the procuring entity’s minimum requirements to a higher degree as specified in Articles 14-16 of this law can not be a justification for qualifying that tenderer’s tender.

28.11. In evaluating responsive tenders and qualifying the «best» tender, the procuring entity

shall use the criteria pursuant to the procedures specified in the tender documents. 28.12. Tender documents shall specify the foreign currency where it is used for the

tender evaluation. 28.13. In case of using a foreign currency not specified in the tender document for

payments and settlements, the currency shall be converted at the Mongolbank (the Central Bank of Mongolia) rate effective on the day of tender announcement.

28.14. In the two-stage open tendering, evaluation of tenders shall be done in the following

manner: 28.14.1. technical proposals shall be reviewed to check their responsiveness to the

requirements according to provisions of Article 27 of this Law; 28.14.2. on each technical proposal that satisfies the requirements specified in 27.1 of this

law a discussion shall be made with a given tenderer in order to prepare a standard technical specification that better satisfies the procuring entity’s requirements;

28.14.3. following the discussions, the procuring entity shall issue a standard technical specification;

28.14.4. the tenderer shall conduct an additional review of its technical proposal to comply with the standard technical specification set out in 28.14.3 of this law and submit the updated version along with a financial proposal;

28.14.5. the subscfriber shall open financial proposals publicly on a fixed date; 28.14.6. financial proposals shall be evaluated in accordance with 28.2-28.7 of this law,

and the tenderer with the «best» evaluated tender shall be authorized to sign a contract.

28.15. If a tenderer considers that it is impossible to revise its tender in accordance with

the standard technical proposal set out by the procuring entity pursuant to 28.14.3 of this law, the procuring entity has the right to reject the tender.

Article 29. Authorization to enter into a contract 29.1. The procuring entity shall authorize the tenderer, who has satisfied the requirements

specified in Article 27 of this law and submitted the “best” evaluated tender as specified in Article 28 of this law, to enter into a contract. The tenderer and other tenderer shall be informed about this decision simultaneously in writing.

15

29.2. The contract shall be signed after at least 5 working days following the notification of the authorization to contracting and within the tender validity period.

29.3. If the tenderer, who has submitted the «best» evaluated tender, refused to enter into a

contract, or the condition specified in 20.7.2 of this law has taken place, the procuring entity shall annul the authorization to contracting and enter into a contract with the second best evaluated tenderer in accordance with the provisions of this law. In the absence of such a tenderer, the procuring entity shall make any of the decisions specified in 30.4 of this law.

29.4. The procuring entity may extend the tender validity period, if it became impossinel to

sign a contract due to reasons not dependent on the procuring entity. 29.5. If the procuring entity extended the validity period as specified in 29.4 of this law, it shall

state the justification for doing so in its decision. Article 30. Rejecting all tenders 30.1. The procuring entity shall reject all tenders in the following cases:

30.1.1. all tenders that were submitted are not responsive; 30.1.2. the court or competent authority determines that the tendering price was

negotiated and agreed upon prior to the tendering , conditions of the tendering were not provided accurately to competitors, or competitors were put under pressure;

30.1.3. tendering prices of all responsive tenders exceeded the procuring entity’s cost estimate by more than 5%;

30.1.4. the negotiation specified in 30.2 of this law was failed; 30.2. If tendering prices of all responsive tenders exceeded the procuring entity’s cost estimate,

the procuring entity shall make negotiations with a tenderer whose tendering price exceed by less than 5% in order to reduce the tendering price down to the cost estimate. The procuring entity shall be prohibited from reducing the tenderer’s price without justification.

30.3. If the procuring entity rejects all tenders in accordance with provision 30.1 of this

law, it shall not bear any liability to tenderers. 30.4. The procuring entity shall make any of the following decisions if it rejected all tenders:

30.4.1. examine the reasons that resulted in failure of the tendering , conduct an open tendering after making relevant amendments to the content of the tender document;

30.4.2. if the conditions set out in 30.1.3 and 30.1.4 of this law took place and the tendering failed only due to the quantity and scope of goods, works or services to be procured, a limited tendering shall be carried out after making relevant modifications to the tender document;

30.4.3. Direct contracting procedure shall take place where the condition set out in 30.1 reoccurred after carrying out the tendering in accordance with 30.4.1 and 30.4.2 of this law.

CHAPTER THREE

EXCEPTIONAL PROCUREMENT PROCEDURES

16

Article 31. Application of the Exceptional procurement procedure 31.1. Exceptional procurement procedures shall be carried out in the following ways:

31.1.1. limited tendering; 31.1.2. comparison; 31.1.3. direct contracting.

31.2. Matters pertaining to the exceptional procurement procedure but not regulated under

Articles 32-34 of this law shall be governed by the appropriate articles and provisions set out in Chapter 2 of this law.

Article 32. Limited Tendering 32.1. Limited tendering shall be applied in the following cases:

32.1.1. the number of bodies capables of executing complicated goods, works or services requiring high qualification, expertise, equipment, and technology is limited;

32.1.2. the condition specified in 30.4.2 of this law. 32.2. In carrying out an open tendering, the procuring entity shall simultaneously send an

invitation to tender for all bodies with capacity to execute the contract pursuant to Articles 14-16 of this law thereby providing an equal opportunity to submit a tender.

32.3. The invitation to tender must include the information specified in Article 21.5 of this law. 32.4. The tender document shall be provided to interested tenderers without unreasonable

delay in accordance with 22.2 of this law. 32.5. The tender submission deadline shall be set to 15 or more days following the delivery

of the invitation to tender. Article 33. Comparison method 33.1. The the comparison procedure may be used where the cost estimate of the goods,works

or services does not exceed the threshold values set out in 8.1.1 of this Law. 33.2. The comparison procedure shall be applied as follows:

33.2.1. invite 3 or more bodies that satisfy the technical specification and other conditions and requirement to submit their prise proposals;

33.2.2. authorize a tenderer, who satisfied technical and other conditions and requirements and quoting the lowest price, to sign a contract as specified in 29.1 of this Law.

33.3. The timeframe for submission of the price proposal specified in 33.2.1 of this law shall

be no less than 5 working days from the day the invitation was delivered. 33.4. In case no authorization was provided due to failure to compare, the direct contracting

procedure may be applied. Article 34. Direct Contracting method 34.1. The direct contracting procedure may only be used in the following cases:

34.1.1. the condition specified in provisions 30.4.3 and 33.4 of this law;

17

34.1.2. given the necessity to protect copyright, a contract can be signed only with one body, and no substitute exists for the body;

34.1.3. given additional supplies do not exceed 20% of the value of the initial contract, and there is a need of replacing, repairing and making additional supplies of some parts of the goods and equipment provided under the initial agreement, the procuring entity has to change the supplier and such a change leads to procurement of supplies with different technical specifications, which cause a technical difficulty in the application and maintenance or incur cost-inefficiency;

Comment: 34.1.4 is not translated 34.1.4. when the cost of additional works does not exceed the least of 15% of

the value of the initial contract and comparison threshold price specified in 8.1.1 of this law, it was considered that repeating the competitive tendering would not result in better proposals for repeating the additional and/or similar works for the works procured through the tendering ;

34.1.5. it is impossible to adhere to the tender submission deadline pursuant to the open and limited procurement procedure as a result of unforeseeable and force major circumstances.

34.2. During direct contracting in accordance with the condition specified in 34.1 of this law,

the procuring entity shall make negotiations with one or more bodies, that satisfy the requirements in Artciles 14-16 of this law and are capable of executing given goods, works or services, and enter into a contract with the body that best satisfies the technical specifications and other conditions and requirements as specified in this law. Any agreement reached during the negotiations shall be included in the contract.

34.3. In case of direct contracting under the conditions set out in 34.1 of this law, a copy of

the contract and a statement justifying the application of the procedure shall be sent to the central administrative authority fir budgetary issues.

CHAPTER FOUR

PROCUREMENT OF CONSULTING SERVICES

Article 35. Selecting Consultants 35.1. An individual and/or legal entity may provide consulting services. 35.2. If a given consulting service involves the application of multi-disciplinary expertise

and specialized personnel, services of a legal entity shall be used. 35.3. If a given consulting service is best provided by an indivisual with necessary

qualification and expertise, those services shall be used. Article 36. General Procedure of Selecting Consultants 36.1. The procuring entity shall prepare the terms of reference ("TOR") that define the

objectives, expected outcome and other relevant information relating to the service in request.

18

36.2. TOR along with their amendments shall form an integral part of the contract to be made with a consultant.

36.3. The procuring entity shall make cost estimations of the service in request. The cost

estimation shall give consideration to the type and level of personnel background, time required for works at the field and office, office supplies and other expenses required for a given service.

36.4. After preparing the TOR and making cost estimations, the procuring entity shall publish

an invitation to submit proposals to be listed as potential consultants through daily and other mass media.

36.5. The general list may be compiled from the following bodies:

36.5.1. consultants who has responded to the invitation specified in 36.4 of this law; 36.5.2. national and/or international consultants providing services in Mongolia; 36.5.3. consultants listed in the register specified in Article 51 of this law; 36.5.4. consultants affiliated with professional associations, and international financial

and organizations. 36.6. The procuring entity will draw up a shortlist from the general list consisting of three

and more consultants that satisfy the requirements set out in Article 14-16 of this law and qualification requirements determined by the procuring entity.

36.7. The procuring entity shall provide a request for proposals ("RFP") and the TOR to the

shortlisted consultants. 36.8. RFP shall contain:

36.8.1. brief description of the assignment and details of financing; 36.8.2. TOR; 36.8.3. qualification requirements determined by the procuring entity based on criteria ser

out in Articles 14-16 of this law and evaluation criteria and methodology established by the procuring entity in accordance with provisions in 28.11 of this law;

36.8.4. the name of legal entities and/or individuals invited; 36.8.5. draft contract; 36.8.6. instructions for submitting proposals; 36.8.7. evaluation method to be used.

36.9. The deadline for submitting proposals shall be no more than 60 days; however, it shall be

set to more than 30 days for a legal entity and more than 7 days for an individual and stated in the RFP clearly.

36.10. The consultant shall prepare technical and financial proposals separately. 36.11. The technical proposal shall contain information relating to the consultant's

professional qualification and expertise, and in case of a legal entity, lead specialists and operating pratice.

36.12. The financial proposal shall contain the price at the contract would be executed on the

terms stated in the technical proposal.

19

36.13. The financial proposal shall only be evaluated after evaluating the technical proposal.

36.14. Financial and technical proposals shall be submitted concurrently and contained in a

separate sealed envelope if RFP requires so. 36.15. The procuring entity shall evaluate technical and financial proposals in accordance with

Articles 37-39 of this law, and authorize a contract as specified in Article 29 in case negotiations with a selected consultant succeed.

Article 37. Evaluation Methods for Selecting Consultants

37.1. The procuring entity shall determine the evaluation method for selecting consultants

prior to delivering the REP. 37.2. The evaluation method for selecting consultant shall have qualification, quality, and

combined evaluation forms. 37.3. The Qualification evaluation method shall be used for selecting an individual

consultant. The Qualification evaluation shall be based on the consultant’s knowledge, expertise, professional level, and other professional skills.

37.4. In selecting a consulting firm either Quality evaluation method or Combined evaluation

method shall be used. 37.5. In case of a contract involving simultaneous execution of a number of services requiring

comprehensive qualification extertise and technical qualification or having interdependence, a consulting firm shall be selected using the Quality evaluation method.

37.6. In all cases other than those specified in 37.3 and 37.5 of this Law, the Combined

evaluation method shall be used. Article 38. Quality Evaluation Method for selecting consultants 38.1. Proposals shall be analysized for comparison taking into account operating

practice and work schedule of the proposed consulting services, personnel’s expertise and capacbilities, and quality of the servce and technical appliances.

38.2. Technical proposals shall be assigned a score on the basis of the requirements and criteria

set out in Articles 14-16 of this law. 38.3. The procuring entity shall then open the financial proposal submitted by the

consultant who was ranked first in terms of technical proposal and make negotiations to agree on financial and other conditions with the given consultant.

38.4. During the negotiations specified in 38.3 of this law, the procuring entity shall not require

the consultant to reduce the proposed price without unreasonable justification. 38.5. The consultant or its authorized representative is obliged to provide the procuring entity

with relevant documents, cost estimates, and other information and evidence.

20

38.6. If the parties fail to reach an agreement on financial or other terms of the contract, the procuring entity may terminate negotiations with the selected consultant and open the financial proposal of the consultant ranked next to the best consultant and invite him for negotiations.

Article 39. Combined Evaluation Method 39.1. When using the Combined evaluation method, the procuring entity shall indicate the

appropriate minimum score for a technical proposal in the RFP. 39.2. Technical proposals shall be evaluated and scored subject to the requirements and

criteria set out in Articles 14-16 of this Law. 39.3. All consultants whose tenders were scored at the minimum or higher shall be

notified of the time for opening their financial proposals. Financial proposals of the consultants who could not get the minimum score shall be returned without opening.

39.4. Financial proposals of the consultants whose tenders were scored at the minimum or

higher shall be opened publicly at the fixed time. Relevant minutes shall be kept. 39.5. The consultant or his/her representative is entitled to be present at the opening. 39.6. All opened financial proposals shall be evaluated and scored in accordance with

requirements and criteria set out in 36.8.3 of this law. 39.7. Scores for technical and financial proposals shall be added in the proportion set out in the

REP to obtain a total score of quality and price evaluation. 39.8. The procuring entity shall make negotiations with the consultant who is scored the

highest. 39.9. During negotiations some requirements to a given service such as person-days, person-

months, time required for the consultant to work at the field or office, and office supplies may be modified.

39.10. It is prohibited to change unit costs such as proposed cost of person-days and person-

months. 39.11. If the parties fail to reach an agreement on non-financial terms of the contract, the

procuring entity shall terminate negotiations with the selected consultant and invite the consultant ranked next for negotiations.

39.12. For consultancy assignments with established practices whose estimated

contractual cost does not exceed the threshold value set out in 8.1.3 of this law, the least cost method, which is a simplification of the combined evaluation method, may applied.

39.13. Under the least cost method, technical proposals shall be evaluated and then

financial proposals shall be opened pursuant to provisions in 39.2-39.4 of this law. 39.14. Negotiations shall be made with a consultant who submitted the lowest price

proposal as specified in 39.9-39.11.

21

CHAPTER FIVE

PROCUREMENT CONTRACT FOR GOODS, WORKS OR SERVICES

Article 40. Procurement contract for goods, works or services 40.1. Matters related to the procurement contract for goods, works or services (hereinafter

referred to as the “procurement contract”) to be signed between the procuring entity and the contractor shall be regulated by the Civil law unless this law provides otherwise.

40.2. Commercial and technical requirements in the «best» evaluated tender and the tender

documents determined by the procuring entity shall be the general provisions of the procurement contract.

40.3. The procurement contract must contain the following items in addition to those set forth

in 40.2 of this law: 40.3.1. contract price; 40.3.2. payment terms and conditions; 40.3.3. amount and terms of advance payment security, if applicable; 40.3.4. procuring entity’s supervision and other conditions; 40.3.5. amount and terms of performance guarantee, if applicable; 40.3.6. commercial conditions; 40.3.7. schedule of execution of works and services or supply of goods; 40.3.8. conditions and methodology of price adjustment, if applicable.

40.4. The procuring entity may provide for an adjustment in the price of equipment, primary

and raw materials, and labor cost for goods, works and/or services to be procured in the following cases: 40.4.1. price index has changed during the contract implementation for over 2 years; 40.4.2. abrupt fluctuation of the base price.

40.5. The Cabinet member for budgetary issues shall approve standard contractual conditions

to be followed in procurement. Article 41. Prohibiting amendments in the procurement contract 41.1. It is prohibited to make the following amendments in the procurement contract:

41.1.1. changing contractual conditions pertaining to the content of the tender except making compulsory amendments in the contract due to unforeseeable circumstances;

41.1.2. increasing the contract price under the conditions except those specified in 40.4 of this law.

41.2. The contractor is prohibited to transfer its contrcual obligations to the third party. Article 42. Invalid contract 42.1. The procurement contract shall be regarded invalid in the following cases:

42.1.1. the procuring entity entered into the contract without an approval specified in Article 53 of this law;

22

42.1.2. the procuring entity entered into the contract breaching the procedures set out in Articles 27, 28 and 29 of this law;

42.1.3. a breach made during the implementation of procurement activities as set out in this law had a visible influence on the final result of the tendering .

Article 43. Performance guarantee and its amount, issuing a performance guarantee 43.1. The procuring entity may require the «best» evaluated tenderer to furnish a performance

guarantee prior to entering into a contract. 43.2. The procuring entity shall set and state in the tender documents the amount of

performance guarantee at 5 percent of the contract value. 43.3. The performance guarantee remains valid until contract evaluation and handover of

goods, works or services. 43.4. The procuring entity shall require the contractor to furnish a performance guarantee in

the following cases: 43.4.1. entering into a procurement contract for works with an cost estimate of over

MNT 150 million; 43.4.2. entering into a procurement contract for goods or services with an cost estimate

of over MNT 100 million; 43.4.3. entering into a procurement contract lasting for over two years.

43.5. If the execution of a procuremet contract is to continue for over two years, that

procuring entity may reduce the amount of performance guarantee by a rate equal to the contactor’s performance.

43.6. For the purpose of guaranteeing the performance of the contractor’s contractual

obligations during the quality warranty period of goods, works or services, the procuring entity may provide for a pledge of 5-10 percent of the contract value in the tender document until the end of the warranty period.

43.7. The contractor may guarantee its obligations specified in 43.6 of this law with a bank

guarantee or government bonds. In such case, the procuring entity shall make an advance payment of the pledged money equal to the amount of guarantee.

Article 44. Advance payment, its security 44.1. The procuring entity may make an advance payment to the contractor for the purpose of

making workd preparations. 44.2. The procuring entity shall make the advance payment after receiving the security

specified in 20.2 of this law from the contractor equal to the advance. 44.3. The procuring entity shall not make any advance payments unless so required in the

tender documents.

CHAPTER SIX

MANAGING PROCUREMENT Article 45. Organizing procurement

23

45.1. The procuring entity shall organize the procurement of goods, works or services financed

with funds and other resources allocated from the central and local budget for expenditures except investment, and with own funds pursuant to the procedure set out in this law.

45.2. The following bodies shall be the procuring entitys in case of procuring goods, works or

services with the central budget investment resources: 45.2.1. President and Parliament Administration, Cabinet Secretariat, National Security

Council, institutions that report to state administrative bodies and parliament, Supreme Court, State Prosecutor General, General Court Council, and agencies under the jurisdiction scope of the Prime Minister and Deputy Prime Minister for procurement all goods, works, and/or services for their domestic needs;

45.2.2. The state administrative body for goods and services costing over MNT 50 million and works costing over MNT 150 million to be procured for the needs of agencies and institutions under the jurisdiction scope of a Cabinet member;

45.2.3. the agency and institution specified in 45.2.2 of this law and aimag governor and capital city mayor’s administration for goods and services costing MNT 20-50 million and works costing MNT 50-150 million;

45.2.4. a given buyer for goods, works or services costing less than the minimum amount specified in 45.2.3 of this law.

45.3. The following bodies shall be the procuring entity in case of procuring goods, works or

services with the local budget investment resources: 45.3.1. aimag governor and capital city mayor’s administration for goods and services

costing over MNT 5 million and works costing over MNT 15 million; 45.3.2. soum and district governor’s administration or local budget institution for goods

and services costing less than MNT 5 million and works costing less than MNT 15 million.

45.4. If centralized procurement of particular types of goods, works, and services produces an

economy and efficiency, it is allowed for two or more procuring entitys to integrate and/or jointly organize their procurements.

45.5. The portfolio minister shall decide on organizing an integrated procurement as specified

in 45.4 of this law and appoint the procuring entity. 45.6. If integrated procurement of one type of goods, works, and services by several procuring

entitys produces an economy and efficiency, the general manager and/or executive director of those procuring entitys may make the respective decision and appoint a procuring entity to administer the procurement.

45.7. It is prohibited to integrate procurements in other cases except those specified in 45.5 of

this law. Article 46. Rights and duties of the procuring entity 46.1. The procuring entity shall have the following rights and duties with respect to

procurement of goods, works, and services: 46.1.1. set up an evaluation committee as set forth in this law; 46.1.2. oversee the respestive compliance of the evaluation committee’s operations and

evaluation reports and take measure to remove violations;

24

46.1.3. issue a decision to authorize a contract subject to a decision from the evaluation committee;

46.1.4. effectively plan and organize the procurement of goods, works or services within the estimated budget;

46.1.5. initiate the procurement upon funds for financing given goods, works, and services are allocated;

46.1.6. review the performance of contractual obligations; 46.1.7. not make amendments in the contract except cases specified in this law; 46.1.8. initiate the procurement of goods, services or works with specific characteristics

and executed in particular seasons such as construction, road, and engineering network, within the 15th of January of a given year.

46.2. The general budget manager and the executive director shall administer the rights and

duties set forth in 46.1 of this law of the procuring entity specified in 4.1.1 and 4.1.2 of this law, respectively.

46.3. The body authorized to represent the procuring entity specified in 46.2 of this law may delegate its rights under the law to a relevant official; however, such delegation does not release the representative from its responsibility.

46.4. The procuring entity shall make all communications related to the procurement only in

writing. Article 47. Evaluation committee 47.1. The procuring entity shall set up an Evaluation committee if the cost estimate of goods,

works or services exceeds the upper ceiling set forth in 8.1.1 of this law. 47.2. The Evaluation committee shall be a non-standing committee and implement the

following missions: 47.2.1. prepare technical specifications, work out an invitation to tender and tender

documents, receive tenders, and carry put the opening of tenders in accordance with respective instructions;

47.2.2. examine and evaluate tenders, prepare an evaluation report, make recommendations to the procuring entity on authorization for contracting.

47.3. It is preferred that officials appointed to the evaluation committee would satisfy the

following requirements: 47.3.1. specialized in procurement or related sectors of given goods, services or works; 47.3.2. not have family relations with tenderers and their representatives; (father, mather,

……. 47.3.3. not have a labor contract relationship with a tenderdr in last 3 years; 47.3.4. not have any violations of civil servant’s duties specified in 50.1 of this law in

last one year. 47.4. A representative of non-governmental organizations in particular sectors may be

appointed to the evaluation committee. 47.5. Majority of evaluation committee members must be specialized in procurement. 47.6. A decision from the evaluation committee (hereinafter referred to as the “evaluation

report”) shall be made in the form of meeting minutes and include decisions approved by the majority of committee members, their rationale, and all relevant information.

25

47.7. All committee members shall sign off the evaluation report. A member that had an

disagreement shall make relevant remarks on and sign off the evaluation report. Article 48. Planning the procurement 48.1. The procuring entity shall formulate the procurement plan of goods, services or works

not exceeding the budget approved for a given year and submit to his/her portfolio minister within 30 days following the budget approval.

48.2. The portfolio minister shall finalize the procurement plan of goods, works or services in

line with his/her budget scope and submit to the state administrative body for budgetary issues within 45 days following the central budget approval.

48.3. The portfolio minister shall approve the procuring entity’s procurement plan and

oversee the execution. 48.4. The state administrative body for budgetary issues shall oversee and evaluate the

portfolio minister’s procurement plan and its execution. 48.5. The procuring entity shall disclose the procurement plan publicly through mass media

within the first month of a given year. Article 49. Reporting the procurement 49.1. The procuring entity shall compile a file for each tendering organized for procurement

and safekeep in an archive unit. 49.2. The tender file shall consist of the following documents and materials:

49.2.1. procurement plan, execution, and commentary if required; 49.2.2. rationale for applying a given method except the open procurement procedure; 49.2.3. brief description of goods, works or services to be procured and tender documents; 49.2.4. correspondence between the procuring entity and tenderer; 49.2.5. tenders submitted; 49.2.6. minutes of the tender opening, evaluation report, and recommendations to

authorize a contract; 49.2.7. reason and rationale if the tendering has failed or all tenders have been

rejected; 49.2.8. decision to authorize a contract, the contract; 49.2.9. other documents related to a given tendering ; 49.2.10. documents related to contract assessment and handover of gods, works, and

services. 49.3. The documents and amteraisl specified in 49.1 of this law shall be made available to the

state administrative body for budgetary issues, legal and supervision authorities, and officials.

49.4. The documents and amteraisl specified in 49.2.2, 49.2.6, 49.2.7, and 49.2.8 of this law

shall be made available to given tenderers upon their written request. 49.5. The procuring entity shall submit a report on procurement of goods, works and

services in a given year to the portfolio minister by December 1st of the current year,

26

the latter shal forward the report to the central public administrative for budgetary issues by January 15th of the following year.

49.6. The Cabinet member for budgetary issues shall adopt a reporting procedure. 49.7. The central public administrative for budgetary issues shall consolidate procurement

reports submitted in accordance with provision 49.5 of this law and report to the Cabinet by the first quarter of the following year.

49.8. The Cabinet shall indicate the Government procurement performance in the annual

budget execution report. Article 50. Duties of the civil servant involved in procurement 50.1. The civil servant involved in procurement with the duty to plan, prepare, execute,

supervise etc, shall have the following duties: 50.1.1. provide for fair competition; 50.1.2. respect the state interests; 50.1.3. not make violations illicit behavior such as offerring and accepting illegal

proposals for own prive interest; 50.1.4. inform his/her direct supervisor about a potential conflict of interest such a

tenderer being his/her family member or his/her family member working for and/or baing paid a remuneration from a tenderer and not involve in the organization of a given tendering ;

50.1.5. promptly inform his/her direct supervisor and legal and supervision authority if a tenderer attempts to influence tendering results by proposing a bribe and putting pressure.

Article 51. Registration framework 51.1. For the purpose of expanding the scope of tenderers, facilitating competition and

providing information to the procuring entity, the respective state administrative body shall maintain a register and establish a database of legal entities and individuals interested in participating in the procurement in accordance with the procedures set out in this law by scopes of Cabinet members.

51.2. The Cabinet member for budgetary issues shall adopt the registration procedure

specified in 51.1 of this law. 51.3. A legal entity and/or individual may apply for a registration to the registration

authority by submitting its request, personally and/or through its representative along with information on the type of operations, capability and expertise any time.

51.4. The registration status of bodies interested in tendering shall not provoke their

rights to participate in the tendering in accordance with the procedures set out in this law.

51.5. In inviting a particular number of tenderers while applying the exceptional procurement

procedure, the procuring entity may obtain information on the legal entity and individual in the register.

51.6. The following general requirements must be satisfied while maintaining the register:

27

51.6.1. create the register based on the qualification criteria set forth in Articles 14-16 of this law;

51.6.2. provide equal conditions for bodies who applied for registration; 51.6.3. submit the request for registration in writing; 51.6.4. update the register with amendments upon request from registered bodies; 51.6.5. interested bodies shall be allowed to access the resgitry; 51.6.6. applications for registration shall be processed in one month;

51.7. The registration authority may require the applicant legal entity, individual, and his/her proxy

representative clarifications and additional notes. 51.8. The registration authority shall follow the procedures below:

51.8.1. define qualification assessment indicators for tenderers on each scope under its jurisdiction;

51.8.2. after qualification assessment indicators specified in 51.8.1 of this law, make a public announcement on the regitsry through nation-wide daily mass media.

51.9. The definition of qualification assessment indicators may be assisted with inputs from a

specialist in a given issue or a consultant selected in accordance with this law. 51.10. If the registration authority rejects a request for registration and/or amendment to

registration, it shall provide the respective decision along with justifications to the applicant in writing.

Article 52. Powers of the state administrative body for budgetary issues 52.1. The state administrative body for budgetary issues shall administer the government policy,

practice, and oversight on procurement in accordance with this law and execute the following powers: 52.1.1. work out proposals to enhance procurement legislation; 52.1.2. provide professional and practical advice to the procuring entity on

procurement matters; 52.1.3. draft and adopt, if the law provides for, policies and procedures, guidelines,

instructions, manuals and standard documents pertaining to procurement; 52.1.4. annually report to the Government on implementation of procurement legislation; 52.1.5. oversee and assess he procuring entity’s compliance to relevant procurement

procedures; 52.1.6. consolidate procuring entitys’ reports, create and maintain a national database of

procurements, issue consolidated reports and data; 52.1.7. entertain complaints from tenderers in accordance with this law; 52.1.8. provide recommendations and opinions on particular issues pertaining to

the implementation of this law upon request from legal and supervision authorities;

52.1.9. review proposals submitted in accordance with 53.1 of this law and provide authorization for contracting;

52.1.10. train and maintain a register of experts mentioned in Article 45 of this law; 52.1.11. define the level, quality, and standards for procurement related training jointly

with the state administrative body authority for education issues, provide support and assistance in organizing the training;

52.1.12. run a website for disclosing information on procurement, tendering announcements and results, determine the manner of posting the invitation to tender and other information;

28

52.1.13. cooperate with international organizations and other foreign organizations on procurment matters, plan and coordinate technical assistance in this area;

52.1.14. keep, oversee, and disclose the register of bodies whose rights to participate in tendering were restricted as specified in 14.5 of this law;

52.1.15. other powers as specified in the law. 52.2. The state administrative body authority for budgetary issues shall define the conditions

and procedures of introducing information technology and electronic devices in procurement activities.

Article 53. Approval from state administrative body for budgetary issues 53.1. The procuring entity except those specified in 4.1.2 of this law shall request an approval

from the state administrative body for budgrtary issues prior to announcing the tendering for goods, works and services, whose cost estimate exceeds the threshold value set forth in 8.1.4 of this law, and entering into a contract with the contractor.

53.2. The procuring entity shall submit the following information in requesting an approval as

defined in 53.1 of this law: 53.2.1. prior to announcing the procurement, a draft of the tender document and pre-

qualification document shall be submitted to the state administrative body for budgetary issues;

53.2.2. following the evaluation report, a draft decision to authorize contracting, draft contract, evaluation report, minutes of the tender opening, and a draft decision on pre-qualification, if applicable;

53.2.3. provision specified in 49.2.2 of this law; 53.2.4. other information regarded as necessary by the state administrative body for

budgetary issues. 53.3. The state administrative body for budgetary issues shall provide the following approvals

pertaining to procurement to the procuring entity in writing: 53.3.1. announce a tendering; 53.3.2. enter into a contract; 53.3.3. announce pre-qualification; 53.3.4. accept and invite for tendering tenderers selected in the pre-qualification.

53.4. The state administrative body for budgetary issues shall review the request in 5 working

working days and issue one of the following decisions based on the documents, information and clarification submitted by the procuring entity: 53.4.1. grant an approval specified in 53.3 of this law to the procuring entity if the tender

selection was consistent with this law and related procedures; 53.4.2. issue the decision specified in 55.3.1-55.3.3 of this law mentioning respective

justifications in case a violation of this law and other policies and procedures adopted consisitently with this law was proven.

53.5. In case the decision specified in 53.4.2 of this law was made, the procuring entity shall

remove the previous violation and request a re-approval in accordance with the procedures set forth in 53.1 and 53.3 of this law.

CHAPTER SEVEN

SETTLEMENT OF DISPUTES, RESPONSIBILITIES

29

Article 54. Submitting complaints to the procuring entity, complaints resolution

54.1. A tenderer may submit a written complaint to the procuring entity in 5 working days after becoming aware of the procuring entity’s perceived breach of the latter’s duties related to tendering . The supporting evidence of breach shall be enclosed to the complaint.

54.2. The procuring entity shall notify all tenderers about the nature of the complaint and

invite tenderers, whose interests might be affected by a respective decision, to complaint proceedings.

54.3 The failure of the tenderer specified in 54.2 of this law to participate in complaint

proceedings will prevent them from bringing further complaints concerning the same subject matter.

54.4. The procuring entity shall review and make a decision on the complaint in 10 working

days after the submission of the complaint. If the decision did not accept the complaint, it should indicate the justification for doing so, and if accepted, measures to rectify.

54.5. The procuring entity shall not authorize any contracts after receiving a complaint

except its consideration to not suspend the tendering in order to protect the public interests.

54.6. If it was decided to continue the tendering as specified in 54.4 of this law, the respective

jusitifications shall be provided to the complaintant at least 5 working days prior to the decision enters into force.

54.7. The procuring entity shall not accept complaints submitted after the authorization of

contracts. Article 55. Complaints regarding the procuring entity’s decision 55.1. The complainant may appeal to the state administrative body for budgetary issues within

5 working days if he/she does not agree with the procuring entity’s decision, the procuring entity did not issue a decision within the time specified in 54.4 of this law, or the procuring entity authorized a contract.

55.2. The state administrative body for budgetary issues shall consider only those

complaints submitted prior to signing a contract and issue a ruling in 14 days after receiving the complaint.

55.3. The state administrative body for budgetary issues shall consider a complaint and issue

the following decisions if it considers that the procuring entity breached this law: 55.3.1. annul and/or modify illicit actions or decisions of the procuring entity fully or

partially; 55.3.2. declare what provision of the law should be applied in a given case; 55.3.3. demand the procuring entity to carry out the tendering after the breaches are

rectified. 55.4. The state administrative body for budgetary issues may issue a decision to temporarily

suspend the implementation of the procuring entity’s decision and/or action in the following cases until a ruling is issued for the complaint: 55.4.1. if ruling in favor of complaintant’s interests is more justifiable;

30

55.4.2. if the decisions are not suspended, tenderers may incur significant losses; 55.4.3. if the suspension would not cause significant loss to the state competent authority

or procuring entity and other tenderers. 55.5. The state administrative body for budgetary issues shall seek an opinion from an expert

board for reviewing the complaint related to the tendering authorized for contracting as specified in 53.1 of this law. The decision of the state administrative body for budgetary issues shall be based on the Expert Board opinion.

55.6. The Expert Board shall be comprised of three independent experts who shall be

selected according to the following procedures within 3 days following the submission of the complaint: 55.6.1. the complainant and procuring entity shall each select an expert; 55.6.2. the experts selected by the complainant and procuring entity shall choose the

third expert. 55.7. The state administrative body for budgetary issues may select experts on behalf of the

parties if they failed to select. 55.8. The Cabinet shall adopt operational and licencing procedures of the expert board. Article 56. Filing a Complaint to the Court 56.1. The complaintant may file a complaint to the court if the state administrative body for

budgetary issues did not make a ruling within the time specified in 55.3 of this Law or the former did not agree with the latter’s ruling.

56.2. Complaints related to the tendering shall only be filed to the court after a contract was

signed. Article 57. Remedies 57.1. If a breach of the procedures contained in this law does not constitute a criminal

offense, the court or authorized state professional inspector shall impose the following administrative penalties: 57.1.1. a fine of MNT 200,000-250,000 and MNT 40,000-60,000, respectively, for the

procuring entity and official’s failure to apply the open procurement procedure; 57.1.2. a fine of MNT 150,000-200,000 for the procuring entity’s failure to invite foreign

tenderers in breach of provision 9.2 of this law; 57.1.3. a fine of MNT 200,000-250,000 and MNT 40,000-60,000, respectively, for the

procuring entity and official’s breach of provisions set forth in 8.4, 8.5 and 8.7.1 of this law in choosing the procurement procedure;

57.1.4. a fine of MNT 30,000-60,000 to members of the evaluation group who breached provisions set forth in 10.1, 10.2 and 10.3 of this law in applying a margin of preference;

57.1.5. a fine of MNT 30,000 for the official’s failure to prepare the invitation for tenderdig and tender documents based respective policies and procedures, and standard documents issued by the state administrative body for budgetary issues;

57.1.6. a fine of MNT 200,000-250,000 for the procuring entity’s failure to announce the invitation to tender in accordance with provisions set forth in 21.3 and 21.4 of this law;

31

57.1.7. a fine of MNT 100,000-150,000 to the procuring entity’s failure to comply with provision 22.2 of this law by setting a unjustifiable high price for the tender documents;

57.1.8. a fine of MNT 100,000-150,000 for the procuring entity’s failure to set the tender submission deadline to more than 30 days in accordance with provisions set forth in 24.3 of this law or failure to follow the minimum timeframe for proposal submission specified in 36.9 for selecting consulting services during the open procurement procedure;

57.1.9. a fine of MNT 200,000-250,000 and MNT 40,000-60,000, respectively, for the procuring entity and official’s breach of provisions set forth in 29.1 of this law by carrying out the tendering unfairly and authorizing for contracting the tenderer who did not submit the “best” evaluated tender;

57.1.10. a fine of MNT 40,000-60,000 for the official’s failure to comply with 26.6 of this Law;

57.1.11. a fine of MNT 200,000-250,000 to the procuring entity for rejecting tenders under the reasons except those specified in 27.1 and 30.1 of this law and annulling the tendering ;

57.1.12. a fine of MNT 150,000-200,000 to the procuring entity for applying the exceptional procurement procedure in circumstances except those specified in 32.1, 33.1 and 34.1 of this law;

57.1.13. a fine of MNT 100,000-150,000 for the procuring entity’s failure to set up an Evaluation committee in accordance with 47.1 of this law,;

57.1.14. a fine of MNT 20,000-60,000 for the official’s failure to announce the procurement plan and create a tendering file as specified in Articles 48 and 49 of this law,;

57.1.15. a fine of MNT 200,000-250,000 and MNT 40,000-60,000, respectively, for the procuring entity and official’s failure to enter into a contract with an approval from the state administrative body for budgetary issues in accordance with Article 53 of this law and follow the provisions set forth in Article 41 of this law;

57.2. The competent authority and official shall impose a disciplinary sanction as to dismiss

the general manager, executive management, and member of the evaluation committee of the procuring entity who repeatedly violated provisions specified in 57.1.1, 57.1.3, 57.1.5, 57.1.7, 57.1.9, 57.1.11, 57.1.12, 57.1.13, and 57.1.15 of this law from the given office.

57.3. If the court and competent authorities have proven a tenderer and/or any body breaching

and not performing obligations under the procurement contract, providing fraud information in the tendering, and committing a corrupted act, the ruling shall be delivered to the state administrative body for budgetary issues to include in the list of entities whose rights to participate in the tendering are restricted.

Article 58. The law entering into force

58.1. This law shall enter into force on 1 February 2006.

32

SPEAKER OF the PARLIAMENT of MONGOLIA TS.NYAMDORJ

Some actions to be carried out for implementation of the Public Procurement Law of Mongolia

The Parliament of Mongolia IS TO ORDER the following: 1. In connection with the enactment of the Public Procurement Law of Mongolia, the

Government of Mongolia (Ts.Elbegdorj) is obliged to undertake the following actions: (1) Amend and approve guidelines, procedures and other legislations for the public

procurement procedures consistent with this law within January 2006; (2) Establish a database of procurement management, supervision, and analysis, and actual

procurements taking place nation-wide and make it applicable for use; (3) Undertake actions towards introducing developments of electronic technology and

information technology in order to enhance the transparency and efficiency of procurements of government agencies;

(4) Improve professional qualifications and capacity of the human resources to implement the public procurement legislation, promote the public procurement law and legislation among the private sector and gerenal public, organize training.

SPEAKER OF the PARLIAMENT of MONGOLIA TS.NYAMDORJ

33

Regard the law void Article 1. Regard the Public Procurement Law of Mongolia enacted on 14 April 2000 as void. Article 2. This Law shall become effective on the same date the Public Procurement Law of

Mongolia enacted in 1 December 2005 enters into force. SPEAKER OF the PARLIAMENT of MONGOLIA TS.NYAMDORJ