When the coolest nerds collide...
Roughly a week ago, a muckraking blogger and a scholarly nepotist got together with some other eggheads and talked for nearly four hours about in-the-works reforms for Federal Law 94, which is a beastly piece of legislation regulating government tenders. The law is made up of 65 articles, and has been revised several times since being enacted in 2006. Aleksei Navalny, superstar Internet sensation, activist lawyer, and all-around promising “new liberal” political inspiration, faced off against Yaroslav Kuzminov, provost/president/”rektor” of the Higher School of Economics and husband to Elvira Nabiulina, head of the Ministry of Economic Development.
Along with the Federal Anti-monopoly Service and the Ministry of Finance, the MED has been brainstorming feverishly (in concert with the big brains at the Higher School) about how to respond to President Medvedev’s demands to fix Law 94. Medvedev sounded the alarm in his Address to the Federal Assembly last November, when (in his ‘eighth point’), he castigated the state procurement system for having cost the government over a trillion rubles in kickbacks. “Therefore it’s come time to begin work on a new edition [redaktsiia] of the law on state purchases that is thorougher and more modern.” A presidential order (poruchenie) followed on December 7, 2010. The demand for revisions to Law 94 is tucked away in Punkt 24, which is directed at no one in particular. Here’s what it says:
“Develop a concept of a new edition of the federal law on the state procurement of goods and services, taking into account lessons learned and corresponding to the tasks of modernization and developing innovation. Due by April 1, 2011.”
Cheer up, Elvira. You'll get another shot.
As of yesterday, MED-FAS negotiations are over. Artem’ev and his outfit won unambiguously. Nabiulina left the meeting on March 24th eating her own words, claiming incredulously that MED never wanted to cancel and rewrite Law 94. And what of MED’s big ticket new ideas? There was “preliminary assessment,” which would have allowed procurement officers to ban certain suppliers from participating in tenders, if the establishment proved under-qualified or was somehow sub-satisfactory. MED also promoted “competitive negotiation,” which is an alternative tendering method to competitive bidding. In competitive negotiation, the procurement officials reach out to a selected group of suppliers, detailing the scope, specifications, and terms and conditions of the tender. Negotiations are then carried out separately, ideally resulting in a contract awarded to the best combination of price, quality, and service. Both of these ideas were criticized for allowing bureaucrats to show favoritism in the tenders process, opening new avenues to bribery and corruption. FAS opposed both preliminary assessment and competitive negotiation. Presumably, this stuff won’t make it into the next version of Law 94.
Igor' Artem'ev adjusts his eyeglasses victoriously.
So how did the debate itself actually go? Unfortunately, it was largely boring. Almost entirely lacking was a substantive discussion about the specifics of MED’s legal concept for a new Law 94. Preliminary assessment and competitive negotiation were mentioned in passing, but never with any explanation or defense. Kuzminov would say that some favor one and others favor another, which Navalny would follow by reminding everyone which he favored. Perhaps overcompensating for his youth, Navalny went to great efforts to remind his opponents that he is a “professional” and an expert, that he sleeps with Law 94 under his pillow, and speaks fluent lawyerese. The man who would ultimately win the real Law 94 battle, Igor’ Artem’ev, never set foot in Navalny’s debate room. He refused to participate, worried that the format was doomed to “unprofessionalism.” He was right.
Words to live by.
So I wholeheartedly agree with Mulders that one needs to read the Russian papers in order to best understand events in Russia. And that’s why I was so disappointed in his conclusions about the Navalny-Kuzminov debate.
As a regurgitation of all the top zingers blurted out over the course of three-and-a-half hours, Mulders’ recap is excellent. But he mentions FAS only twice, and doesn’t mention Artem’ev even once. Now, granted, FAS wasn’t represented at the debate, so it might seem unfair to fault ‘Russia Watchers’ for leaving it out of the picture. But, in any discussion about the Medvedev-ordered revisions to Law 94, ignoring FAS is tantamount to leaving out half of the story. Now that FAS has come out on top of MED in the negotiations under Shuvalov, it’s worth more than half of the story.
Good analysis. I had thought about attending the date, but I knew it would be packed and had just sat through two days of people talking about corruption. Artemyev’s a cool cat and people are often surprised when I point out that he is the only Yabloko member with a significant position in the government, especially considering FAS’ ever-expanding portfolio. Navalny, coincidentally, is also a former Yabloko member.
I meant debate, not date
Hi AGT, thanks for the kind words on the website. Your critique is also appreciated. On the end it got somewhat too venomous for my taste, but I guess I had that coming after I dared to criticize Naval’ny, the new hero of the liberal commentariat.
If I understand you correctly you think my post missed out on the bureaucratic struggle between the MED, FAS and to lesser degree MinFin. You’re right. I could have devoted more words to that important aspect. Do however not accuse of blindness so easily. Perhaps, I merely considered other aspects more interesting.
Let’s start with the bureaucratic struggle. Of course there is friction, disagreement and suspicion among competing bureaucratic entities. It wouldn’t be a bureaucracy without it. Law 94FZ gives powers to both FAS (as the enforcer) and Naval’ny (as a civic activist). Both were clearly concerned that MED/Kuz’minov’s proposal would remove considerable part of these powers. This is how I explain their common position against the abolition of 94FZ.
Both have been successful in raising their concerns. From Kommersant 24/03/2011: ‘The public discussions about the law were ended at the meeting with vice-premier Igor Shuvalov. There will be no Federal Procurement System. Instead under the aegis of the MED a group of amendments will be worked out, including amendments to 94FZ, thereby realizing all the ideas of the Federal Procurement System without endangering the powers of FAS and MinFin.‘
[ http://www.kommersant.ru/Doc-rss/1606699 ]
In other words, both FAS and Naval’ny have been soothed in a typically bureaucratic manner. Shuvalov has concluded that 1/ The idea of a new Federal Procurement System has been tainted. 2/ Thanks to the work of people like Naval’ny law 94FZ has become a public symbol of anti corruption drive. It’s abolition would be politically costly. 3/ FAS has been alienated in the process and should be kept on board.
The idea for a more encompassing regulation of government procurement, however stays on course and will still be coordinated by MED. The new rules: Do not call it a new ‘system’. Don’t touch upon the law 94FZ in name. And don’t propose a new agency assuming tasks currently employed by FAS.
Shocking? Hardly. Throughout the debate Ku’zminov reiterated that he didn’t care whether it was FAS or another agency that would enforce the regulations, just as long as the regulation functioned. He also told Naval’ny repeatedly that he would be in favor of transferring the larger part of law 94FZ to the new system. So besides the naming of things, little has changed. Do you now see why I do not find the bureaucratic struggle that interesting?
What I do find of great interest is potential improvement of Russia’s government procurement practice. One trillion rubles down the drain is a shocking waste of taxpayer money. Regulation of government procurement should ensure that Russian state entities spent tax payer money wisely. Roads should be paved. Hospitals need to be equipped with the best technology. According to Kuz’minov the current law fails to do so. Please note that his more thorough criticism with regard to the content of the law and its practice is not included in the rather incomplete transcript your blog links too. Just watch the first 20 minutes of the video. [ http://russiawatchers.ru/daily/government-procurement ]
Kuz’minov is not the only one criticizing 94FZ. From Russkii Reporter 17/03/2011:
‘Law 94FZ regulates the purchases made by state institutions. Unfortunately this also concerns scientific research. The delivery of toilet paper for the mayor and genome sequencing are regulated by the same rules.’
RR proceeds to quote from a letter to the president signed by 2000 scientists: ‘The number of formalities that need to be observed to obtain a required reagent or instrument has already exceeded the limits of reason. More and more young scientists move abroad, because they consider it impossible to work productively under conditions, when half of their time is not spent on experiments, but running after documents.’ [ http://rusrep.ru/article/2011/03/17/young_brain/ ]
The question at stake here is the efficiency of government procurements. The cheapest price might be the best deal for toilet paper, it isn’t when it comes to scientific instruments or paving roads for that matter. It’s about the prudent spending of taxpayer money and delivering results. People don’t want the cheapest road. They want a road that lasts longer than a year.
Russia’s current tender regulation seems too strict and inflexible to do what it is supposed to do. If that goal requires preliminary assessment and competitive negotiation, I see no reason not to incorporate these instruments. I am not an expert on government procurement, but I know that in my country tender procedures are less strict, for example when it comes to describing the often hardly quantifiable requirements needed for green, ecology friendly products or services. The Netherlands however are less corrupt than Russia is.
Russian bureaucrats can’t be trusted, Naval’ny would say. A more flexible system would only lead to more corruption. Don’t give them any room! For Naval’ny the regulation of government procurement is an instrument in the fight against corruption. It’s very important that there are activists like him. Let me leave no doubt about that. But what if strict, inflexible regulation for the sake of the fight against corruption hamper the main goal: efficient spending of tax payer money. Roads that last.
This is why the Georgian joke about excessive control was no distraction of the debate, but the very essence of it. (Unless of course you think the debate was not about government procurement, but Naval’ny accusing his hosts of corruption) Does Russia need more control based on the presumption of dishonesty, thereby also strangling all that is good in state and society with more and more regulations? Or is there a way to implement a more civilized regulation of state procurement regulation which allows more flexibility where it is needed, while retaining the instruments to fight corruption? The latter seems most desirable to me.
To cool our heads I won’t say any bad words about Naval’ny. I hope you know that had it really been my intention to blacken the guy, I could have referred to many other materials. So let me sign off by paraphrasing the first moderator of the debate Evgeny Yasin: ‘There must be people who fight the authorities, but there must also be people who run educational institutes. I support you (Naval’ny) in your work, but please let me also do my work.’
Best wishes, Joera
Joera,
Thanks very much for those thorough comments. If it didn’t come across in my original post, let me reiterate/clarify that I appreciate your coverage of the state procurement issue, and I welcome any further work you do on this subject.
My criticism was/is simply that you left out an important part of the 94FZ story — the part about FAS and Artem’ev, which is arguably more important than Kuzminov’s debate with Navalny. The Kommersant piece you link to certainly carries a different tone than the Vedomosti and Gazeta.ru pieces I saw in the immediate aftermath of FAS’ “victory,” but — now that the results of the Shuvalov meeting have been made public (http://www.kommersant.ru/doc/1612459) — it looks like FAS did indeed defeat the hot-button issues I reviewed above. (They also added significant monitoring and oversight to ‘unilateral contract negation,’ as I tweeted earlier today.) Nabiullina has been making spooky allusions to future legislation, perhaps something that would introduce an FKS, albeit in a way that would assuage any ‘bureaucratic fears’ on the part of FAS.
I entirely understand if you think inter-agency bickering is “less interesting,” but it does seem to be indisputably important to procurement reform. It also has undeniable influence on Navalny’s activism, as he and FAS are basically echoing one another. (The guys over at APN are even suggesting a financial relationship between RosPil and FAS. http://www.apn.ru/publications/article23928.htm)
Whether or not you like this part of the story (or find it interesting) doesn’t change that fact that it’s an important piece of the puzzle, and it’s being covered rather extensively in the Russian press. As ‘Russia Watcher,’ it seems to fall within your purview, does it not?
A final note about Navalny: he’s no hero of mine, even if his current anti-corruption work is perfectly admirable in various ways. Here at AGT, I try to leave at the door any normative assessment of who’s better or worse, and stick instead to an unemotional analysis of power projection and political gaming. Please feel free to accuse him of whatever selfishness you like. I only wished to point out that, on the procurement issue, Navalny speaks in chorus with a major organ of the state.
Thanks again, Kevin (AGT)
Great stuff from both of you guys!!! I’m enjoying finally reading about Russia (here and at Russia Watchers.org) w/out all the typical gratuitous stereotypes.