In September of 2012 the RA Government made amendments in the Resolution No 168 on ‘Regulation of Procurement Procedures". 1. It is the responsibility of the Client to include the major terms in the invitation to bid and in the contract, as well as to provide for compliance with the requirements specified for clients /procuring entities by the RA procurement legislation. 2. The RA Ministry of Finance is authorized to do random-based monitoring of contracts signed for the purpose of the State needs, as well as monitoring of procurement procedures which generate State liabilities, based on the risk assessment procedures set up by the RA Minister of Finance. 3. The RA Ministry of Finance is authorized to request and receive from the clients all the documents related to procurement transactions; undertake measures aimed at implementation of activities to address the issues detected in the result of monitoring, as well as to suspend procurement processes. 4. In order to comply with the Resolution requirements, in June 2013 the RA Ministry approved risk assessment procedures, which specify risk assessment criteria, used to distinguish procurement processes which generate the State liabilities, and contracts signed for the needs of the State which are subject to monitoring.

In October, 2013 the Ministry of Finance reorganized the Department of Internal Public Control and Public Procurement Methodology into the Monitoring and Research Division with the aim to implement the functions specified by the Resolution. Powers of this Division include monitoring of procurement procedures generating the State liabilities, as well as contracts signed for public needs.

 Monitoring is carried out during three stages of procurement process.  1. Procurement process announcement and contract award stage. This phase of monitoring is the responsibility of the Procurement Support Center, which evaluates published announcements and invitations to bid, specifications of the procurement subjects, and compliance with the RA Procurement Law.  2. The phase of filing signed contracts into the software, in the result of which the system automatically selects contracts and prohibits their further financing possibility. This phase of monitoring is the responsibility of the Monitoring and Research Division, which is carried out by the e-system: in case of receiving blocking message, the compliance of the subject contract filed into the system and validity conditions are then subjected to review in respect of their compliance with the requirements of the RA Procurement Law, and within five working days the positive or negative results of the review shall enter into the e-system.  3. Contract implementation stage. This monitoring is also carried out by the Monitoring and Research Divisions through the Treasury system.

 Monitoring of the first stage, i.e. assessment of specifications of procurement items approved by the clients and published in the invitations of official procurement bulletins and announcements of pre-qualification procedures, as well as assessment of qualification criteria for participants is the responsibility of the Procurement Support Center. Selection of clients and procurement procedures subject to monitoring is random-based.

 The second stage monitoring can relate to contract price, type of procurement, reflected indicators, contractor performance or the contracts where incompliance is detected with the frequency specified by the RA Minister of Finance.

 Results of monitoring implemented by the Monitoring and Research Division ( violations recorded in contracts reviewed in the period form June 2013 to February 2014, by months).

 Monitoring of contract performance is the function of the Treasury system which is done through various reports.  Monitoring is carried out through application of a snowball method, i.e. random-based method, when one of the signed contracts is chosen and a comprehensive review is done starting from the planning through the disbursement phases.

 Monitoring performed by the Treasury system has detected the following violation:  Disbursement schedule of some public entities filed into the treasury system does not comply with the quarterly proportions approved by the RA Government.  Example 1. The amount of AMD provided for the RA Ministry of Finance under the category of “Administration equipment” was allocated by the following quarterly proportions :  However, the Ministry of Finance signed the contract to purchase goods under the category “administration equipment” only in May, thus the disbursement schedule filed into the treasury system does not comply with the planned quarterly disbursements. RA Ministry of FinanceTotalI quarterII quarter9 monthsYear “Administration equipment” category of economic classification of budget expenditures

 According to the RA Procurement Law repayment of advance payment is done by deductions from the disbursements. In each case the amount being deducted is determined proportionally to the total contract amount. Monitoring implemented by the Treasury system has detected that in many cases calculation of the advance payment provided under the contract is wrong.  Example 1. The State Revenues Committee under the RA Government signed a contract for purchase of development and introduction of e- reporting system at the amount of AMD, assuming 20% advance of the total contract amount, with monthly disbursements of AMD. The monitoring protocol indicated that monthly disbursements of the Committee do not consider the amount of proportional reductions, i.e. there is 20% shift.

 Expenditures of the RA public authorities incurred in were also reviewed according to budget classification of economic categories.  Results have demonstrated that in some of economic categories the indices of expenditures made by the RA public authorities during were not stable.

Example: expenditures for utilities which are considered relatively stable have shown the following:

 RA Ministry of Finance informs the Head of the Client regarding violations recorded in the result of the monitoring and proposes to submit justifications, eliminate the violations or organize discussions to find solutions.  In case the Client does not accept the fact of violations or in case of failure to reach an agreement, the RA Ministry of Finance shall apply to the Prime Minister.