RESTRICTED  WORLD TRADE  
ORGANIZATION  GPA/ACC/ARM/1 
4 September 2009 
 
 (09-4225) 
Committee on Government Procurement Original:   English 
  
 
APPLICATION FOR ACCESSION TO THE AGREEMENT ON GOVERNMENT 
PROCUREMENT AND INITIAL APPENDIX I OFFER 
 
Communication from the Republic of Armenia
 
 
 
 The following communication, dated 3 July 200 9, has been received from the Delegation of 
the Republic of Armenia.  
_______________ 
 
  In order to implement the Republic of Ar menia's commitments toward the World Trade 
Organization, especially regarding Government Proc urement, I have the honour to submit herewith 
the application and initial offer of the Republic  of Armenia to join the WTO Agreement on 
Government Procurement. 
 
 This offer is circulated for discussion purpo ses only.  The Republic of Armenia reserves the 
right to revise this initial offer in order to correct  any possible error, omission or inaccuracy.  Nothing 
in this document should be taken as a de finitive part of Armenia's final offer. 
 
 We are also attaching reports prepared by SIGMA (Support for Improvement in Governance 
and Management) in December 2008 on:  "Analysis of the Armenian Public Procurement Law and 
Implementing Decree vis-à-vis  the EC Public Procurement Directives and the Agreement on 
Government Procurement (WTO)", and "Public  Procurement in Armenia:  Overview".
1 
  All recommendations of the Sigma's reports  have been included in the "Government 
Procurement Reforms Strategy" approved by the Government of the Republic of Armenia on 
23 April 2009 and will be implemented shortly. 
                                                     
 
1 Both in English only. GPA/ACC/ARM/1 
Page 2  
 
   
INITIAL OFFER 
 
APPENDIX I
* 
 
REPUBLIC OF ARMENIA 
 
(Authentic in the English Language) 
  
ANNEX 1 
 
Central Authorities which Procure in Accordance with 
the Procedures of this Agreement 
 
 Thresholds (*): 
 
Goods         SDR 130,000 
 Services (specified in Annex 4)      SDR 130,000 
 Construction services (specified in Annex 5)    SDR 5,000,000 
 
(*) Subject to Note 1 below.   List of Entities : 
 
1. Staff of the President of the RA 
2. Staff of the National Assembly of the RA 
3. Staff of the Government of the RA 
4. Staff of the Constitutional Court of RA 
5. Chamber of Control of the RA 
6. Judicial Department of  the RA 
7. Office of the Public Prosecutor of the RA 
8. Special Investigation Service of the RA 
9. Staff of the Human Rights Defender of the RA  
10. Ministry of Agriculture of the RA 
11. Ministry of Defence of the RA 
12. Ministry of Diaspora of the RA 
13. Ministry of Economy of the RA 
14. Ministry of Education and Science of the RA 
15. Ministry of Energy and Natural Resources of the RA 
16. Ministry of Finance of the RA 
17. Ministry of Foreign Affairs of the RA 
18. Ministry of Healthcare of the RA 
19. Ministry of Justice of the RA 
20. Ministry of Labour and Social Affairs of the RA 
21. Ministry of Nature Protection of the RA 
                                                     
 
* In English only.  GPA/ACC/ARM/1 
 Page 3 
 
 
  22. Ministry of Sport  and Youth Affairs of the RA 
23. Ministry of Territorial Administration of the RA 
24. Ministry of Transport and Communication of the RA 
25. Ministry of Urban Development of the RA 
26. Ministry of Culture of the RA 
27. Ministry of Emergency Situation of the RA 
28. National Security Service of the RA  
29. State Security Service of the RA 
30. State Revenue Committee of the RA 
31. State Committee of the Real Estate Cadastre of the RA 
32. State Nuclear Safety Regulatory Committee by the Government of the RA 
33. State Property Management Department of the RA 
34. General Department of Aviation of the RA 
35. Police of the RA 
36. Armenian Rescue Service 
37. State Water Committee 
38. State Science Committee 
39. Central Electoral Commission of the RA 
40. Public Services Regulatory Commission of the RA 
41. Social Insurance Commission of the RA 
42. State Commission for the Protection of Economic Competition of the RA 
43. Civil Service Council of the RA 
44. National Statistical Service of the RA 
45. National Commission on TV and Radio of RA 
46. Council of the Public TV and Radio of the RA 
47. Municipality of Yerevan 
48. Municipality (Marzpetaran) of Aragatsotn 
49. Municipality (Marzpetaran) of Ararat 
50. Municipality (Marzpetaran) of Armavir 
51. Municipality (Marzpetaran) of Gegharquniq 
52. Municipality (Marzpetaran) of Lory 
53. Municipality (Marzpetaran) of Kotayq 
54. Municipality (Marzpetaran) of Shirak 
55. Municipality (Marzpetaran) of Syuniq 
56. Municipality (Marzpetaran) of Vayots Dzor 
57. Municipality (Marzpetaran) of Tavush 
 [This list is provisional. ] 
 This Agreement will generally appl y to procurement by the Ministry of Defence, Police of the RA, 
National Security Services and State Security Serv ices.  The list of the supplies and equipments 
categories is subject to the Government of Arme nia determinations and will be presented by final 
offer.   
Notes to Annex 1 
 
1. Thresholds in respect of goods and services are subject to a three-year transition period.  In 
the first year following accession, the thresholds fo r both goods and services will be SDR 300,000, in 
the second year following accession, they will be SDR 200,000.  In the third year following accession, 
the thresholds will be and will thereafter rema in at SDR 130,000 as set out in this Annex. 
 GPA/ACC/ARM/1 
Page 4  
 
  2. This list refers to all ce ntral government entities, subordi nated organizations and their 
successors in title as defined in Article 2 of the Law on Procurement of December 2004. 
 3. The conditions specified in the Ge neral Notes apply to this Annex.  GPA/ACC/ARM/1 
 Page 5 
 
 
   
ANNEX 2 
 
Sub-Central Authorities which Procure in Accordance with 
the Procedures of this Agreement 
 
 Thresholds (*): 
 Goods         SDR 200,000  
 
Services (specified in Annex 4)      SDR 200,000 
 Construction services (specified in Annex 5)    SDR 5,000,000 
 
(*) Subject to Note 1 below. 
  List of Entities : 
 1. Following local authorities as defined by RA Law On Administrative-Territorial Division No. 
N-062-I of 7 November 1995: 
 
- Municipality of Ashtarak 
- Municipality of Aparan 
- Municipality of Talin 
- Municipality of Artashat 
- Municipality of Ararat 
- Municipality of Masis 
- Municipality of Vedi 
- Municipality of Armavir 
- Municipality of Vagharshapat 
- Municipality of Mecamor 
- Municipality of Gavar 
- Municipality of Chambarak 
- Municipality of Martuni 
- Municipality of Sevan 
- Municipality of Vardenis 
- Municipality of Vanadzor 
- Municipality of Alaverdi 
- Municipality of Akhtala 
- Municipality of Tumanyan 
- Municipality of Spitak 
- Municipality of Stepanavan 
- Municipality of Tashir 
- Municipality of Hrazdan 
-
 Municipality of Abovyan 
- Municipality of Byureghavan 
- Municipality of Eghvard 
- Municipality of Tsakhkadzor 
- Municipality of Nor Hachn 
- Municipality of Charentsavan 
- Municipality of Gyumri GPA/ACC/ARM/1 
Page 6  
 
  - Municipality of Artik 
- Municipality of Maralik 
- Municipality of Kapan 
- Municipality of Agarak 
- Municipality of Goris 
- Municipality of Dastakert 
- Municipality of Megri 
- Municipality of Sisian 
- Municipality of Qajaran 
- Municipality of Eghegnadzor 
- Municipality of Jermuk 
- Municipality of Vayq 
- Municipality of Ijevan 
- Municipality of Berd 
- Municipality of Dilijan 
- Municipality of Noyemberyan 
 
 
Notes to Annex 2  
 
1. Thresholds in respect of goods and services are subject to a three-year transition period.  In 
the first year following accession, the thresholds fo r both goods and services will be SDR 400,000, in 
the second year following accession, they will be SDR 300,000.  In the third year following accession, 
the thresholds will be and will thereafter rema in at SDR 200,000 as set out in this Annex. 
 2. The above sub-central authorities, as define d by RA Law On Administrative-Territorial 
Division No. N-062-I of 7 November 1995, include their subordinate bodies and organizations which 
are under supervision or control of such authorities.  3. The conditions specified in the Ge neral Notes apply to this Annex.  GPA/ACC/ARM/1 
 Page 7 
 
 
   
ANNEX 3 
 
All Other Entities which Procure in Accordance with 
the Procedures of this Agreement 
 
 Thresholds (*): 
 Goods         SDR 400,000 
 
Services (specified in Annex 4)      SDR 400,000 
 Construction services (specified in Annex 5)    SDR 5,000,000 
 
(*) Subject to Note 1 below. 
  1. All legal persons (authorities, establishments  and foundations) governed by public law and 
not having or having an industria l or commercial character, whose  procurement is covered by the Law 
on Procurement of December 2004 in particular the following: 
 
- Academy of Sciences 
- State Research institutes and centres 
- State Universities and Education state institutes 
- State Museums 
- State libraries 
- State theatres, operas, philharmonic orchestras, cultural houses and centres 
- State schools, culture and cults inspectorates 
- State Hospitals, sanatoriums, clinics, medical  units, legal-medical institutes, ambulance 
stations 
- […] 
 
 [This list is provisional.  The schedule could provid e that the final list to be established within three 
years after the conclusion of the Armenia's accession to WTO Agreement on Government 
Procurement. ] 
  Notes to Annex 3  
 
1. Thresholds in respect of goods and services are subject to a three-year transition period.  In 
the first year following accession, the thresholds fo r both goods and services will be SDR 600,000, in 
the second year following accession, they will be SDR 500,000.  In the third year following accession, 
the thresholds will be and will thereafter rema in at SDR 400,000 as set out in this Annex. 
 2. This Agreement shall not apply to contract s which the contracting authorities award for the 
purposes other than the pursuit of their activities in the above mentioned sectors. 
 
3. The conditions specified in the Ge neral Notes apply to this Annex. GPA/ACC/ARM/1 
Page 8  
 
   
ANNEX 4 
 
Services 
  
 Of the Universal List of Services, as contained in document MTN.GNS/W/120, the following services are included (others being excluded):  
Sector CPC Reference No. 
 
Maintenance and repair ser vices 6112, 6122, 633, 886 
Computer and related services 84 Accounting, auditing and bookkeeping services 862 Market research and public opinion polling services 864 Management consulting services and related services 
(except arbitration and conciliation services) 865, 866 
Architectural services;  engineering services and integrated engineering 
services, urban planning and landscape architectural services;  related scientific and technical consulting services; technical testing and 
analysis services 8671-8676 
Advertising services 871 
Building-cleaning services and propert y management services 874, 82201-82206 
Sewage and refuse disposal; sanitation and similar services 94 
 
 
Notes to Annex 4  
 
1. The thresholds of Annexes 1-3 apply.  
2. The offer regarding services is subject to th e limitations and conditions specified in the 
Government of the Republic of Armenia' s WTO Schedule of Specific Commitments. 
 3. The conditions specified in the Ge neral Notes apply to this Annex.  GPA/ACC/ARM/1 
 Page 9 
 
 
   
ANNEX 5 
 
Construction Services 
  
 A construction services contract is a contract which has as its objective the realization by whatever means of a civil or bu ilding works, in the sense of Division 51 of the Central Product 
Classification.  
 
Threshold : 
 SDR 5,000,000 for Annexes 1, 2 and 3.  
 
List of construction services offered : 
 All services listed under Division 51.  
 
Notes to Annex 5  
 
1. Construction services are covered in respect of the Ministry of Defence, Police of the RA, National Security Services and State Security Se rvices (Annex 1) only to the extent that such 
construction services are not related to national security and defence. 
 
2. The offer regarding construction services is subject to th e limitations and conditions specified 
in the Government of the Republic of Arme nia's WTO Schedule of Specific Commitments. 
 3. The conditions specified in the Ge neral Notes apply to this Annex. GPA/ACC/ARM/1 
Page 10  
 
   
GENERAL NOTES 
  1. Armenia will not extend the benefits of this Agreement to any contract: 
 
 (a) awarded under an international agreemen t and intended for the joint implementation 
or exploitation of a project by the signatory States; 
  (b) awarded under an international agreemen t relating to the stationing of troops; 
 
 (c) funded wholly or in part by and/or awarded under the particular procedure of an 
international organization. 
 2. A service listed in Annex 4 is covered with respect  to a particular Party only to the extent that 
such Party has included that service in its Annex 4. 
 3. This Agreement shall not apply to procurement of agriculture products made in furtherance of 
agriculture support programmes and human feeding programmes.  4. This Agreement shall not apply to products and services procured with a view to re-sale or to 
use in the production of goods or provision of services  for sale, provided that the contracting authority 
enjoys no special or exclusive right to sell a nd other entities are free to sell it under the same 
conditions as the contracting entity.  5. This Agreement shall not apply to the acqui sition of land, buildings or other immoveable 
property or concerning rights thereon. 
 6. When a specific procurement may impair impor tant national policy objectives in the event of 
regional conflicts or political instability, the Governme nt of the Republic of Armenia may consider it 
necessary in exceptional cases to deviate from the princi ple of national treatment in the Agreement.  A 
decision to this effect should be taken by the Government of the Republic of Armenia.  GPA/ACC/ARM/1 
 Page 11 
 
 
   
NOTE* 
  1. Having regard to provisions of Article XVI  regarding policy considerations relating to 
development, the Republic of Armenia may apply, for participation in procedures for the award of 
procurement contract, offset conditions with aim at  encouraging the local development or improving 
the balance-of-payment accounts, by means of domes tic content, transfer of technology, employment, 
investment or ecological requirements, count er-trade or other similar requirements. 
 
2. This shall be done under the following terms: 
  (a) The Republic of Armenia shall ensure that its contracting authorities indicate the 
existence of such conditions in their tende r notices and specify them clearly in the 
contract documents. 
 
 (b) Suppliers will not be required to purc hase goods that are not offered on competitive 
terms, including price and quality, or to take  any action which is not justified from a 
commercial standpoint. 
  (c) Offsets in any form may be required up to 35 per cent of the contract going down to 
30 per cent after five years, 25 per cent af ter 10 years and 20 per cent after 15 years, 
beginning from the date the Republic of Armenia implements the Agreement. 
 2. (a) At the end of each period mentioned in  paragraph 1(c), the Re public of Armenia will 
submit a report concerning the implementation of this Note. 
 
 (b) When the level of the offset has reac hed 20 per cent, the Repub lic of Armenia will 
consult with the Parties to this Agreement on the level of the use of offset by the 
Republic of Armenia.  The review shall take into consideration inter alia general and 
economic developments in the Republic of Armenia, its trade balance, the actual performance within the framework of this  Agreement and the views of the other 
Parties. 
 
                                                     
 
* The offsets are prohibited under Article V:6 of the revised GPA, GPA/W/297 of 11 December 2006. GPA/ACC/ARM/1 
Page 12  
 
   
APPENDIX II 
 
PUBLICATIONS UTILIZED BY PARTIES FOR THE PUBLICATION 
OF NOTICES OF INTENDED PROCUREMENT - PARAGRAPH 1 
OF ARTICLE IX AND OF POST-AWARD NOTICES –  
PARAGRAPH 1 OF ARTICLE XVIII 
  
Procurement official electronic bulletin: 
www.procurement.am
 
 
 
APPENDIX III 
 
PUBLICATIONS UTILIZED BY PARTIES FOR THE PUBLICATION ANNUALLY OF 
INFORMATION ON PERMANENT LISTS OF QU ALIFIED SUPPLIERS IN THE CASE OF 
SELECTIVE TENDERING PROCEDURES - PARAGRAPH 9 OF ARTICLE IX 
  
Currently no such publication exists 
 
 
APPENDIX IV 
 
PUBLICATIONS UTILIZED BY PARTIES FOR THE PUBLICATION OF LAWS, 
REGULATIONS, JUDICIAL DECISIONS, ADMINISTRATIVE RULINGS OF GENERAL 
APPLICATION AND ANY PROCEDURE REGARDING GOVERNMENT PROCUREMENT 
GOVERNED BY THIS AGREEMENT - PARAGRAPH 1 OF ARTICLE XIX 
 
Procurement official electronic bulletin: 
www.procurement.am
 
 
  GPA/ACC/ARM/1 
 Page 13 
 
 
   
                                  
      
  
SIGMA 
Support for Improvement in Governance and Management 
A joint initiative of the OECD and the European Union, prin cipally financed by the EU 
 
   
 
  
Analysis of the Armenian Public Procurement Law and Implementing 
Decree vis-à-vis the EC Public Proc urement Directives and the Agreement 
on Government Procurement (WTO) 
 
  
December 2008 
 
  
 
    
 
    
 
     
 
 
This document has been produced with the financial a ssistance of the European Un ion.  The views expressed 
herein are those of the author and can in no way be taken to reflect the official opinion of the European Union, 
and they do not necessarily reflect the views of the OE CD and its member countrie s or of the beneficiary 
countries participating in the Sigma Programme. GPA/ACC/ARM/1 
Page 14  
 
   
1. Summary and Scope of the Legal Analysis  
 
Public procurement in Armenia is currently g overned by the Law on Procurement (hereinafter 
referred to as the LP) which came into force on January 1, 2005.  The LP is supplemented by 
secondary legislation which deals with a series of pr ocedural and more practical issues - Government 
Decree No. 853-N of June 5, 2008 (hereinafter referr ed to as the GD853), and which came into force 
in September 2008.  The purpose of this legal analysis is to exam ine the LP and GD853 vis-à-vis  the EC Public 
Procurement Directives (also referre d in this text as to the EC Directives), i.e.: Directive 2004/18/EC
2   
(so-called public sector Directive); Directive 2004/17/EC3  (so-called special sectors or utilities 
Directive) and, the so-called Remedies Di rectives  (i.e. the new Directive 2007/66/EC4and Directive 
89/665/EEC5 and Directive 92/13/EEC6) and the Agreement on Government Procurement of the 
World Trade Organisation (GPA) (adopted on 15  April 1994, revised in December 2006). 
 
In the context if this analysis it is important to  mention that both the GPA and the  EC Public 
Procurement Directives apply only to large contract s whose values are equal to or greater than set 
financial thresholds, and which therefore may be of  interest to providers from other Member States. 
The fundamental EC Treaty principles apply, ho wever, to all procurements including those 
procurements below the set financial thresholds. 
 
The public procurement legislative framework in pl ace in Armenia is generally well structured and 
thought through and basically in line with interna tionally recognised public procurement principles. 
Broadly speaking, the LP is inspired by the UNCIT RAL Model Law. However, a review of the LP 
shows several areas of substantial difference with the EC Public Procurement Directives and GPA. 
The main  differences can be summarised as follows: 
 
• Covered Entities 
- Different definitions are used co mpared to the EC Directives. 
- All public owned commercial companies, even those not operating in the utilities 
sector are covered. 
- Private utilities operating in the utilities sector s on the basis of special or exclusive 
rights are not covered. 
- Associations of one or more public authorities are not covered. 
 
                                                      
2 Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the 
coordination of procedures for the awar d of public works contracts, public supply contracts and public service 
contracts [2004] O.J. L134/114. 
3 Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating 
the procurement procedures of entities operating in the water, energy, transport a nd postal services sectors 
[2004] O.J. L134/1. 
4 Directive 2007/66/EC of 11 December 2007 amending Council Directives 89/665/EEC and 
92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public 
contracts O.J. L335, 20/12/07. 
5 Directive 89/665/EEC on the coordination of laws, regulations and administrative provisions relating 
to the application of review procedures to the award of public supply and public works contracts, O.J. 1989 
L395/33, as amended. 
6 Directive 92/13/EEC coordinating the laws, regulatio ns and administrative provisions relating to the 
application of Community rules on the procurement procedures of entities operating in the water, energy, 
transport and telecommunications sectors,   O.J. 1992 L76/14, as amended.   GPA/ACC/ARM/1 
 Page 15 
 
 
  • Utilities 
- The utilities sector (entities that are covered) is subject to the same public 
procurement rules as the public sector strictu sensu. 
 
• Covered Contracts 
- Concessions are not covered or regulated. 
- Non-purely military items are in practice considered to be covered by state or official 
secrets and therefore they are procured through closed-end tendering. 
 
• Procurement Procedures 
- A different terminology is used compared to the EC Directives. 
- The restricted procedure under the LP is not equivalent to the restricted procedure 
under the EC Directives. 
 
• Publication Requirements 
- No prior indicative notices (PINs) are foreseen. 
- The content of contract notices and contract award notices is not as extensive as  in 
the EC Directives and GPA. 
 
• Qualification Criteria and Documents Required 
- No mandatory exclusion is foreseen for tho se providers that have  been found guilty 
by final judgement of participating in crimin al organisations or of  corruption, fraud or 
money laundering. 
- No list of references or evidence to prove the satisfaction of the qualification criteria 
is contained in the LP (it is left to the discretion of the procuring entities to determine 
which references or evidence to request). 
 
• Contract Award Criteria 
- In practice only the lowest price criterion is applied (except for consultancy services).  
 
• Appeal/Review System 
- No independent review body 
- No detailed procedural rules are in place.  
- Standstill period is not foreseen. 
 A review of the LP and GD853 reveals some procedur al issues that need be addressed in order to 
ensure compliance with international good procurem ent practice (even if those are not specifically 
covered by the EC Directives or GPA). In fact , the EC Directives leave to Member States the 
regulation of the more practical matters of th e procurement procedures. These issues fall beyond the 
scope of this legal analysis and, therefore, they  are only briefly touched upon in Section 3 below. 
 In the context of the Partnership and Cooperation Agreement (hereinafter referred to as the PCA) 
signed by the Government of the Republic of Ar menia and the EU and the European Neighbourhood 
Policy (hereinafter referred to as the ENP), the approximation of the Armenian procurement 
legislation to the EC public procurement legisla tion is amongst the  identified priority activities. 
 
2. Public Procurement Legislative Framewor k of the Republic of Armenia and the EC 
Directives 
 
The LP entered into force on January 1, 2005 and it replaced the previous procurement law which had 
been in force since June 5, 2000. The new LP w as adopted following the 2004 Country Procurement GPA/ACC/ARM/1 
Page 16  
 
  Assessment Report (CPAR) of the World Bank.  The LP is supplemented by the GD853 which 
contains detailed rules on:  
- approving specifications, prior revi ew and procurement financing; 
- formation and activities of bidding committees; 
- checking the minutes of the procurement procedure; 
- the activities of the unit considering complain ts submitted to the Authorised Body and 
supervising the procurement process; 
- procurements outside the territory of the Republic of Armenia. 
 
In addition to the above, the GD853 enumerates  the natural monopoly services for which single-
source procurement applies. The LP is also suppl emented by Instruction No. 426 of 25 April 2005 
issued by the Ministry of Finance and Economy (h ereinafter referred to as the MOFE), which lays 
down the information and/or docum ents required to justify the use of single source procurement. 
 
The LP creates an institutional system characterised  by two main actors:  the Authorised Body 
(hereinafter referred to as the AB), and the State Procurement Agency (hereinafter referred to as the 
SPA). The AB is a division of the MOFE and has regulatory, advisory, monitoring and enforcement 
functions. The AB is part of the organisational stru cture of the MOFE, it is not a legal entity and it 
does not have its own budget. The SPA is a stat e non-commercial organisation, founded by the 
Government of Armenia. The SPA is a legal entity financed by the State Budget and also for a minor 
part by fees for services rendered to specified non-central government procuring entities (like for 
example local communities). In very general terms, the SPA is responsible for the organisation of the 
centralised procurement processes in periodic tenders, thus operating like a sort of central purchasing agency.
7 In accordance with the LP, local self-govern ment bodies and community institutions; the 
Central Bank of the Republic of Armenia; state or community non-profit entities and entities with 
over 50% of shares owned by the state or communities,  even though subject to the LP, are not obliged 
to carry out their procurements in periodic tendering through the SPA.  
The LP and the GD853 constitute a relatively good regulatory framework for public procurement, 
which is well-structured and it is based on the cornerstone public procurement principles of non-
discrimination, equal treatment and transparency. The LP is mainly based on the UNCITRAL Model 
Law and it also reflects some influences from other sources such as the World Bank and the EC 
Directives.  However, a review of the LP shows so me areas of substantial differences with the EC 
Directives. The main observations are made below. 
 
Covered Entities 
 
The LP explicitly covers state bodies and local-self government bodies, state or community agencies, the Republic of Armenia Central Bank, state or co mmunity non-profit organisations and entities with 
over 50% of shares owned by the state or communities.  The scope of the Armenian LP is different from the EC Directives in several aspects. 
 
The LP does not use the definitions of procuring en tities included in the EC Directives. Also, it does 
not explicitly mention entities operating in the utiliti es sector, which are in practice covered by the LP 
as long as they fall within the LP’s definitions of  procuring entities. Thus, as far as the covered 
entities are concerned, the LP is not fully in line with  the EC Directives. In particular, in the LP there 
                                                     
 
 7 It is understood that in view of the development of electronic procurement in the Republic of 
Armenia, the idea is to transform th e SPA from a central procuring agency  to a central Electronic Procurement 
Servicing Centre (EPSC). 
  GPA/ACC/ARM/1 
 Page 17 
 
 
  is no definition that can be considered equivalent to  that of “bodies governed by public law” (as laid 
down in Directive 2004/18/EC and Directive 2004/17/EC ), of “public undertakings” (as laid down in 
Directive 2004/17/EC), as well as of entities operating on  the basis of “special or exclusive rights” (as 
laid down in Directive 2004/17/EC). As a result of th is, and unlike the EC Directives, the LP covers in 
practice all publicly owned commercial undertakings  including the ones not operating in the utilities 
sector, but  it does not cover those private utilities operating on the basis of special or exclusive rights 
granted by a competent authority.  A list of the bodies or categories of bodies covered by the LP does not appear to exist. Furthermore, unlike the EC Di rectives, the LP does not include in the definition of 
procuring entities associations formed by one or more public authorities.  
The GPA’s scope of application is defined for each  Party to the Agreement by Annexes set up by the 
Party concerned and accepted by the other Parties.  
Utilities Sector 
 
The LP does not contain specific provisions concer ning the utilities sector, which, unlike in the EC 
public procurement legislation, is subject to the same public procurement rules as the public sector 
strictu sensu . 
 In the EU context, Directive 2004/17/EC provides fo r more flexible proce dural rules which take 
account of the more commercial environment within which utilities operate. It also contains a general 
exemption mechanism for utility activities in compe titive markets as well as specific exemptions (for 
example, for the purchase of energy or fuel and for the purchase of water).  
Covered Contracts and Exceptions 
 The LP covers contracts for the procurement of go ods, works and services even though the definitions 
are not as extensive as those contained in the EC Directives.  With regard to services, the LP does not reflect the division of services into “priority” (Annex II A) and “non-priority” (Annex II B) services which is contained in the Directive 2004/18/EC and therefore the LP takes a different approach than th e EC Directives on this specific aspect. The LP also 
contains a separate definition of Consultancy Services and the procedures for their award are 
regulated in Section 5 of the law. In accordance with Section 5 of the LP, the procurement of Consultancy Services is characterised by a prequalifica tion stage (this stage is aimed at identifying the 
qualified consultants to be invited to submit a tende r, which cannot be more than 6), and then by a 
tender stage. Consultancy Services may also be pr ocured through single source procurement if the 
justifications mentioned by the LP are satisfied (i .e. the service must be provided “by a concrete 
person with exceptional qualifications” or the provi sion of services “is possible only with the same 
person in case of extension of a previously signed contract or signing a new contract”). It could be 
argued that these conditions are too broadly formulated , which may lead, in practice, to abuse in the 
recourse to the use of single source procurement.  In the case of procurement of Consultancy Services, in general terms, negotiations with the selected consultant concerning the contract conditions are 
allowed (however, no changes to the specificat ions are allowed). The acceptability of these 
negotiations is questionable in the EC context, in  particular when no single-source procurement is 
used.  The LP does not cover either works or services concessi ons (they are not mentioned in the LP at all). 
This is not in line with Directive 2007/18/EC. As  for public services concessions, even though they 
are excluded from the coverage of the EC Direct ives, procuring entities are obliged to apply the 
fundamental principles of the Treaty when awarding th em. It must also be underlined that, in the EU 
context, the award of PPP contracts must follo w the procurement rules contained in Directive GPA/ACC/ARM/1 
Page 18  
 
  2004/18/EC when a specific PPP contract can be classi fied as a public work contract or public works 
concession.  Also, unlike Directive 2004/18/EC, certain types of wo rks or services contracts subsidised directly by 
a public authority by more than 50% and awarded by a private entity are not mentioned or covered by 
the LP. 
 The exceptions in the LP are less extensive than th e ones foreseen in the EC Directives. For example, 
the specific exclusions listed in Art. 16 of Directive 2004/18/EC,
8 as well as the exemptions laid down 
by Directive 2004/17/EC (and mentioned above) are not present in the LP. 
 
It is understood that defence procur ement and national security procur ement, are in principle covered 
by the LP. However, in accordance with Art. 19 of th e LP, when state or offici al secrets are involved, 
closed-end tendering must be used. Closed-end te ndering differs from open tendering because the 
publication of the tender announcement is not required (the invitation must be sent instead to “all 
possible suppliers”). Also, neither contract awar d announcement nor cancellation notice, in case of 
tender cancellation, are published. All the other proc edural rules applying to open tendering apply 
also to closed-end tendering. A special unit within  the Ministry of Defence is responsible for 
conducting all closed-end tenders linked to defence n eeds. It is understood that on the basis of the 
Law on State and Official State Secrets, every y ear, the Government of Armenia establishes which 
items are linked to state or official secrets. It appears that in practice some non-purely military items 
(for example, food or uniforms purchased by the Mi nistry of Defence ) are considered as linked to 
state or official secrets and therefore they are proc ured through closed-end tendering. This approach is 
less strict than the approach of the EC public procurement rules. Directive 2004/18/EC, in fact, 
specifies that Community rules on public procuremen t apply to contracts awarded in the field of 
defence, subject to the exemption system laid down in Article 296 of the EC Treaty. 9 In accordance 
with Art. 296 (1) (b) of the EC Treaty “Any Member State may take such measures as it considers 
necessary for the protection of the essential interests of its security  which are connected with the 
production of or trade in arms, ammunition and war material…”.10 . Article 296 (1) (b) also states 
that “. such measures shall not adversely affect th e conditions of competition in the common market 
regarding products which are not intended for specifically military purposes.”   In this way a clear 
distinction is set out between purely military pr oducts/goods and products/goods which, although used 
in the context of defence are not specifically mi litary, so-called dual-use products (for example, 
computers, food, medicines – which may be used both for civil and defence purposes). In December 
2007, the European Commission adopted a proposal fo r a new procurement directive adapted to the 
specificities of defence to enhance openness and intra-European competition in Member States’ 
defence markets (it will apply to arms, munitions and war material, but also to certain sensitive non-
military security equipments).11 
 
                                                      
8 The specific exclusions under Art. 16 of Directive 2004/18/EC include, among others, public service 
contracts for: the acquisition or rental of land,  br oadcasting material and time, arbitration and conciliation 
services, employment contracts,  certain financial services. 
9 The exemption under Art. 296 of the EC Tr eaty has been dealt with directly in case Commission v 
Spain  (Case C-414/97 Commission v Spain  [1999] E.C.R. I-5585). In this important case, the ECJ took the 
position that the exemption is not automatic but a Member State may invoke it only for the protection of the 
essential interests of its security and the burden  of proof falls on the Member State concerned. 
10 A list of such products was included in Council Decision of April 15, 1958 in Official Journal of the 
European Union C364 E/86  of 20 December 2001.  
11 Proposal for a Directive of the European Parlia ment and of the Council on the coordination of 
procedures for the award of certain pub lic works contracts, public supply contracts and public service contracts 
in the fields of defence and security, Commission of the European Communities, 5.12.2007, COM(2007) 766 
final 2007/0280 (COD).  GPA/ACC/ARM/1 
 Page 19 
 
 
  Also GPA excludes military products, but the excl usion is limited to arms, ammunition and war 
materials12 (thus according to the GPA non-military produc ts purchased by the Ministry of Defence 
should be contracted using regular “civilian” procedures).  It seems that the Armenian practice, where non-milita ry products for the defence sector are considered 
as secret, is not in line with intern ational public procurement regulations. 
 The LP contains another exception which goes beyond wh at is foreseen in the EC Directives, i.e. it 
specifically excludes from its application procurement made outside the territory of the Republic of 
Armenia. In accordance with GD853, in these cases, it is the Head of the covered entity in question 
that, in agreement with the Ministry of Fina nce, shall determine the conditions for making 
procurement. However, it is understood that the valu e f this procurement is in practice very limited. 
 
Basic Public Procurement Principles 
 
The LP stresses that its purpose is to ensure co mpetitive, efficient, transparent, open and non-
discriminatory procurement processes.  The LP provi des for a general principle of equality of 
participation in the procurement process by all in terested persons, including foreign bidders. Foreign 
bidders may be excluded only on the basis of a resolution issued by the Government of the Republic of Armenia in the interests of national security or defence.  In addition to this, the Government of the 
Republic of Armenia  may establish through legislation that certain activities for which a special 
permit/license or the satisfaction of certain criteria is  required, can be exercised only by Republic of 
Armenia legal entities. This provision appears to be too vague and it may lead to unjustified 
exclusions of foreign bidders. 
 
Financial Thresholds 
 The LP applies to public procurement contracts well below the EC financial threshold levels, i.e. it 
applies to all contracts above the value of 1 Million AMD (which corresponds to “one base procurement unit”).  In the EU context, while the principles of the EC Treaty apply to all procurements, the EC Directives 
concern only contracts above certain relatively high financial thresholds – 5.150.00 Euro for 
construction works and works concessions, 1330.000 Euro for supplies and services (for for central 
government agencies). The GPA thresholds are of the same amount (the EU thresholds are harmonised with the GPA thresholds). This is because only these high value contracts are likely to 
attract cross-border competition but also because form al tendering is costly (in terms of money and 
time) and its use can be normally justified only in case it is likely that the benefits outweigh the costs. 
 The EC Directives also lay down detailed rules on the calculation of the estimated value of public 
procurement contracts. No equivalent rules exist in the Armenian LP.  In line with the EC Directives, Art. 24 of the LP forbids unlawful splitting of contracts. 
 
                                                     
 
12 Art. III. 1 of the GPA: “ Nothing in this Agreement shall be construed to prevent any Party from 
taking any action or not disclosing any information that it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition, or war materials, or to procurement 
indispensable for national security or for national defence purposes.”  GPA/ACC/ARM/1 
Page 20  
 
  Procurement Procedures/Methods of Procurement 
 
The LP provides for the following procurem ent procedures/methods of procurement: 
 
- tender (which may be open or closed-end); 
- restricted tendering; 
- request for quotations; 
- competitive negotiations; 
- single-source procurement. 
 
Under the circumstances specified by the LP, a “tender”  can  also be carried out as a two-stage tender. 
Additionally, in case of a  “tender”, a prequalificati on procedure can also be used  (its purpose is to 
allow the identification of the providers that are qualif ied to perform a specific contract and that will, 
therefore, be invited to tender – only a maximum of 6 providers may pre-qualify). In terms of practical implementation it is understood that a pre- qualification procedure is almost always applied 
in case of open tenders. In accordance with the LP an d GD853, open tendering may be either periodic 
or targeted. The SPA is centrally responsible for the organisation of periodic and targeted 
procurement (local self-government bodies and co mmunity institutions; the Central Bank of the 
Republic of Armenia; state or community non-prof it entities and entities with over 50% of shares 
owned by the state or communities, even though s ubject to the LP, are not obliged to go through the 
SPA for their open procedures). Periodic procuremen t is obligatory for all items which are included 
on a list approved by the AB, and which are needed by procuring entities on recurrent basis. Targeted 
procurement, instead, concerns items not covered on  the list issued by the AB. In this latter case, 
every time a need arise, the procuring entity submits  a request to the SPA (including inter-alia the 
draft specifications and the list of the persons to  be included in the bidding committee). In both 
periodic and targeted procurement the SPA provi des a non-voting secretary and signs the resulting 
contracts with the winning providers. 
 Generally speaking, the procurement procedures la id down in the LP are inspired on the UNCITRAL 
Model Law. Thus, the LP uses a rather different term inology from the one used in the EC Directives 
and the procedures used under the LP are generally not in line with the EU ones.  
In very general terms, the EC Directives lay down the following three main  procurement 
procedures:
13 
 
- Open procedure,  under which the contract is adverti sed and all interested providers may 
respond to the advertisem ent by submitting a tender,  
- Restricted procedure , under which the contract is advertised in order to invite providers to 
submit an expression of interest. The procuring entity then selects, amongst those that have 
submitted an expression of interest, whom to i nvite to tender. The restricted procedure, 
therefore, is a kind of a two stage procedure characterised by a pre-qualification process - during which procuring entities assess the providers ’ qualifications and select those that will 
be invited to tender – and a second stage which c onsists in issuing the invitation to tender to 
the selected providers. 
- Negotiated procedure, which may be  with prior publication of a notice  or without prior 
publication of a notice. The former   is similar to the restricted procedure, in the sense that, the 
procuring entity advertises the contract in orde r to obtain expressions of interests and then it 
selects who to invite to negotiate. This pro cedure, however, is more flexible than the 
restricted procedure and it applies, under Direc tive 2004/18/EC, only if specified exceptional 
                                                     
 
13 GPA uses another terminology, but the EU procedures  are considered to be compatible with the GPA 
requirements  GPA/ACC/ARM/1 
 Page 21 
 
 
  circumstances are met.14 In the latter, instead, the procuring entity selects those with whom to 
negotiate without advertising the contract and it can be used only in duly justified 
circumstances. 
 Directive 2004/14/EC recently added another procedure: 
 
- Competitive dialogue  whereby, following the advertisement of a notice and a pre-
qualification process, the contracting authority en ters into a dialogue with potential tenderers, 
to develop one or more suitable solutions for its requirements and on which chosen providers 
will be invited to tender. This procedure is ha lf way, on the one hand, the open and restricted 
procedure, and on the other hand, the negotiated procedure with prior publication of a notice. 
In fact, it is more flexible than the open and r estricted procedure and it is procedurally more 
structured than the negotiated procedure. Th e competitive dialogue procedure can be used 
only in defined circumstances. It is essentially used for complex contracts especially when PPPs are involved. 
 
Directive 2004/18/EC, puts the open procedure and the restricted procedure on an equal footing 
(procuring entities are free to choose between the open procedure or the restricted procedure). Both 
open and restricted procedure involve formal competitive tendering. However, the restricted 
procedure, with its pre-qualification process, allows  the procuring entity to manage the number of 
qualified providers it will invite to tender. Thus  purchasers, taking into account the value of the 
specific contract, its specific nature and complexity  and the cost associated with the evaluation of a 
large number of tenders may decide to pre-qualif y a more limited number of economic operators 
through a restricted procedure in order to make the process more manageable and reduce the costs. 
The choice of using the restricted procedure is  normally linked to a cost/benefit analysis.  
 
Under the LP, open tendering appears to be the pref erred method of procurement. In fact, closed-end 
tendering can be used only if the procurement involves state or official state secrets. Also, the other 
procurement procedures laid down by the LP (i.e . restricted tendering, request for quotations, 
competitive negotiations and single-s ource procurement) may be used only if specified circumstances 
are met. For example, the restricted tendering may be used only “ if the procurement item is not 
covered in the signed procurement contracts und er periodic tenders, and due to the technical 
specifications of the procurement item, this procurement can be done from no more than three 
persons ” (restricted tendering is procedur ally similar to an open procedure with the difference that it 
does not require a public announcement). Thus the c oncept/rationale behind the restricted tendering 
under the LP is different from the one of rest ricted procedure under the EC Directives. 
 
Request for quotations may be used if the procurem ent item is not covered by  periodic tenders and its 
value does not exceed five base procurement units , in case of goods and service, or ten base 
procurement units, in case of works (Art. 21 of the LP). Under this procedure at least two suppliers 
must be requested to submit a quotation. The request for quotations procedure is not stipulated by the EC Directives but this procedure concerns only lo w value contracts (far below the EC thresholds). 
 
Competitive negotiation may be used, if the proc urement item is not covered in the periodic 
procurement contract, and either its value does not  exceed the base procurement unit or it concerns 
urgent/emergency procurement (Art. 22 of the LP).  Single-source procurement may be used, in very general terms, in the following cases only: for items 
that can be procured only from one source (for example due to copyrights, licences etc); for 
urgent/emergency procurement provided that th e item is not covered in the signed periodic 
                                                     
 
14 Under Directive 2004/17/EC, instead, the negotiated procedure with a call for competition may be 
used without justification and it is put on an equal foo ting position with the open and the restricted procedure. GPA/ACC/ARM/1 
Page 22  
 
  procurement contract (this ground is also covere d under the competitive negotiation procedure); for 
additional procurement from the same person (Art. 23 of the LP).  The conditions for the use of competitive negotia tion and single-source procurement under the LP are 
slightly different than the ones foreseen for the use of negotiated procedures under the EC Directives. 
In accordance with the LP, negotiations are allo wed under the first stage of a two-stage tendering 
procedures (two-stage tendering may be used for open tenders when it is not possible to formulate the 
technical specifications and in case of procurement of “ scientific services, including sociological or 
expert surveys ”). 
 
The LP does not contain  provisions concerning framewo rk agreements which are equivalent to those 
of the EC Directives. However, as mentioned abov e, the LP provides for periodic procurement. This 
is a type of framework agreement. Practically, periodic procurement consolidates the needs of a number of procuring entities for items needed on a recurrent basis and it is mainly used for office 
consumables, regular repairs/maintenance (for exampl e of cars), medicines. The procedural aspects of 
periodic procurement are regulated by GD853. In very  general terms, the procedure starts with the 
publication of a notice on open periodic bidding and th e issuance of an invitati on to bid to interested 
providers; providers are requested to submit inform ation about their qualifications and also a bid 
security; the providers that satisfy the qualification criteria set out in the invitation to bid (this checking is done by the Secretary of the bidding co mmittee) are registered as “potential bidders for 
that periodic bidding” and the SPA concludes a “prelim inary contract” with them;  on the basis of the 
“preliminary contract” a registered potential bidder commits itself to submit the bid and also to sign 
the subsequent contract in case it is recognised to  be the successful bidder and it also undertakes to 
deposit an amount equal to its bid security  in case of  failure to meet these obligations; on specified 
quarterly or yearly deadlines (depending on whet her the procurement concerns goods; or works and 
services respectively), the registered potential bidder s are obliged to submit their bids, which will 
include inter-alia the bid price which should be expr essed in unit prices for the items in question and a 
bid security; the bidder that is compliant and offers  the lowest price is declared the winner by the 
bidding committee and that SPA signs the periodic contr act with it; this contract is valid for a quarter 
or a year only (depending on whether it concerns goods; or works and services respectively).  It is understood that the periodic contract does not defi ne the exact quantities, delivery places and delivery 
times but it fixes the prices and the other terms of the contract. In order to make purchasers under the 
periodic contract, procuring entities have to present a request to the SPA, which, for this purpose, will 
conclude a specific agreement with the contractor in question on the basis of the agreed terms and 
prices. Attention is to be paid to the fact that the SPA signs both the periodic contract and also any 
subsequent arrangement based on it. It must also be stressed that the notice on periodic bidding and 
the invitation to bid remain valid for 3 years. Ther efore the system is opened, in the sense that any 
interested provider may apply to become a registered  potential bidder during this three year period. In 
case of changes made to the invitation to  bid a re-registration is re-organised. 
 Under the EC Directives, a framework agreement is defined as an agreement between one or more  
procuring entities and one or more economic opera tors (so-called single provider or multi provider 
framework agreements), the purpose of which is to est ablish the terms, in particular with regard to 
price and where appropriate the quantity envisaged, which govern the  contracts  to be awarded during 
a given period. The definition of framework agr eements under the EC Directives refers to those 
framework agreements that do not impose any bi nding legal obligations on the parties to the 
agreement to buy or sell any of the requirements that may arise,  but that limit themselves to 
establishing the terms and conditions for any subse quent contract that may be concluded under the 
agreement. These framework agreements do not them selves constitute contracts for the purpose of the 
EC Directives since they do not bind the parties. A contract would arise only when an order is placed 
under the framework agreement. It is the non-binding nature of these framework agreements that has 
created the need for specific control under the EC Directives, and especially, under Directive 
2004/18/EC. Under the EC Directives, a framework agre ement is not itself a type of award procedure  GPA/ACC/ARM/1 
 Page 23 
 
 
  strictly speaking, but it is a type of purchasing a rrangement that will follow the rules of one of the 
award procedures foreseen by the EC public proc urement Directives for all phases up to the award of 
contracts based on that framework agreement. Thus , this purchasing arrangement is characterised by 
two main stages: the award of the framework agreem ent itself to one or more providers and the award 
of the individual call-off contracts under the concluded framework agreement. Following the 
conclusion of the framework agreement, the procuri ng entity/ies that is/are party to the framework 
agreement may call-off its/their orders periodically at  a later stage. The award of individual call-off 
contracts varies depending on whether a single-provi der or a multi-provider framework agreement has 
been concluded. In the former case, the contract s that are placed under that agreement, shall be 
awarded within the limits of the terms laid down in the framework agreement (no new tender can be 
submitted).  In the latter case, call-off contracts may be  awarded either by application of the terms laid 
down in the framework agreement without reopen ing competition or by reopening competition and 
using a mini-tender procedure. In any event, when  the call-off contracts are awarded, no substantial 
changes to the terms laid down under the framework agreement are allowed. Th e EC Directives,  and 
in particular Directive 2004/18/EC, regulates also a number of other issues concerning framework 
agreements (for example, methods for calculati ng the estimated value of framework agreements, 
duration, framework agreements awarded by Centra l Purchasing Bodies, inform ing tenderers, contract 
award notices, reporting). Member States are free to choose between different types of framework agreements, for example framework agreements that bind both the procuring entity and the provider; 
framework agreements that bind only the procurin g entity; framework agreements that bind only the 
provider or framework agreements th at bind neither of them. In fact, the EC Directives do not require 
that Member States use a particular type of framework agreement. 
 Also, no special provisions for design contests are included in the LP.  
 
Publication requirements 
 
For procurements above 1 Million AMD, and which do no t relate to state or official secrets, the LP 
prescribes the publication of the following notices: notices for prequalification procedures (in case such a procedure is used); notices for open tende rs (which would also apply in case a two-stage 
procedure is used); notices of the signed procur ement contracts and; announcements/notices of 
cancellation of tendering proceedings (menti oning the grounds for such cancellation). 
 
Since September 2008, all above mentioned notices are published on the web-site of the AB (no 
longer in the Official Gazette) and also in local newspapers as well as being advertised on TV. In case 
of request for quotations and competitive negotiati on procedure for emergency/urgent procurement, 
the LP prescribes that announcements for these pro cedures are published in the press in order to 
identify the persons to be invited to submit a quot ation or to negotiate but the LP does not specify 
their content.  The content of the announcements/notices under the LP appears to be less extensive than the content 
of the corresponding notices under the EC Directives
15 and GPA16. In particular  the announcement 
for open tenders under the LP does not include informati on on whether the contract is divided into lots 
and indication of the possibility of tendering for one,  several or for all lots; time limits for completion 
of the works or delivery time for supplies and ser vices; persons authorised to be present at the 
opening, and date, time and place for such opening ; tender validity period; any guarantee required;  
the criteria for the award of the contract; name a nd address of the body responsible for appeal and the 
information on the dates for lodging appeals or contact details of the service from which such 
                                                      
15 See Commission Regulation (EC) No 1564/2005  of 7 September 2005 establishing standard forms 
for the publication of notices in the framework of public procurement procedures pursuant to Directives 
2004/17/EC and 2004/18/EC of the European Parliament and of the Council.  
16 See Art. VII and XVI of GPA. GPA/ACC/ARM/1 
Page 24  
 
  information may be obtained.  Also the announcem ent of signed contract/contract award notice as 
described under the LP, unlike the EC Directives, does not seem to include, in particular, information 
on the number of tenders received, on the name and address of the successful tenderer; on the price; 
on the proportion of the contract carried out by s ub-contractors; on the name and address of the body 
responsible for appeals and on the dates for lodging appeals or on the contact details of the service 
from which such information may be obtained. 
 Furthermore the LP does not provide for prior indi cative notices (PIN in the terminology of the 
Directives, or notice on planned procurement in the terminology of GPA). Under Directive 
2004/18/EC, the purpose of PINs is to provide info rmation to potential tenderers about forthcoming 
contracts that will be advertised through a noti ce.  However, under the EC public procurement 
legislation the publication of PINs is compulsory only when a procuring entity wants to reduce the time limits for the receipt of tenders. It should al so be noted that the various information notices 
foreseen under the EC Directives are drawn up on th e basis of standard forms developed by the 
European Commission.
  In the GPA contracting entities are “ encouraged ” to publish notices on 
planned procurements. 
 In practice many Armenian contracting authoriti es publish their annual procurement plans, but the 
content of the information made available seems less detailed than the EU prior indicative notices. 
 
Procedural Requirements 
 Although the EC Directives leave to Member States th e regulation of the more practical matters of the 
procurement procedures,  they still set out some gene ral procedural rules. As far as the procedural 
rules are concerned, the LP is not in line with the EC Directives on the main following points: 
 
- the shorter time limits for the submission of tenders in open procedures foreseen by the LP; 
- the absence in the LP of specific provisions that regulate abnormally low tenders; 
- the absence in the LP of specific and detaile d provisions on informing bidders/participants 
about the results of the tender process/prequa lification process and on the debriefing of 
unsuccessful bidders/participants to a prequalification process. 
 
Furthermore, even though GD853 V contains some provisions aimed at guarantying the 
confidentiality of the tender process and tenders ,  these rules are not as exhaustive as the ones 
contained in the EC Directives. In fact, the EC Di rectives  put a particular stress on the necessity to 
guarantee that the integrity of data and the confiden tiality of tenders are preserved and that procuring 
entity examine the tenders only after the deadline for their submission is expired (this is particular 
important when electronic procurement is used). 
 
Technical Specifications 
 
The LP contains rules on technical specifications whic h are in general terms compatible with the EC 
Directives, although they appear to be not as deta iled as the ones contained in the EC Directives. In 
particular, unlike the EC Directives, the LP does not specifically regulate functional/performance 
technical specifications.  In line with the EC Directives and GPA (Art. X), th e LP prohibits the use in technical specifications 
of any reference to a specific “ trade mark, brand name, license, design or model, country of origin or 
concrete source or producer ”. The LP goes on stating that this is allowed only when “ it is impossible 
to describe the procurement item ” and that in this case the word “or equivalent” must be used.  In 
respect of practical implementation it is understood that often the word  “or equivalent” is abused and 
applied also to cases where the procurement item c ould actually be described. In this context, it 
should be noted that the EC Directives put a partic ular emphasis on the fact that any reference to a  GPA/ACC/ARM/1 
 Page 25 
 
 
  specific make or source can be used only in  exceptional  cases “ where a sufficiently precise and 
intelligible description of the subject-ma tter of the contract is not possible ”. 
 
Qualification Criteria and Documents Required 
 With regard to qualification criteria, the LP  provide s for general suitability requirements  as well as 
for “capacity” requirements of providers.  The general suitability requirements of providers can  be summarised as follows: 1) providers shall not 
be bankrupt or under liqui dation; 2) they shall have paid so cial security and taxes and 3) the 
representative of the management board of the provide r (for the three year period prior to the deadline 
for submission of  tenders) must not have been convicted for offences against “economic activities or 
public service”, must have not submitted false data in  order to sign a procurement contract, and must 
not have violated the obligations under a procurem ent contract which has resulted in the unilaterally 
termination of this contract by the procuring entity.  Under the LP, failure to meet one or more of these 
general suitability requirements will lead to the ma ndatory exclusion of the provider concerned. 
 However, unlike the EC Directives, the LP does not  provide for the mandatory exclusion of those 
providers that have been found guilty - by final judge ment - of participating in  criminal organisations 
or of corruption, fraud or money laundering.  
Furthermore, those providers that do not meet th e requirements under point 3 above will be included 
in a sort of blacklist which is published on the AB website and which is based on the information 
received from procuring entities and other bodies (t he blacklist remains valid for three years). 
 It is questionable to what extent such a rule on bl acklisting is compatible with the EC Directives. The 
qualification of tenderers is contract specific,  which implies that a disqualification of a 
supplier/contractor for all contracts on the ground of non-pe rformance is not permitted. The 
establishment of official negative lists for non-perfo rming contractors may be in conflict with the 
Treaty principles on non-discrimination and equal treatm ent. Positive qualification lists are acceptable 
under certain conditions (article 52, EC Direc tives 2004/18 and article 54, EC Directive 2004/17). 
Tenderers’ suitability shall be verified in accordance w ith the rules laid down in article 45, 46, 47, 48 
and 49 of EC Directive 2004/18. Verifica tion of satisfactory past execution of 
works/deliveries/services- relevant to nature of the contract- may be requested in the form of 
certificates issued or countersigned by the competent authority.  In line with the EC Directives, the LP provi des for “capacity” requirements linked to the 
capacity/ability of the provider to perform a spec ific contract and which concern the professional and 
technical qualifications, financial resources and labour resources of the providers concerned. Both the 
LP and GD853 leave to the discretion of the procuri ng entities to determine these criteria.  In this 
context, few words must be addressed to the fact  that, unlike the EC Directives, the LP does not 
mention the possibility for tenderers that are consor tia (i.e. groups of persons/entities) to rely on the 
economic and financial standing or technical and/ or professional ability of the consortia’ members. 
This is probably linked to the fact that the definitio n of “bidder” contained in the LP ,  unlike the EC 
Directives, does not explicitly  include   consortia (i.e. groups of persons/entities). 
 It should also be noted that GD853, fixes a sub-c ontracting limit to 25% of the procurement contract. 
The EC Directives instead allow procuring entities to simply request tenderers to indicate the share of 
the contract to be subcontracted. No limitati on on subcontracting would be allowed under the EC 
Directives.  GPA/ACC/ARM/1 
Page 26  
 
  Unlike the Directive 2004/18/EC, the LP does not la y down the list of references or evidence that 
procuring entities may require from providers to prove that they meet  qualification criteria. Under the 
LP, this is left to the discretion of the proc uring entities. For reasons of legal certainty and 
transparency and in order to avoid discriminator y treatment amongst providers, it would be advisable 
to consider to adopt such lists through secondary legislation. It should be noted that, under the EC 
public procurement legislation, while the list of  references or evidence concerning economic and 
financial standing is not exhaustive, no other re ferences or evidence concerning technical and/or 
professional ability may be requested by procurin g entities except for those specifically listed. 
Additionally, with regard to the general suita bility requirements, the EC public procurement 
legislation indicates the list of evidence that pr ocuring entities must accept as sufficient evidence of 
these criteria. The rationale of the EC rules is to limit the arbitrary discretion of contracting authorities 
and to protect legitimate interests of suppliers.  The LP does not include some qualitative selection criteria, that are provided for by the EC Directives: enrolment on professional or trade regi sters/suitability to pursue the professional activity; 
quality assurance standards and envir onmental management standards. Also official lists of approved 
providers are not covered by the LP.  
Contract Award Criteria  
 
Under the LP a contract is awarded to the “most highly evaluated” proposal. The LP specifies that 
“when deeming the proposal most highly evaluated, in addition to the proposed price, non-price 
criteria ” specified by the Government of the Rep ublic of Armenia are taken into account. No 
secondary legislation has currently been adopted in  the Republic of Armenia setting out the non-price 
criteria that may be taken into account or the te nder evaluation methodologies to be applied when 
non-price criteria are used in order to determine the “most highly evaluated proposal”. Thus a more 
restrictive approach has been adopted which is not in line with the EC Direct ives. In fact, except for 
consultancy services - which are separately regulated  under the LP - in practice only the lowest price 
criterion is applied.  The EC Directives provide for two contract award criteria on which procuring entities may base the award of their public and utilities contracts i.e.: th e lowest price only, or the most economically 
advantageous tender (MEAT). The choice of the contr act award criterion to be used for the award of a 
contract is left to discretion of the procuring entity
17. When the award criterion chosen is the MEAT, 
the procuring entity may use various sub-criteria to  award the contract, which may and will normally 
include price but also other sub-criteria (for exampl e quality; technical merit ; aesthetic and functional 
characteristics; environmental characteristics; runni ng cost; cost-effectiveness;  after-sales service and 
technical assistance; delivery date and delivery pe riod or period of completion. Directive 2004/17/EC 
contains also two additional examples, i.e. commitm ent with regard to spare parts and security of 
supplies18). Also the GPA lists similar evaluation criteria:  price, other costs factors, quality, technical 
merit, environmental characteristics, terms of deliver y (Art. X.8). The EC Directives stress that all the 
criteria used to identify the MEAT must be linked to  the subject-matter of the contract in question and 
their relative weighting must be disclosed and ma de public. No similar provisions are found in the LP 
and GD853. 
                                                      
 17 This is confirmed also by the ECJ in Sintesi case (Case C-247/02 , Sintesi SpA vs. Autorita’ per la 
Vigilanza sui Lavori Pubblici  [2004] E.C.R. I-9215, para. 40). In this case, the subject of dispute was an Italian 
Law which imposed that all works contracts launched unde r an open and restricted procedure shall be awarded 
on the basis of the lowest price only. The ECJ held that national legislation may not impose such a general and 
abstract requirement since it deprives the contracting au thorities of the possibility of taking into consideration 
the nature and the specific characteristics of such contr acts and of the possibility of choosing the best tender. 
 18 There is no doubt, however, that the additional examples of criteria given by Directive 2004/17/EC 
are also allowed in case of public procurement processes launched under Directive 2004/18/EC.   GPA/ACC/ARM/1 
 Page 27 
 
 
   
With regard to consultancy services, the LP provi des for various methods for selecting the winning 
consultant which may be based on price but also on non-price criteria or on a combination of them. The methodologies for selecting the winning consultant  are set down in GD853 IX , which lays down 
a scoring methodology where, inter alia, the scores given for the satisfaction of the qualification 
criteria are added to the scores given to the met hodology concerning the provision of the service in 
question. This is not in compliance with the EC Directives. Under the EC Directives, in fact, the 
qualification of tenderers (qualitative selection stage) and  the evaluation of tenders (award stage) are 
two stages of the evaluation process, which are completely separated from one another, have different objectives and (although governed by the same key principles of non-discrimination, equal treatment 
and transparency) are  governed by different rules.  In general terms, the objective of the qualitative 
selection stage is to determine the tenderers’ suitab ility to perform the contract, while the award stage 
aims to establish which tenderer offers the best solution. Thus, while the qualitative selection stage 
relates to the tenderers, the award stage relates to the tenders. 
 
E-Procurement  
The possibility of using electronic procurement is provided for in the LP (in particular the LP states that communication can be maintained electronica lly; that tender announcements and invitations can 
be transmitted through electronic means (provided that  - if requested - they are also transmitted in 
hard copy); and that, if prescribed, by the invita tion, the tenders can be transmitted electronically). 
However, unlike the EC Directives, the LP does not include a set of minimum rules and requirements 
for electronic procurement.  The EC Directives put electronic and traditional means of communication on an equal footing and they define electronic means as means using “el ectronic equipment for the processing (including 
digital compression) and storage of data which is transmitted, conveyed and received by wire, by 
radio, by optical means or by other electronic magnetic means”. The means of communication chosen 
must be generally available and not restrict ec onomic operators’ access to the tendering procedure. 
Furthermore, the EC Directives point out that the tools to be used for communicating by electronic 
means as well as their technical characteristics  must be: non-discriminatory, generally available and 
interoperable with the information a nd communication technology products in general use . The 
purpose of these provisions is to help to ensure th at procuring entities do not use electronic means of 
communication in a manner that restricts access to tendering procedures and jeopardises competition. The EC Directives also impose specific requirements concerning the devices that operate those tools 
and technologies and that are  used for the electronic transmission and receipt of tenders and for the 
electronic receipt of requests to participate. In order to guarantee access to these devices, procuring 
entities must make available to interested par ties the information regarding the specifications 
necessary for the electronic submission of tenders a nd requests to participate, including encryption. 
These specifications should be indicated in the cont ract notice or tender documents. Furthermore, in 
view of the need  to safeguard the in tegrity and confidentiality of data, the devices  used for the 
electronic communications above mentioned (including for the electronic receipt of plans and projects in contests) must be such as to guarantee, through technical means and appropriate procedures, at least 
the following: 
 
- that the electronic signatures comply with na tional provisions adopted pursuant to Directive 
1999/93/EC
19 on electronic signature (the use of electronic signatures, however, is not 
obligatory but only encouraged); 
- that the exact time and date of  receipt of tende rs or request to participate can be determined 
precisely; 
                                                      
19 Directive 1999/93/EC of the Eu ropean Parliament and of the Council of December 13, 1999 on a 
Community framework for electronic signatures [2000] O.J. L13/12. GPA/ACC/ARM/1 
Page 28  
 
  - that it may be reasonably ensured that before the time limits laid down, no-one can have 
access to the data transmitted; 
- that it may be reasonably ensured that if the above access prohibition is infringed, the 
infringement is clearly detectable; 
- that only authorised persons may set or ch ange the dates for opening data received; 
- that during the different stages of the contract award procedure access to all data submitted or 
part thereof must be possible only through simultaneous action by authorised persons; 
- that data received and opened in accordance with these requirements must remain accessible 
only to persons authorised to  acquaint themselves therewith. 
 
Also the GPA provides for similar (although less deta iled) conditions for electronic procurement (Art. 
V.3).  When documents, certificates or declarations to be submitted do not exist in electronic form, tenderers 
or candidates must undertake to submit them before  the expiry of the time-limits laid down for 
submission of tenders or requests to participate. 
 It should also be noted that if electronic means ar e used, under the EC Directives, a procuring entity is 
able to reduce the time limits for receipt of tende rs. The idea was to provide incentives to contracting 
authorities to invest in electronic procurement systems. Similar provision is lacking in the LP. 
 
Incidentally, it should be briefly mentioned that in December 2004 the Eur opean Commission adopted 
an Action Plan for the implementation of the lega l framework for electronic public procurement. The 
main objective of the Action Plan is to help Me mber States remove obstacles to cross-border 
electronic public procurement and increase efficiency.  
Furthermore, unlike the EC Directives, the LP does not foresee the use of a dynamic purchasing 
system and of electronic auctions. It could be considered to introduce these specific purchasing 
arrangements in the LP in the context of the e-procurement system that is currently under 
development. 
 
Appeal/Review System and Role of the AB 
 In accordance with the LP, allegedl y aggrieved providers may choose to  lodge a complaint against the 
actions of the procuring entity and/or tender commiss ion either before the AB or before the national 
courts (the LP does not foresee the possibility for al legedly aggrieved providers  to submit complaints 
directly to the concerned procuring entities). The decisions of the AB may be appealed before the 
national courts. 
 The LP recognises the right to seek review to any pe rson that claims to have suffered or that can 
suffer from the actions of the procuring entity and/or tender commission. It is understood that 
complaints may be submitted at any stage during the procurement process including during contract 
execution. Additionally, the LP does not provide an y list of decisions that may be subject to 
complaints or any limitations regarding complaints. It  is therefore understood that complaints may be 
lodged against of any decision of a procuring entity.  Complaints to the AB must be submitted in writing.  The AB must reach a decision within a maximum 
of 20 days after the receipt of the complaint. The decision is made by the Head of the AB. The AB 
can make the following decisions with respect to  the procuring entity and/or tender committee: 
prohibit certain actions and decisions; oblige them to  make certain decisions; reconsider the decisions; 
terminate the procurement contract. The AB may al so award damages to aggrieved providers.  No 
indication is contained in the LP of how damages ar e calculated. Furthermore, the AB may decide to 
suspend the procurement process before the decisi on on the complaint is made (therefore no  GPA/ACC/ARM/1 
 Page 29 
 
 
  automatic suspension applies). In any event, no su spension applies if for reasons of defence and 
national security the procurement process must continue.  The LP does not lay down detailed procedural rules fo r the appeal/review procedures. For example, it 
does not lay down the time limits for lodging comp laints/appeals (as a general remark,  setting time 
limits for lodging complaints/appeals would ensure lega l certainty and would also help to make sure 
that decisions are challenged and corrected as soon as possible) and the precise manner for lodging them.  Furthermore, the LP does not provide for a mandatory standstill period. Directive 2007/66/EC on 
improving the effectiveness of review procedures c oncerning the award of public contracts requires 
for all contracts falling within the scope of th e procurement rules (with some limited exceptions)
20  a 
standstill period (prior to contract signature) of at least 10 calendar days following the date on which 
notification of the contract award decision is sent, if notification is by email or fax. Where other 
means of communication are used, a longer period of at  least 15 calendar days must be allowed. If this 
standstill period has not been respected, Directiv e 2007/66/EC requires national courts, under certain 
conditions, to set aside the signed contract , by rendering the contract “ineffective”. 
 The LP provides that a standing unit of the AB is  responsible for handling complaints concerning 
public procurement proceedings. At the time of writing,  this unit has not been created yet .Thus, it is 
understood that complaints are handled by the Publ ic Procurement Division within the AB which it 
also has policy development functions. The fact that  regulatory, advisory and enforcement functions 
are carried out by the same body may present so me problems, not only technical ones (possible 
conflicting interests), but also with regard to th e fact that potential complainants may not feel 
confident in (and therefore may not want to lodge complaints with) bodies that are closely linked to 
the government itself. 
 
It should also be noted that the LP provides that , with regard to local self-government bodies and 
community institutions, the Central Bank of the Repub lic of Armenia, state or community non-profit 
entities and entities with over 50% of shares owned by the state or communities, the functions 
conferred to the AB concerning review of complain ts are respectively dealt with by the community 
council, the Central Bank Board or other dele gated body, the management body of the given 
organisation. 
 In the EC context, it is left to Member States to designate the review/appeal bodies. These bodies may 
be judicial  or non judicial  in character. In accordance with the EC Remedies Directives, in case they 
are non judicial , written reasons for their decisions shall always be given and “provision must be 
made to guarantee procedures whereby any allegedly illegal measure taken by the review body or any 
alleged defect in the exercise of the powers conferred on it can be subject of judicial review or review 
by another body which is a court or tribunal within  the meaning of Art. 234 of the Treaty”. This body 
that is given the powers to review decisions of a non judicial review body (whose decisions are not subject to judicial review) must be independent of  both the contracting authority and the review body 
and must satisfy certain requirements: 
 
- the members of this body must be appointed and leave office under the same conditions as 
members of the judiciary as regards the author ity responsible for their appointment, their 
period of office, and their removal; 
                                                     
 
20 The exceptions to the application of the stands till period concern, contracts for which the prior 
publication of a contract notice is not required; cases where the only tenderer concerned is the one that has been 
awarded the contract; case of contracts based on a fr amework agreement or specific contracts based on a 
dynamic purchasing system (in this case a mandatory sta ndstill period could have an effect on the efficiency 
gains linked to these types of procedures). GPA/ACC/ARM/1 
Page 30  
 
  - at least the President of this independent body shall have the same legal and professional 
qualifications as members of the judiciary; 
- the independent body shall take its decisions following the procedure in which both sides are 
heard; 
- the decisions taken by the independent body must shall be legally binding. 
 
In case Dorsch Consult,
21 the European Court of Justice held that to determine whether a body making 
a reference to the ECJ is a court or tribunal for the purposes of Article 177 of the Treaty (new Article 234 of the Treaty), the following factors must be taken into account: i.e. whether the body is established by law; whether it is permanent; whethe r its jurisdiction is compulsory; whether its 
procedure is inter partes; whether it applies ru le of law; and whether it is independent. 
 Regardless of whether the review/appeal body is judi cial or non judicial, Member States must ensure 
that an effective and rapid review/appeal system is in place.  
GPA also requires a timely , effective, transparent and non-discriminatory administrative or judicial 
review procedure available for dissa tisfied participants (Art. XVIII). 
 GPA provides similar conditions for a review body:  
“Art. XVIII.6 A review body that is not a court shall either be subject to judicial review or 
have procedures that provide that: 
 
(a) the procuring entity shall respond in writing to the challenge and disclose all 
relevant documents to the review body; 
 
(b) the participants to the proceedings (" participants") shall have the right to be 
heard prior to a decision of the review  body being made on the challenge; 
 
(c) the participants shall have the ri ght to be represented and accompanied; 
 
(d) the participants shall ha ve access to all proceedings; 
 
(e) the participants shall, have the right to request that the proceedings take 
place in public and that witnesses may be presented;  and 
   (f) decisions or recommendations relating to supplier challenges shall be 
 provided, in a timely fashion, in writing, with an explanation of the basis for 
 each decision or recommendation.” 
 
The Armenian solution for the review procedures an d for the review body does not fulfil the crucial 
EU and GPA criteria.  
The review procedure laid down by the LP appear s timely, transparent and non-discriminatory. It 
seems to be effective to the extent it has been used in many cases by Armenian companies and the 
Authorized Body has accepted or rejected many co mpanies’ appeals without having to go to the 
Court. However, even if the Authorized Body  can be considered independent from the local 
authorities and the public companies, it cannot be considered legally independent from the 
Government and its agencies, since it is a part of the Ministry of Finance. Therefore, a review body 
(court or tribunal) independent from th e Government should be established. 
                                                     
 
21 C-54/96 Dorsch Consult Ingeniurgesellschaft mbH v Bundesbaugesellschaft Berlin mbH  [1997] 
E.C.R. I-961. para 23.  GPA/ACC/ARM/1 
 Page 31 
 
 
   
3. Public Procurement Legislative Framewor k of the Republic of Armenia and Good 
International Procurement Practice 
 
A review of the LP and GD853 shows that there are al so additional practical pr ocedural issues that 
would need to be addressed in order to ensure compliance with good in ternational procurement 
practice, which are not specifically  dealt with by the EC Directives since they leave the regulation of 
these kind of issues to the Member States.  These issues include in particular:  
- the rejection of tenders at the public tender ope ning (in accordance with good international  
procurement practice only late tenders sha ll be excluded at a public tender opening); 
- tender securities requested for all procuremen ts above 1 Million AMD (tender securities 
requested for low value contracts may discourag e participation of providers and therefore 
reduce competition); 
- no specific and explicit confidentiality obliga tion imposed on the members of the tender 
commission during the evaluation process (in accordance with good international 
procurement practice the members of evalua tion committees should sign declarations of 
confidentiality and impartiality); 
- no specific and explicit regulation of exchange  of requests for clarifications during the 
evaluation process (good international procuremen t practice requires that they are made in 
writing and recorded in the evaluation report). 
 
It is understood that the preparation of standard  bidding documents is currently under way. The 
adoption of standard bidding documents including sta ndard general conditions of contracts would be 
in line with good international procurement practice.  GPA/ACC/ARM/1 
Page 32  
 
   
                                  
      
  
SIGMA 
Support for Improvement in Governance and Management 
A joint initiative of the OECD and the European Union, prin cipally financed by the EU 
 
   
 
  
 
Public procurement in Armenia 
Overview 
  
December 2008 
 
 
 
  
 
  
 
  
 
 
This document has been produced with the financial a ssistance of the European Un ion.  The views expressed 
herein are those of the author and can in no way be taken to reflect the official opinion of the European Union, and they do not necessarily reflect the views of the OE CD and its member countrie s or of the beneficiary 
countries participating in the Sigma Programme.  GPA/ACC/ARM/1 
 Page 33 
 
 
  The objective of the analysis of the public procur ement system in Armenia is to provide basic 
information about the legal framework and practice and to focus on key problems.  The data and documents for the analysis were co llected during Sigma mission to Armenia in October 
2008. 
 
 
Legislative framework  
 
Public procurement in Armenia is regulated by the Law on Procurement (LP). The current LP came 
into force on January 1, 2005 and it replaced the pr evious procurement law which had been in force 
since June 5, 2000. The LP is supplemented by sec ondary legislation which deals with a series of 
procedural and more practical issues – Governme nt Decree No. 853-N of June 5, 2008 (GD853), 
which came into force in September 2008. Th e GD853 contains detailed rules on: approving 
specifications, prior review and procurement fi nancing, bidding committees, minutes of the 
procurement procedure, the activities of the unit cons idering complaints submitted to the Authorised 
Body and supervising the procurement process, procur ements outside the territory of the Republic of 
Armenia. The LP is further supplemented by Instruction No. 426 of 25 April 2005 issued by the 
Ministry of Finance and Economy (MOFE), which lays down the information and/or documents 
required to justify the use of single source procurement.  The LP and the secondary legislation constitute a relatively good regulatory framework for public 
procurement. The LP is generally well-structured  and it is mainly based on the UNCITRAL Model 
Law. 
 
The LP explicitly covers state bodies and local-self government bodies, state or community agencies, the Republic of Armenia Central Bank, state or co mmunity non-profit organisations and entities with 
over 50% of shares owned by the state or communities.  
The scope of the Armenian LP is different from the EC  Directives in several aspects. In the LP there 
is no definition that can be considered equivale nt to that of “bodies governed by public law” 
contained in the EC Directives. Utilities are not expl icitly mentioned (in practice they are covered as 
long as they fall within the LP’s definitions of procuring entities). Thus, private utilities operating on the basis of special or exclusive rights granted by  a competent authority are not covered. Also, no 
definition fully equivalent to those of “public undertakings” as per Directive 2004/17
1 is contained in 
the LP. In practice, all publicly owned commercial undertakings including the ones not operating in the utilities sector are covered by the LP. The fact th at the utilities sector is subject to the same public 
procurement rules as the public sector strictu sensu, does not allow – unlike the EC public 
procurement legislation - for a more flexible a pproach for the utilities sector entities, which would 
take account of the more commercial environment within which they operate.  Furthermore, unlike 
the EC Directives, the LP does not include in the de finition of procuring entities, associations formed 
by one or more public authorities.  The LP applies to all procurement contracts. The LP covers contracts for the procurement of goods, 
works and services even though the definitions are not as extensive as those contained in the EC 
Directives. With regard to services, the LP does not reflect the division of services into “priority” and 
“non-priority” services which is contained in th e EC Directives. The LP also contains a separate 
definition of consultancy services and the procedures for their award are regulated in Section 5 of the 
law. The procurement of consultancy services is charact erised by a prequalification stage, and then by 
                                                     
 
1 Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating 
the procurement procedures of entities operating in the water, energy, transport a nd postal services sectors 
[2004] O.J. L134/1. GPA/ACC/ARM/1 
Page 34  
 
  a tender stage strictu sensu. The LP does not cover either works or services concessions (they are not 
mentioned in the LP at all). Also, unlike Directive 2004/18
2 certain types of works or services 
contracts subsidised directly by a public authority by more than 50% and awarded by a private entity are not mentioned or covered by the LP.  
As for defence procurement, Art. 19 of the LP es tablishes that when stat e or official secrets are 
involved, closed-end tendering must be used (a procedure with no prior publication, where the 
invitation is sent to all potential suppliers). It is understood that on the basis of the Law on State and 
Official State Secrets, every year, the Government  of Armenia establishes which items are linked to 
state or official secrets. It appears that in pr actice some non-purely military items purchased by the 
Ministry of Defence (for example, food) are considered as linked to state or official secrets and 
therefore they are procured through closed-end te ndering. This approach is not in line with 
international regulations (GPA and EC Directives). 
 
The LP provides for a general princi ple of equality of participation in the procurement process by all 
interested persons, including foreign bidders. Howeve r, the Government of the Republic of Armenia  
may establish through legislation that certain act ivities for which a special permit/license or the 
satisfaction of certain criteria is required, can be  exercised only by Republic of Armenia legal entities. 
This provision appears to be too vague and it may l ead to unjustified exclusions of foreign bidders. 
 The procurement procedures laid down in the LP  are generally inspired by the UNCITRAL Model 
Law and therefore they use a different terminol ogy from and are not fully in line with the EC 
Directives.  The LP provides for the following procedures: tender (which may be open or closed-end); restricted tendering; request for quotations; co mpetitive negotiations; single-source procurement. A 
tender may be preceded by a pre-qualification procedure.  
Under the LP, open tendering is the preferred meth od of procurement. In fact, closed-end tendering 
can be used only if the procurement involves stat e or official state secrets. Other procurement 
procedures foreseen by the LP, including restrict ed tendering, may be used only if specified 
circumstances are met. The concept/rationale behi nd the restricted tendering under the LP does not 
correspond to the one of restricted procedure under the EC Directives. The conditions for use of the 
competitive negotiation procedure and the single-sour ce procurement procedure are slightly different 
than in the EC Directives. 
 Unlike the EC Directives, the LP does not provid e for the use of a dynamic purchasing system and 
electronic auctions. These specific purchasing arrang ements could be introduced in the LP in the 
context of the e-procurement system that is curre ntly under development in Armenia. The possibility 
of using electronic means of communication is provi ded for in the LP, even though, differently from 
the EC Directives, a set of minimum rules and requi rements for their use are not laid down. Also, no 
reduction of the time limits for receipt of tenders is foreseen under the LP where electronic means of communication are used.  The publication of contract notices and contract award notices is obligatory for procedures above 1 
Million AMD (however this depends on the type of  procedure that applies) . Since September 2008 
the notices are published on the web-site of the AB  and also in local newspapers as well as being 
advertised on TV. However, the content of the Armenian contract notices and contract award notices is less extensive than the content of the corres ponding notices under the GPA or the EC Directives 
(contract notices under the LP do not include, inter-alia, the criteria for the award of contracts and the 
name and address of the body responsible for appeal . The contract award notices do not include inter-
                                                     
 
2 Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the 
coordination of procedures for the awar d of public works contracts, public supply contracts and public service 
contracts [2004] O.J. L134/114.  GPA/ACC/ARM/1 
 Page 35 
 
 
  alia, information on the number of tenders rece ived). Unlike the EC Directives, the LP does not 
provide for prior indicative notices (PINs) (although each year contracting authorities publish their procurement plans).  With regard to qualification criteria, the LP provi des for general suitability requirements as well as for 
“capacity” requirements of providers. These require ments are less extensive than under the EC 
Directives. Failure to meet one or more of th ese general suitability requirements will lead to the 
mandatory exclusion of the provider concerned. Fu rthermore, those providers that do not meet the 
requirements defined in Art. 5 (2)(d) will be include d in a sort of blacklist which is published on the 
AB website and which is based on the informati on received from procuring entities and other bodies 
(the blacklist remains valid for 3 years). 
 It is questionable to what extent such a rule on bl acklisting is compatible with the EC Directives. The 
qualification of tenderers is contract specific,  which implies that a disqualification of a 
supplier/contractor for all contracts on the ground of non-pe rformance is not permitted. The 
establishment of official negative lists for non-perfo rming contractors may be in conflict with the 
Treaty principles on non-discrimination and equal treatm ent. Positive qualification lists are acceptable 
under certain conditions (article 52, EC Directiv es 200/18 and article 54, EC Directive 2004/17). 
Tenderers’ suitability shall be verified in accordance w ith the rules laid down in article 45, 46, 47, 48 
and 49 of EC Directive 2004/18. Verifica tion of satisfactory past execution of 
works/deliveries/services- relevant to nature of the contract- may be requested in the form of 
certificates issued or countersigned by the competent authority. 
 Unlike the EC Directives, the LP does not provide for the explicit mandatory exclusion of those providers that have been found guilty - by final judge ment - of participating in  criminal organisations 
or of corruption, fraud or money laundering. 
 
Unlike the EC Directives, the LP does not mention th e possibility for tenderers that are groups of 
persons/entities to rely on the ec onomic and financial standing or t echnical and/or professional ability 
of the groups’ members.  Unlike the Directive 2004/18/EC, the LP does not lay down a list of references or evidence that 
procuring entities may require from providers to prove that they meet  qualification criteria. Under the 
LP, this is left to the discretion of the proc uring entities. For reasons of legal certainty and 
transparency and in order to avoid discriminator y treatment amongst providers, it would be advisable 
to consider adopting such lists through secondary le gislation. It should be noted that, under the EC 
public procurement legislation, while the list of  references or evidence concerning economic and 
financial standing is not exhaustive, no other re ferences or evidence concerning technical and/or 
professional ability may be requested by procurin g entities except for those specifically listed. 
Additionally, with regard to the general suita bility requirements, the EC public procurement 
legislation indicates the list of evidence that pr ocuring entities must accept as sufficient evidence of 
these criteria. The rationale of the EC rules is to limit the arbitrary discretion of contracting authorities 
and to protect legitimate interests of suppliers. 
 
Regarding the contract award criteria, except fo r consultancy services – which are separately 
regulated – in practice only the lowest price criterion is applied. This is not only contrary to the EC 
rules, but also may in practice force contracti ng authorities to purchase goods, services and works of 
lower quality, thus endangering the “value for money” principle. 
 
The LP is not in line with the EC Directives also on the other issues: the shorter time limits for the 
submission of tenders in case of open competitive negotiations ; the absence in the LP of specific 
provisions that regulate abnormally low tenders; the absence in the LP of specific and detailed 
provisions on informing tenderers/ candidates about the results of the tender/prequalification process GPA/ACC/ARM/1 
Page 36  
 
  and on the debriefing of unsuccessful tenderers/candi dates. Also, the LP does not specifically regulate 
functional/performance technical specifications. 
 
There also some additional practical procedural issu es identified in the LP, which are not specifically 
dealt with by the EC Directives, like for example th e rejection of tenders at the public tender opening 
(in accordance with good international  procurement pr actice only late tenders shall be excluded at a 
public tender opening); and tender securities request ed for all procurements above 1 Million AMD 
(tender securities requested for low value contract s may discourage participation of providers and 
therefore reduce competition). It is understood that th e preparation of standard bidding documents is 
currently under way.  The LP presents several areas of no n-compliance with the EC Directives and GPA. The application 
of more flexible public procurement rules for the utilities sector,  in line with what provided for by 
Directive 2004/17/EC, should be considered.  Seriou s consideration should also be given to the 
introduction of less complex procedures to take into  account the size of the contracts. It is also 
especially important to consider a number of  procedural issues that would promote good 
procurement practice.  
 
Procurement Operatio ns and Practices 
 
For the State administrations, the contracts are  drafted and awarded by the State Procurement Agency, except the contracts involving State or offi cial secrets and those awarded through a single 
source procedure. The other contracting authorities, particularly the local authorities, may award their 
contracts through the Agency but they are not obliged to do so. As a general practice, they award the 
contracts themselves.  
The role of the State Procurement Agency 
 
The SPA is centrally responsible for the organisati on of the procurement processes in open tendering.  
Open tendering may be periodic or targeted. Periodi c procurement is obligatory for all items which 
are included on a list approved by the Authorised Bo dy (Ministry of Finance) and which are needed 
on a recurrent basis (in practice, it is mainly used for office consumables, routine repairs/maintenance 
(for example for cars), annual rehabilitation of road s, medicines). Targeted procurement, instead, 
concerns items not covered on the list issued by th e AB. In periodic tendering the SPA is responsible 
for conducting the procedure which results in a so rt of framework contract (so-called periodic 
contract) signed between the SPA and the one bidder  that is complaint and offers the lowest price 
(prices are based on units) for that specific periodic tender. The periodic contract remains valid for a 
limited period of time and it is understood that it doe s not define the exact quantities, delivery places 
and delivery times. In order to make purchases unde r a periodic contract, procuring entities have to 
present a request to the SPA, which will conclude  a specific agreement for this purpose with the 
contractor in question on the basis of the agreed terms and prices.  Thus, periodic procurement does 
not correspond to the definition of framewo rk agreements under the EC Directives. 
 The capacity of State administration agencies and lo cal governments to draft their contracts and to 
manage the awarding procedures appears to be often weak (most of the interviewed institutions, even 
those having big procurement budgets , had only one public procurement officer, often not even full-
time). Therefore it seems justifiable at this moment for most of public contracts to be awarded by the State Procurement Agency. Centralization of procur ement may bring many benefits: standardization, 
professionalization, better prices and quality due to the effect of economy of scale. However, such an 
approach also has many drawbacks: slow responsiv eness to the needs of user s, lack of flexibility, 
prolonged procedures, limited competition, difficult access for small and medium-seize companies,  GPA/ACC/ARM/1 
 Page 37 
 
 
  increased risk of corruption. Any irregularities in  the work of the SPA may overshadow the whole 
system.  In the future, the role of the SPA should be re-d efined and more freedom and responsibility should be 
given directly to contracting authorities. It is recommended that the Armenian authorities strengthen 
the capacity of the biggest contracting author ities and local governments before amending the 
Agency’s role. In the future, the SPA could be re-d efined towards a role of a central purchasing body 
(within the meaning of Directive 2004/18/EC) fo r a number of goods and services, where the 
aggregation has been proved undoubtfully beneficial . The SPA plays also important role in other 
procurement procedures (so called targeted tenders ) not covered by periodic tenders (see discussion 
below). Thus the autonomy of contracting authorities is  additionally restricted. In the future the direct 
involvement of the SPA should be limited and it shou ld rather perform advisory activities without any 
mandatory character.  
Procurement planning 
 For a contracting authority the first step of the pr ocedure is to prepare a procurement plan as soon as it 
has adopted the budget of the financial year. This procurement plan provides the list of items to be 
purchased with quantities and prices envisaged. C ontracts can be signed and performed only if 
sufficient financial resources are available for th e fulfillment of the contract. The provisions on 
procurement planning appear very strict and rigi d. Obviously, these requirements aim at preventing 
the public entities from committing themselves without having enough money to pay their 
contractors. However, if the real prices deviate fro m the scheduled ones or if the needs are not exactly 
the same as forecasted, the very detailed character of  the procurement plan may make it very difficult 
to quickly satisfy (unplanned) needs and to u se the available funds. These drawbacks could be 
softened by using framework agreements (within  the meaning of Directive 2004/18/EC) and requiring 
less detailed forecasts (categories of goods or services instead of items, or a sum for a category of 
goods instead of a price for each item for example – similarly as in prior indicative notices stipulated 
by the EC Directives).  
Preparation of technical specifications 
 
The contracting authorities often face difficulties when  they draft the technical specifications for the 
tender documents, due to a lack of experience and available templates (models). They sometimes try 
to overcome this problem by asking for supplie rs’ advice. Thus, it may happen that the tender 
documents favour a particular tende rer (even perhaps unintentionally). This problem could be solved 
by training the purchasers to design neutral and obj ective technical specifications and by providing 
them with models of standard technical specificati ons. Another possibility could be to strengthen the 
advisory activities of the State Procurement Agency , which could provide the contracting authorities 
with its assistance in drafting particular technical specifications (without necessarily being in charge 
of implementing the procedure).  
Tendering committees in contracting authorities 
 During the targeted tender procedure the tenders  are evaluated by a committee set up by the 
contracting authority of at least three members. Th is committee is entitled to approve the texts of the 
contract notice and the tender invitation, open and evaluate the tenders, and determine the winner. 
Moreover, the committee includes a secretary appoi nted by the State Procurement Agency (a 
secretary is an employee of the SPA). This secretary do es not take part in the voting, but is entitled to 
suspend a procedure if he considers that it is irregular. It means th at in practice, the position of a 
secretary is much stronger than the regular (voti ng) members of the tendering committee. When the 
winner has been determined, the contract is signed not by the contracting authority but by the State 
Procurement Agency. Such an organization may br ing more professionalism into the procedures but GPA/ACC/ARM/1 
Page 38  
 
  definitely shifts the responsibility for awarding the c ontract from the contracting authority to the State 
Procurement Agency. With the aim of avoiding su ch a transfer while enabling the contracting 
authorities to lean on the Agency’s competenci es, two changes could be introduced into the 
legislation: the secretary would not be entitled to suspend the procedure but could make comments in 
the minutes to which the contracting authority sh ould reply with a reasoned opinion before awarding 
the contract. In addition, the contract should not be signed by a representative of the Agency, even on 
behalf of the contracting authority, but by the contracting authority itself. In other words, the contracting authorities would be fully responsible fo r their decisions but they could benefit from the 
advisory role of the State Procurement Agency.  Tender security  
In pursuance to Art. 31 of the Law on public procur ement, the tenderers have to provide a tender 
security the amount of which is 2 % of their tender. This requirement was not reported as an obstacle by the private companies met. However, it cannot be  excluded that potential tenderers might consider 
it unjustified and/or expensive and decide not to take part in public tenders. The authorities of 
Armenia could envisage removing this requirement, at least for small contracts.  
Availability of professional training and support 
 
The Ministry of Finance has provided State procurement officers with training sessions. The scale of these trainings however seems very limited. This act ion needs to be continued and extended to the 
local authorities’ officers. In this respect, the development of e-procurement is likely to create 
additional needs but also to provide additional ways of informing and training officers in charge of 
procuring activities.  Size of the procurement market 
 
The State Procurement Agency collects statistical da ta relating to the contracts that it has organized. 
No consolidated statistics relating to the local au thorities and the other entities covered by the Law on 
public procurement are available. In the future, th e e-procurement system that Armenia intends to 
develop should enable the Armenian authorities to get statistics on public procurement. In the short 
term, they probably could get a be tter view of public procurement in Armenia through a questionnaire 
to be sent to all the entities covered by the Law.  
Openness for foreign competition 
 
There is no legal obstacle for fore ign economic operators to apply fo r public contracts in Armenia, 
except for contracts involving national security an d defense interests. In practice, the foreign 
operators’ share in public procurement seems very lim ited but it must be noted that in some cases, for 
instance for computers, goods were obviously ma nufactured abroad even if the corresponding 
contracts were awarded to importing companies established in Armenia.  
 
Complaints Review 
 In accordance with the LP, allegedl y aggrieved providers may choose to  lodge a complaint against the 
actions of the procuring entity and/or tender commis sion either before the Authorised Body (AB) or 
before the national courts. The decisions of the AB may be appealed before the national courts. 
 The LP recognises the right to seek review to any pe rson that claims to have suffered or that can 
suffer from the actions of the procuring entity and/or tender commission. It is understood that  GPA/ACC/ARM/1 
 Page 39 
 
 
  complaints may be submitted at any stage during the procurement process including during contract 
execution even though no provision in this sense is contained in the LP. Additionally, the LP does not 
indicate the decisions that may be subject to complain ts or any limitations regarding complaints. It is 
therefore understood that complaints may be lodged ag ainst any decision of a procuring entity that it 
is considered to be allegedly unlawful. 
 
The AB must reach a decision within a maximum of 20 days after the receipt of the complaint. Within 3 days from the receipt of the complaint, the AB announces the complaint received in the press 
without indicating the name of the complainant. Any person/s whose interests have been allegedly 
infringed for the same reasons as th e ones at the basis of the announced  complaint can participate in 
the review proceeding by submitting a separate comp laint to the AB. Failure to submit such a 
complaint will result in the loss of the right to subsequently submit a complaint on the same grounds. 
 In general terms, the AB can make the following deci sions with respect to the procuring entity and/or 
tender committee: to prohibit certain actions and d ecisions; to oblige to make certain decisions; to 
reconsider the decisions; to terminate the procurem ent contract. The AB may also award damages to 
aggrieved providers.  The decision of the AB on th e complaint must be sent to the complainant/s 
within 5 working days from its adoption. In accord ance with GD853 it is also published on the AB’s 
website. The AB may decide to suspend the procur ement process before the decision on the complaint 
is made (therefore no automatic suspension applies). In any event, no suspension applies if for reasons 
of defence and national security the procurement process must continue. 
 
The LP does not lay down detailed procedural rules for the review procedures. For example, it does not lay down the time limits for lodging complain ts and appeals. Furthermore, the LP does not 
provide for a mandatory standstill period. This is an incompatibility with Directive 2007/66
3. 
 
The LP provides that a standing unit of the AB is  responsible for handling complaints concerning 
public procurement processes. At the time of writing,  this unit has not been created yet .Thus, it is 
understood that complaints are handled by the Pub lic Procurement Division within the AB under its 
monitoring functions (the Public Procurement Divi sion has also policy development functions). The 
fact that regulatory, advisory and enforcement functions are carried out by the same body (AB) may present some problems, not only technical ones, but al so may create conflict of interests. Additionally, 
potential complainants may not feel confident in bodies that are closely linked to the government 
itself (and therefore may not want to lodge complaints with).  It should also be noted that the LP provides that , with regard to local self-government bodies and 
community institutions, the Central Bank of the Repub lic of Armenia, state or community non-profit 
entities and entities with over 50% of shares owned by the state or communities, the functions 
conferred to the AB concerning review of complain ts are respectively dealt with by the community 
council, the Central Bank Board or other dele gated body, the management body of the given 
organisation.  The number of complaints lodged with the AB by  dissatisfied tenderers in 2007 was between 15 and 
19, while in the period January-October 2008 it has incr eased to 40. Only a very few cases have been 
appealed before the Court.  In the EC context, it is left to Member States to designate the review/appeal bodies. These bodies may 
be judicial  or non judicial  in character. The body that is given the powers to review decisions of a non 
                                                     
 
3 Directive 2007/66/EC of 11 December 2007 amending Council Directives 89/665/EEC and 
92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public 
contracts O.J. L335, 20/12/07. GPA/ACC/ARM/1 
Page 40  
 
  judicial review body (whose decisions are not subject to judicial review) must be independent of both 
the contracting authority and the review bod y and must satisfy certain requirements. 
 
The Armenian solution for the revi ew procedures and for the review  body does not fulfil the crucial 
EU and GPA criteria.  
Even if the Authorized Body can be considered independent from the local authorities and the 
public companies, it cannot be considered le gally independent from the Government and its 
agencies, since it is a part of the Ministry of Fina nce. Therefore, a review body (court or tribunal) 
independent from the Government should be established.  
 
Recommendations 
 
Sigma would recommend to consider the following actions for improvement of public procurement 
system in Armenia: 
 
• Adoption of a  new public procurement law , modelled closely on the EC public 
procurement Directives (or to amend the curre nt law). New public procurement legislation 
should be harmonised with acquis communautaire especially in the following areas: 
o Scope of the regulation (inclusion of bodies governed by public law, inclusion of all 
(also private) entities operating in the utilities sectors, inclusion of associations of contracting authorities, exclusion of p ublic companies operating in commercial 
sectors), 
o Procurement regime for utilities (transposition of the Directive 2004/17 providing for 
more flexible procurement procedures for the utilities), 
o Defence procurement, 
o Procedures modelled on the EU procurement procedures, 
o Publication requirements fully in line with the EU methods (above the EU 
thresholds), 
o Qualification requirements and procedures, 
o Contract award criteria (introduction of the concept of the most economically 
advantageous offer), 
o Review procedures in line with the EU re quirements (including the introduction of 
the “stand-still period”). 
 
• Changes in the institutional set-up 
o Establishment of an indepe ndent review body (tribunal)  
o The role of the State Procurement Agency re-defined – more focus on assistance, less 
direct involvement in procurement procedures conducted by contracting authorities 
(the position of contracting authorities strengthened),  
o Centralised procurement of the State Procurement Agency limited to a few items 
where benefits of aggreg ation have been proved, 
 
• Changes in practice 
o More training, advice and support given by the State Procurement Agency and 
Ministry of Finance to procurement officers in contracting authorities, 
o Development of operational tools (manua ls, guidelines, model tender documents, 
model technical specifications, standard contracts). 
 
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