26 May 2025

National Regime in Procurement and Import Substitution by State-Owned Companies

May 26, 2025

BRACE Law Firm ©

On January 1, 2025, a new system for the national regime (the "national regime", "import substitution") took effect. This represents a global reform aimed at creating uniform procurement rules under Federal Law No. 44-FZ dated April 5, 2013, On the Contract System in the Procurement of Goods, Works, and Services for State and Municipal Needs (the "Law No. 44-FZ", "contract system") and Federal Law No. 18.07.2011 No. 223-FZ On Procurement of Goods, Works, and Services by Certain Types of Legal Entities (the "Law No. 223-FZ", "Procurement Law", "corporate procurement system").

Uniform rules and conditions for the admission of goods, works, and services ("GWS") have been introduced for both Law No. 44-FZ and Law No. 223-FZ, aimed at protecting domestic manufacturers and the market. The principle of equal opportunities for both Russian and foreign goods and suppliers has been declared, except for those GWS subject to the national regime. In such cases, safeguard measures (the "safeguards", "forms of national regime") apply: prohibition, restriction, and preference. A specific tool of the national regime is ensuring a minimum share of Russian goods.

However, it is impossible to establish absolutely identical rules for Law No. 44-FZ and Law No. 223-FZ, as these procurement systems differ significantly: they have different goals and objectives, different compositions of customers, and differences in procurement procedures. Therefore, despite the declared unification, the national regime conditions for the contract system are not identical to the import substitution rules for corporate procurement.

This article examines the specifics of applying the national regime in procurements conducted under Law No. 223-FZ and provides a comparative analysis with the rules for Law No. 44-FZ.

National Regime in Procurement by State-Owned Companies: A Brief Historical Overview

The regulatory framework for the national regime in Law No. 44-FZ and Law No. 223-FZ did not develop synchronously. Until 2025, the Procurement Law itself lacked specific requirements for customers regarding import substitution, and the conditions for access to foreign goods were regulated by scattered regulatory acts.

The corporate procurement system used the concept of "priority of goods of Russian origin", established in Part 8 of Article 3 of Law No. 223-FZ. This provision briefly stated that the Government of the Russian Federation determines the rules for prioritizing Russian GWS over foreign ones and sets a minimum share of domestic goods for customers. To implement this priority mechanism, the Government of the Russian Federation issued Decree No. 925 dated September 16, 2016, On the Priority of Goods of Russian Origin and Works and Services Performed or Rendered by Russian Persons Relative to Goods Originating from a Foreign State and Works and Services Performed or Rendered by Foreign Persons (currently repealed). In nature, the priority regime is an analog of the current "preference" safeguard: during participant selection, a domestic goods proposal receives a 15% advantage over other bidders relative to its price offer.

The percentage of the mandatory share of Russian goods procurement and the list of these goods were approved by the Government of the Russian Federation in a separate decree.[1]

In Law No. 44-FZ (unlike the Procurement Law), a specific provision on the national regime has always existed. Until 2025, Article 14 of Law No. 44-FZ defined the conditions for admitting foreign goods in the form of prohibitions and restrictions, with the application procedure established by the Government of the Russian Federation. Additionally, the contract system (like Law No. 223-FZ) required customers to ensure a minimum share of Russian goods procurement, the percentage of which was also approved by the Government. As of January 1, 2025, this requirement for the contract procurement system has been abolished.[2]

Thus, until 2025, the primary tool of the national regime under Law No. 223-FZ was priority (preference), while Law No. 44-FZ relied predominantly on prohibition and restriction mechanisms. The reform combined all three safeguard tools (prohibition, restriction, and preference), applying them equally to both Law No. 44-FZ and Law No. 223-FZ.

In 2024, a large-scale project to unify import substitution rules was implemented. As a result, uniform national regime rules for procurement under Law No. 44-FZ and Law No. 223-FZ were codified at the legislative level. Federal Law No. 318-FZ dated August 8, 2024, On Amending Certain Legislative Acts of the Russian Federation and Recognizing Certain Provisions of Legislative Acts of the Russian Federation as Void (the "Law No. 318-FZ") was issued. Part 8 of Article 3 of Law No. 223-FZ expired on January 1, 2025. In its place, a new Article 3.1-4 was introduced into the Procurement Law, which practically mirrors the structure and content of Article 14 of Law No. 44-FZ. Article 3.1-4 establishes the foundations of the national regime for corporate procurement:

It characterizes the main safeguard measures (prohibition, restriction, and preference);
It lists specific obligations for customers to comply with these national regime rules;
It establishes reporting rules for the volume of Russian goods procurement.

By January 1, 2025, all customers operating under Law No. 223-FZ were required to align their procurement policies with the new requirements and post them in the EIS; otherwise, the policy is considered illegitimate (Part 9, Art. 5 of Law No. 318-FZ). Law No. 318-FZ entered into force on October 1, 2024, but Article 3.1-4 applies from January 1, 2025:[3]

To procurements for which notices were posted (or proposals sent to participants) starting from January 1, 2025;
To single-source procurement contracts concluded starting from January 1, 2025.

Detailed rules for the new national regime are set forth in Government of the Russian Federation Decree No. 1875 dated December 23, 2024, On Measures to Provide a National Regime for the Procurement of Goods, Works, and Services for State and Municipal Needs and the Procurement of Goods, Works, and Services by Certain Types of Legal Entities (the "Decree No. 1875"). This document details import substitution mechanisms and contains lists of GWS for applying specific safeguard measures. The new system raised many questions. Consequently, the Ministry of Finance of the Russian Federation (the "Ministry of Finance") issued Information Letter No. 24-01-06/8697 dated January 31, 2025, On the Application of Provisions of Government of the Russian Federation Decree No. 1875 dated December 23, 2024 (the "Letter dated January 31, 2025"). This document clarifies practical aspects of applying the national regime, with particular focus on procurement under Law No. 223-FZ.

The Concept of the National Regime under the Procurement Law

The safeguard mechanism of the national regime manifests in three forms (Clause 1 of Decree No. 1875, Part 2, Art. 3.1-4 of Law No. 223-FZ):

Prohibition: A ban on procuring foreign goods (including when the subject of procurement is works or services involving the supply of such goods). There is also a ban on procuring works or services performed by foreign persons. The list of such GWS is established in Annex No. 1 to Decree No. 1875;
Restriction: Limited possibilities for procuring foreign goods (including when the subject of procurement is works or services involving the supply of such goods). The possibility of procuring works and services performed by foreign persons is also restricted. The list of restricted GWS is established in Annex No. 2 to Decree No. 1875;
Preference: Granting an advantage to goods of Russian origin over other participants during the procurement process.

These safeguard measures apply equally to procurements under both Law No. 44-FZ and Law No. 223-FZ.

However, for customers operating under Law No. 223-FZ, an additional "fourth" safeguard measure is provided: ensuring a minimum mandatory share of Russian-origin goods procurement (the "minimum share", "procurement limit") (Clause 2 of Decree No. 1875). The specifics are that not all customers under Law No. 223-FZ must maintain the minimum share; only certain categories of organizations defined in Decree No. 1875 are required to do so. These categories are exempt from the obligation to comply with admission conditions regarding prohibition, restriction, and preference. Conversely, other customers must apply the general national regime rules but are not required to ensure the minimum share of Russian goods.

It should be noted that the legislative reform fundamentally changed the situation regarding the procurement share limit as of January 1, 2025: until 2025, the obligation to ensure a minimum share was imposed on customers under both Law No. 44-FZ and Law No. 223-FZ. From 2025, this requirement for the contract system was abolished: Article 30.1 of Law No. 44-FZ expired, mentions of the minimum share were removed from Article 14 of that law, and maintaining the Russian goods procurement limit is now only required for customers under Law No. 223-FZ.

Thus, currently, within the scope of the national regime, all customers under the Procurement Law can be divided into two main groups:

Group One: Organizations that must comply with all safeguard measures under Decree No. 1875 (prohibition, restriction, and preference) but are not required to ensure a specific share of Russian goods in their procurements;
Group Two: Organizations that must maintain a minimum share of Russian goods procurement but are not required to apply the prohibition, restriction, and preference rules (except for certain types of procurements).

It can be assumed that this distribution of obligations aims to balance the interests of the state and the customers. Since many commercial organizations whose procurement is not aimed at state needs operate under Law No. 223-FZ, certain customers are given the alternative of a minimum Russian goods share instead of full compliance with all national regime rules.

Therefore, to apply the law correctly, every customer operating under Law No. 223-FZ must first determine their category. In practice, this task may be difficult: Decree No. 1875 lacks a clear, visual structure for quick and error-free classification. The text refers to Clauses 1–3 of Part 2 of Article 1 of Law No. 223-FZ, which contain a long list of various types of organizations and legal forms. The Letter dated January 31, 2025, provides more detailed clarifications, yet even these do not perfectly reflect the classification. The Letter divides all Law No. 223-FZ customers into three groups rather than two (Clause 2.1 of the Letter dated January 31, 2025). The "third group" includes organizations that ensure the Russian goods procurement limit and are not required to apply prohibition, restriction, and preference mechanisms, but must comply with these measures when conducting certain types of procurements. The inaccuracy of this classification is that customer categorization depends on the type of organization, whereas the "third group" is formed based on the subject matter of the procurement rather than the nature of the legal entity.

Dividing Law No. 223-FZ customers into two groups aligns with the logic of Decree No. 1875 and allows for a clearer definition of the organization's rights and obligations regarding the national regime.

Customers under Law No. 223-FZ Required to Ensure a Minimum Share of Russian Goods Procurement

Customers required to ensure a minimum share of Russian-origin goods can be characterized as follows (Para. 2, Subclause "l", Clause 4 of Decree No. 1875; Clause 2.4 of the Letter dated January 31, 2025):

They are organizations specified in Clauses 1–3 of Part 2 of Article 1 of Law No. 223-FZ;
They include only those categories of organizations that are business companies (joint-stock companies or limited liability companies).

Thus, the status of a customer subject to the procurement limit regime can be determined using the following algorithm:

From the list of all organizations operating under Law No. 223-FZ, identify the entities listed in Clauses 1–3 of Part 2 of Article 1 of Law No. 223-FZ;
From that category, isolate exclusively those that are business companies.

Consequently, the following types of legal entities are subject to minimum share requirements:

Business companies in which the Russian Federation, a constituent entity of the Russian Federation, or a municipality (the "state participation share") holds more than 50%;
Subsidiaries of the aforementioned organizations with state participation, if their share in the subsidiary's charter capital exceeds 50%;
Business companies in which more than 50% of the participation share belongs to the subsidiaries of the aforementioned organizations with state participation.

There are exceptions to this list. These customers are not required to comply with the minimum share requirement if they are included in the consolidated register of defense-industrial complex organizations (the "DIC consolidated register") approved by the Government of Russia.[4]

Customers subject to the minimum share requirement are not required to apply the specific regimes of prohibition, restriction, and priority (Subclause "m", Clause 4 of Decree No. 1875). However, there is an exception to this rule. For specific categories of procurement, safeguard measures must be observed (Clause 2.3 of the Letter dated January 31, 2025):

Procurements for the execution of the state defense order aimed at forming a stock of products, raw materials, materials, semi-finished products, or components provided for by Clauses 3–3.2 of Article 7.1 of Federal Law No. 275-FZ dated December 29, 2012, On the State Defense Order;
Procurements for the functioning of the critical information infrastructure of the Russian Federation;
Procurements in the field of atomic energy use;
Procurements aimed at implementing a technological sovereignty project included in the register of technological sovereignty projects and structural adaptation projects of the Russian economy.

When conducting these types of procurements, compliance with the prohibition, restriction, and priority regimes is required, but this does not waive the customer's obligation to ensure the minimum share (if the organization is otherwise subject to that requirement).

Rules for Applying the Minimum Share Regime for Russian Goods

The minimum share of Russian goods procurement is defined as a percentage of the total volume of goods of the relevant category procured by the customer in the reporting year (Clause 2 of Decree No. 1875). The list of goods subject to the quota is established in Annex No. 3 to Decree No. 1875 and currently contains 277 items. To prepare procurement documentation, an OKPD 2 code is specified for each item.

The list includes goods in high demand for economic activity, such as:

Paper and cardboard;
Work and hand tools;
Portable computers weighing no more than 10 kg (e.g., laptops and tablets), computing machines, and data processing devices;
Television cameras and video cameras;
Audio equipment;
Telephone sets of various types and electronic communication devices;
Household electronic appliances;
Measuring instruments and tools;
Lighting electrical equipment and various types of lamps;
Furniture (including office furniture).

The list also includes industrial equipment and machine tools, lifting and special equipment, goods for the railway industry (e.g., railcars) and the shipping industry (e.g., ships and tankers), medical goods, and musical instruments.

The law requires customers to generate and post Reports on the Volume of Russian-Origin Goods Procurement and Works or Services Performed by Russian Persons (the "Report") (Part 6, Art. 3.1-4 of Law No. 223-FZ). This requirement applies to both groups of customers: those ensuring the minimum share and those following the prohibition, restriction, and preference regimes.

The Report is generated annually by February 1 and posted in the Unified Information System ("EIS"). The Report is created by processing information from the register of contracts contained in the EIS. Even if the law does not require the Report to be posted in the EIS, the customer must still generate the procurement volume information, prepare the Report, and submit it to the Ministry of Finance. The Ministry reviews the Report by March 1 and evaluates the procurements performed by the customer during the reporting year (Part 7, Art. 3.1-4 of Law No. 223-FZ). The standard Report form and requirements for its content, as well as the review and evaluation procedure, are approved in a special annex to Decree No. 1875.

Customers under Law No. 223-FZ Required to Comply with Safeguard Measures During Procurement

This category of customers is not required to ensure a minimum share of Russian goods. Instead, they are fully subject to requirements regarding prohibition, restriction, and priority regimes (Para. 3, Subclause "l", Clause 4 of Decree No. 1875; Clause 2.2 of the Letter dated January 31, 2025).

This group includes:

State corporations;
State companies;
Public law companies;
Autonomous institutions;
Budgetary institutions (operating under Law No. 223-FZ);
State and municipal unitary enterprises (operating under Law No. 223-FZ);
Federal unitary enterprises of significant importance for ensuring the rights and interests of citizens of the Russian Federation, national defense, and state security;
Organizations included in the DIC consolidated register;
Natural monopoly entities;
Organizations engaged in regulated activities (electricity supply, gas supply, heat supply, water supply, water disposal, wastewater treatment, solid municipal waste management) (the "regulated activities").

If natural monopoly entities or organizations with regulated activities are simultaneously:

Business companies with a state participation share exceeding 50%;
Subsidiaries of business companies with state participation, if their share in the subsidiary's charter capital exceeds 50%;
Business companies in which over 50% of the participation share belongs to the subsidiaries of an organization with state participation;

they still fall into the category of customers complying with safeguard measures (Clause 2.2 of the Letter dated January 31, 2025). The minimum share rules established for business companies with state participation do not apply to them, and they are not required to ensure the Russian-origin goods procurement quota.

National Regime Based on Procurement Methods under Law No. 223-FZ

The effect of safeguard measures (prohibition, restriction, and preference) varies depending on whether the procurement is competitive or non-competitive. The mechanisms for applying these measures in Law No. 44-FZ and Law No. 223-FZ operate differently. It must be noted that the classification of procurement methods in Law No. 44-FZ differs from those in Law No. 223-FZ. While the division into competitive and non-competitive procurements exists in both systems, the specific types of procurements differ.

Competitive procurements under Law No. 44-FZ may be conducted using the following methods (Part 2, Art. 24 of Law No. 44-FZ):

Tender (open electronic tender, closed tender, closed electronic tender);
Auction (open electronic auction, closed auction, closed electronic auction);
Electronic Request for Quotations.

Non-competitive procurements under Law No. 44-FZ consist only of single-source procurements. This classification follows from the text of Part 1 of Article 24 of Law No. 44-FZ. The types of single-source procurements are listed in Article 93 of Law No. 44-FZ. It should be noted that the presence of multiple bidders does not necessarily make a procedure competitive. Therefore, the "off-the-shelf procurement" procedure, which takes place on an electronic platform and involves collecting and evaluating several offers from different participants, is classified as a non-competitive method (Part 12, Art. 93 of Law No. 44-FZ).

In the Procurement Law, competitive and non-competitive procurements are structured differently. A special list of criteria was developed for competitive procurements to distinguish them from non-competitive ones.

Competitive procurement in the Law No. 223-FZ system is characterized by the following features (Part 3, Art. 3 of Law No. 223-FZ):

Information about it is posted in the EIS and available to an unlimited number of persons (if a closed procurement is conducted, the customer sends invitations to at least two participants);
Participants compete with each other for the right to conclude a contract during the procurement procedure;
The subject of procurement must be described in the documentation to ensure competition. Only functional or technical characteristics of the GWS and quality requirements should be specified. It is impermissible to specify individualization means (i.e., trademarks or service marks, trade names, patents, utility models, industrial designs). If a trademark is specified, the phrase "or equivalent" must be added.

Competitive procurement methods under Law No. 223-FZ (Clause 1, Part 3.1, Art. 3 of Law No. 223-FZ):

Tender: open tender, closed tender, and electronic tender;
Auction: open auction, closed auction, and electronic auction;
Request for Quotations: electronic Request for Quotations or closed Request for Quotations;
Request for Proposals: electronic Request for Proposals or closed Request for Proposals.

Non-competitive procurement methods are not explicitly defined in Law No. 223-FZ. Unlike Law No. 44-FZ, which has a strict list of single-source contracts, Law No. 223-FZ does not. There is also no regulatory definition of non-competitive procurements. When conducting corporate procurements, customers apply the a contrario method: procurements that do not meet the criteria for competitive procurements are non-competitive. The customer independently determines the types of non-competitive procurements (including single-source) and their procedures in their policy (Part 3.2, Art. 3 of Law No. 223-FZ).

In Law No. 223-FZ, single-source procurement is by no means the only non-competitive method. This is a significant difference between the corporate procurement system and the contract system. Therefore, procurement policies may include procedures that involve multiple participants yet are qualified as non-competitive.

The most common of these are:

Electronic non-competitive procurement where only small and medium-sized enterprises ("SMEs") may participate (the "procurement among SMEs"). This procurement follows a special procedure.[5] Searching for and selecting participants occurs electronically on a specialized platform. The procurement price must not exceed 20 million rubles. Participants (SMEs) post their offers on the platform. The customer publishes a request for goods. An automated search process is then launched, and the operator looks for offers meeting the customer's request. The customer evaluates the offers and concludes a contract with a participant;
The second popular non-competitive method with multiple participants is the conclusion of a "small contract" or "small procurement". The customer determines the maximum allowable price for such procurements (e.g., a contract for no more than 100,000 rubles). The counterparty is selected based on the lowest price offer or the best contract performance conditions. The search occurs through market analysis and evaluation of commercial offers received in response to targeted requests. The customer may post an announcement online, including on electronic platforms. Frequently, the "Electronic Store" subsystem of the AIS GZ is used. Therefore, these procurements are called "electronic store" or simplified procurement procedures.

Thus, non-competitive procurements under Law No. 44-FZ assume only one bidder (except for off-the-shelf procurements under Part 12, Art. 93 of Law No. 44-FZ). In non-competitive procurements under Law No. 223-FZ, multiple participants may be present, and the forms of such procurements are not limited by law.

The national regime's effect in Law No. 44-FZ and Law No. 223-FZ differs based on the procurement methods.

The prohibition regime applies identically in both the contract system and the corporate procurement system (Clause 4.1 of the Letter dated January 31, 2025; Clause 1, Part 4, Art. 14 of Law No. 44-FZ):

In Law No. 44-FZ — to any procurements (competitive and non-competitive, i.e., single-source procurements);
In Law No. 223-FZ — to any procurements (competitive and non-competitive, including single-source procurements).

Restriction and preference regimes operate differently in Law No. 44-FZ and Law No. 223-FZ.

In Law No. 44-FZ, restriction and preference apply as follows (Clause 4.2 of the Letter dated January 31, 2025; Clauses 2 and 3, Part 4, Art. 14 of Law No. 44-FZ):

During any type of competitive procurement;
During only one type of non-competitive procurement: off-the-shelf procurement under Part 12 of Article 93 of Law No. 44-FZ. These safeguard measures are not used in other single-source procurements.

In Law No. 223-FZ, restriction and preference have a broader scope (Clause 4.3 of the Letter dated January 31, 2025):

During any type of competitive procurement;
During non-competitive procurements involving the submission of bids by several participants. For example, the national regime will apply to procurements among SMEs.

Note that the Letter dated January 31, 2025, refers to several bids (not several participants). Under Law No. 223-FZ, the term "bid for participation" refers not only to bids for competitive procurements but also to any other document sent to a customer for participation in non-competitive procurements (this may not necessarily be a "bid"; the customer determines the type of document). Such a document is considered a bid regardless of the procurement method (Part 5, Art. 3 of Law No. 223-FZ).

Therefore, in Law No. 223-FZ, national regime rules do not apply only when concluding single-source contracts that have the nature of a "direct procurement", where there is only one potential counterparty (e.g., a contract with a monopoly entity).

Effect of Prohibition and Restriction in Procurement under Law No. 223-FZ

The mechanisms for applying prohibition, restriction, and preference are set forth in Parts 4 and 5 of Article 3.1-4 of Law No. 223-FZ.

The prohibition regime applies as follows:

When a good is subject to the regime, the customer cannot conclude a contract for the supply of foreign-origin goods;
When works or services are subject to the regime, the customer cannot conclude a contract for the performance of works or rendering of services with a foreign contractor (performer);
Russian goods cannot be replaced with foreign goods during contract performance;
A contractor (performer) cannot be replaced with a foreign person registered in a foreign state during contract performance.

The restriction regime applies as follows:

If a good is subject to the regime and a bid from a participant offering a Russian good meeting the requirements was submitted during the procurement, concluding a contract for the supply of a foreign good is not permitted;
If works or services are subject to the regime and a bid from a Russian participant meeting the requirements was submitted, concluding a contract with a foreign participant is not permitted;
Russian goods cannot be replaced with foreign goods during contract performance if the contract was concluded for the supply of Russian goods;
A contractor (performer) cannot be replaced with a foreign person registered in a foreign state during contract performance if the contract was concluded with a Russian person.

Preference for Russian Goods in Procurement under Law No. 223-FZ

This safeguard measure has several features.

First, unlike prohibition and restriction, there is no specific list of GWS for preference. This regime applies by the exclusion method: if the subject of procurement contains at least one good absent from Annexes No. 1 and No. 2 (Subclause "b", Clause 4 of Decree No. 1875; Clause 5.2 of the Letter dated January 31, 2025). The preference mechanism operates in the following situations:

If the subject of procurement contains no items from the goods listed in Annexes No. 1 and No. 2;
If the subject of procurement simultaneously contains a good listed in Annexes No. 1 and No. 2 and a good not listed in those annexes.

Second, preference applies only to goods (including when goods are supplied as part of a construction contract or service agreement). Works or services themselves are not subject to the preference regime. This should be considered when reading the law's provisions. Subclause "v", Clause 1, Part 2 of Law No. 223-FZ establishes that preference is granted "with respect to goods of Russian origin (including those supplied during the performance of works or rendering of services), works, and services performed or rendered by Russian persons." A similar wording is found in Law No. 44-FZ (Subclause "v", Clause 1, Part 2, Art. 14). However, Clause 1 of Decree No. 1875 mentions exclusively goods in its description of preference. The Ministry of Finance clarified these contradictions: if the subject of the contract is exclusively the performance of works or rendering of services that do not involve the supply of goods, the preference regime does not apply (Clause 5.1 of the Letter dated January 31, 2025).

Third, a specific feature of preference is that participants are not required to provide documents to confirm the country of origin to apply it. Specifying the country in the bid is sufficient. If all bidders offer exclusively Russian GWS, the preference mechanism does not apply, and bidders compete on general terms.[6]

Preference rules are expressed as follows:

If a participant offers only Russian goods, its price offer must be reduced by 15% during the procurement. If participants bid on the fee for concluding the contract, the price offer is increased by 15%;
When the contract is concluded with such a participant, the 15% price reduction or increase does not occur. That is, the contract specifies the price actually offered during the procurement. The 15% adjustment is essentially an advantage aimed at giving the participant a "head start" over other bidders, not increasing its income from the contract;
If replacement of goods is allowed during contract performance, only Russian-origin goods may be used as replacements.

Although the preference regime currently extends only to goods, Law No. 223-FZ establishes its operation mechanism for works or services:

If a bid is submitted by a Russian participant, its price offer must be reduced by 15% during the procurement (or increased by 15% for contract fee bidding);
When the contract is concluded, the 15% price reduction (or increase) is not taken into account, and the price offered is established in the contract;
If the contractor or performer is replaced during contract performance, only a Russian contractor (performer) may be substituted.

As we can see, the preference regime mechanism for works or services is identical to the rules for goods, but it is currently not applied as this safeguard measure applies exclusively to goods (this situation is identical for both Law No. 223-FZ and Law No. 44-FZ).

Providing Information on the Country of Origin in Procurement under Law No. 223-FZ

To take advantage of national regime preferences, a participant must provide the customer with information and documents confirming the product's country of origin. The list of these details is established in Clause 3 of Decree No. 1875. In procurements under Law No. 223-FZ, such information provision has its own specifics.

In procurement under Law No. 44-FZ, a participant generally must provide details and documents regarding the country of origin within their bid (Clause 5, Part 1, Art. 43 of Law No. 44-FZ; Clause 7.2 of the Letter dated January 31, 2025). Failure to do so results in the goods being treated as foreign by default. Therefore, the application of safeguard measures in Article 14 of Law No. 44-FZ differs from Law No. 223-FZ:

If GWS are subject to a prohibition regime, the customer must reject the bid offering the prohibited GWS (Subclause "a", Clause 1, Part 4; Subclause "a", Clause 1, Part 5, Art. 14 of Law No. 44-FZ);
If GWS are subject to a restriction regime, such a bid must be rejected if there are bids offering Russian GWS (Subclause "a", Clause 2, Part 4; Clause 2, Part 5, Art. 14 of Law No. 44-FZ).

In Article 3.1-4 of Law No. 223-FZ, there is no mandatory requirement to reject a participant's bid offering foreign GWS. Only a ban on concluding the contract is established for the customer.

This is because Law No. 223-FZ does not define the exact moment when a participant must provide documents and information on the country of origin (Clause 7.4 of the Letter dated January 31, 2025). The exception is procurement among SMEs: the law explicitly states that the participant must provide such details and documents within the bid (Clause 12, Part 19.1, Art. 3.4 of Law No. 223-FZ). For other types of procurement, the customer independently determines in their policy when and at what stage of the procurement procedure the participant confirms the GWS origin. This must be reflected in the procurement documentation and, if necessary, in the contract.

The customer independently establishes the requirements for the bid content under Law No. 223-FZ (except for SME procurements). Therefore, if there is a need to verify the country of origin during the procurement process before the contract is concluded, a mandatory condition for providing supporting documents can be included in the bid.[7]

The Ministry of Finance noted that supporting information and documents may be provided to the customer not only during the procurement process itself but also later — during contract performance and delivery (except for contracts concluded based on SME procurements). The only requirement is that such confirmation must occur before the goods are accepted. If the customer receives the details and documents after acceptance, the country of origin is considered unconfirmed, and the parties' actions contradict Decree No. 1875.

Despite this "lenient" possibility, Law No. 223-FZ customers prefer not to take risks and follow the example of Law No. 44-FZ: if goods fall under the national regime, participants are usually required to confirm the country of origin at the bid submission stage. Antimonopoly practice regarding disputes over such bids has already begun to form:

When goods are subject to restriction, the customer may require both information on the country of origin and supporting documents in the bid. A participant failing to meet this condition is not admitted to the procurement. If only one bidder offers Russian goods and provides documentary proof while others do not, their bids may be rejected (if provided for in the notice);[8]
When several items in the procurement subject matter are subject to the national regime and the customer requires confirmation at the bid stage, such confirmation must be provided for all items. All entries from the register of industrial products must be valid at the time of bid submission. If an entry has expired or registry data is not provided for all goods, the bid should not be admitted;[9]
Customer requirements for country of origin confirmation must not mislead participants. For instance, it is incorrect to require documents in both the first and second parts of the bid. According to FAS, such actions violate Clause 9, Part 10, Article 4 of Law No. 223-FZ. Additionally, the customer must clearly list the specific documents and details the participant is required to provide. Otherwise, the procurement may be challenged;[10]
Country of origin information provided by a participant must not be contradictory. If a bid lists different countries for the same item, this is qualified as unreliable information, and the customer should reject the bid. Such an offer cannot even be accepted as an offer of foreign goods. For example, a participant appealed to FAS regarding the rejection of its bid, which declared the Russian Federation as the country of origin, while the supporting document (registration certificate) listed China as the place of manufacture. The antimonopoly authority found the customer's actions lawful and the appeal groundless;[11]
If a participant specifies a product number from the register of industrial products in its bid, this does not mean the participant must already possess the goods. This situation is not a violation, although some competitors attempt to challenge such actions as providing deliberately false information. However, at the time of bid submission, the participant may not own the goods and is not required to provide a supply contract for them. If the goods are in free circulation on the market, the bidder is entitled to participate in the procurement first and then purchase the necessary goods if it wins;[12]
If a restriction is established and a participant does not specify the country of origin in the bid, this is not absolute grounds for rejection — the bid is treated as an offer of foreign GWS. In this case, the customer should not confuse the restriction regime with the prohibition regime. Purchasing "restricted" foreign goods is not prohibited if information transparency is ensured and the customer's funds are spent efficiently.[13]

Final Conclusions

In conclusion, the following main features distinguish the application of the national regime in procurements conducted under Law No. 223-FZ:

All customers are divided into two categories. The first category must apply the safeguard measures of prohibition, restriction, and preference (similar to Law No. 44-FZ customers). The second category is not required to follow these rules but must ensure a set share of Russian goods procurement (whereas the Russian goods limit for Law No. 44-FZ was abolished from 2025);
Restriction and priority rules in Law No. 223-FZ can apply not only in competitive procurements but also in non-competitive ones if they involve multiple participants. Under Law No. 44-FZ, these safeguard measures do not apply in single-source procurements (except for "off-the-shelf procurements");
When conducting a procurement under Law No. 223-FZ, a participant is not required to provide confirmation of the country of origin at the bid submission stage. Therefore, the list of customer obligations regarding the national regime does not include rejecting bids with foreign GWS. The customer may independently determine when the participant must provide such confirmation, which can happen after the contract is concluded but before the goods are accepted.

It should be noted that the new national regime system is just beginning to operate, so customers will evaluate its effectiveness in the future.

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References

[1] Government of the Russian Federation Decree No. 2013 dated December 3, 2020, On the Minimum Share of Russian-Origin Goods Procurement (repealed).

[2] Government of the Russian Federation Decree No. 2014 dated December 3, 2020, On the Minimum Mandatory Share of Russian Goods Procurement and Its Achievement by the Customer (repealed).

[3] Ministry of Finance of Russia Letter No. 24-07-08/97806 dated October 9, 2024.

[4] Government of the Russian Federation Decree No. 96 dated February 20, 2004, On the Consolidated Register of Defense-Industrial Complex Organizations.

[5] Government of the Russian Federation Decree No. 1352 dated December 11, 2014, On the Specifics of Participation of Small and Medium-Sized Enterprises in the Procurement of Goods, Works, and Services by Certain Types of Legal Entities.

[6] Resolution of the Voronezh OFAS Russia dated April 8, 2025, in case No. 036/07/3-320/2025.

[7] FAS Russia Letter No. GR/108695/24 dated November 27, 2024, On the Consideration of the Appeal, Ministry of Finance of Russia Letter No. 24-07-08/124512 dated December 10, 2024.

[8] Resolution of the Moscow OFAS Russia dated May 5, 2025, in case No. 077/07/00-5400/2025.

[9] Resolution of the Tatarstan OFAS Russia dated May 6, 2025, No. RV-04/4327; Resolution of the Volgograd OFAS Russia dated April 30, 2025, in case No. 034/10/18.1-536/2025.

[10] Resolution of the Moscow Regional OFAS Russia dated April 29, 2025, in case No. 050/07/223-14791/2025.

[11] Resolution of the Kemerovo OFAS Russia dated April 23, 2025, on appeal No. 042/07/3-744/2025.

[12] Resolution of the Sverdlovsk OFAS Russia dated April 10, 2025, on appeal No. 066/01/18.1-967/2025.

[13] Resolution of the Moscow OFAS Russia dated April 10, 2025, in case No. 077/07/00-4185/2025.