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DOI: http://dx.doi.org/10.20534/EJLPS-17-2-94-105
Kikavets Vitaly Victorovitch, Candidate of Legal Sciences, Associate professor of financial law, Russian State University of Justice E-mail: [email protected]
Fair price of procurement during the period of economic crisis
Abstract: The article deals with the concept of «fair price» in the economic, philosophical, sociopolitical and competition aspects. The possibility of the use and the determination of fair prices in the contract procurement system during the economic crisis.
Keywords: contract system in procurement, legal regulation, fair price, the initial (maximum) contract price, financial security.
At the moment, it is necessary to admit the inadequacy of the research of the problem of "fair price", taking into account the building momentum of the contractual system in the field of public procurement, public-corporate procurement, as well as the unstable political and economic international relations. Considering that the trend of the development of world powers, legal and economic systems, is taking place in the ever growing dynamics, the concept of "fair value", in our view, should be examined not only in its economic meaning, focusing on justice, equality and so on., but also in the philosophical, social, political and antitrust aspects. It is not surprising that the issue of fair prices has a debatable character and pronounced conflicting approaches of its definition, considering the subjectivity of contract customer services officials.
The need to identify appropriate, effective and competitive prices for goods, works and services in close conjunction of the State policy of counteractions to corruption abuses of certain officials, whose authorities are inextricably linked to the expenditure part of budgets of various levels in the implementation process of State and municipal needs, has determined the relevance of the identified issues. The lack of unified and universal methods, systems research and algorithm of formation of "fair value" in
the Russian Federation is, in our opinion, the main and visible problem of the economic development of the State. It also doesn't favor the development of competition of all economic entities and the effectiveness of expenditure of budgetary funds in procurement.
In recent years, it noted that the world community is taking significant steps to transition to the widespread introduction of fair value because theoretically such assessment is recognized as the most presentable and best reflecting the real value of assets and liabilities [1, 5].
The legislators' attempts to establish a rate obliging customers not only to justify the initial (maximum) contract price (hereinafter - IMCP), the contract price (hereinafter - CP), but also to calculate it correctly is nothing but how to solve the eternal problem of the establishment of a «fair price» category which is diffuse and not specific at all. Unfortunately, there is no consensus how to calculate and set a universal formula "fair price". So what is this unique concept of «fair price»? What is its content, meaning and impact and who needs a "fair price"?
And the most important issue — whether the Russian economy is ready as a whole to implement and use overall the concept of "fair value" of goods,
works and services during the economic crisis, under sanctions of foreign countries?
In search of the most constructive response to the above questions we should turn to the ancient origin of this concept, touch such areas of activity of economic entities and the states as legal, economic, social and political.
Speaking about the product and its fair value, it is first necessary to understand who is the consumer of the certain product, what category of consumers it is meant for and whether it has use value, i. e. the direct dependence of the value of goods of the possibility and necessity of its consumption. There is a good old proverb that describes objectively this dependence: "He is selling, but who's buying?". The sense load of the catchphrase clearly shows that the main and almost the only standard of the product demand are money or price, expressed as a certain number, identifying the equivalent of a consumer demand. Therefore, as a universal instrument of exchange, the amount of money that is not only ready to give the buyer for the goods, but also to the seller expresses a template of "fair price". It is template because if the buyers offer a price well below the cost price of the goods or the seller has announced knowingly the unbearable cost of different interpretations for the seller - it will get a fair price for an analogue. But the profit of any size, without breaking the law, — is precisely the absolute right of the seller and manufacturer.
Let's consider the concept of "fair value" in terms of a simple modern everyman - the average Russian. We continuously or regularly go to the shops, markets, and buying products often believe that the price is high, and sometimes unfair, especially if we cannot afford to buy this product for our own needs. We were taught that the consumer is always right, so many people sincerely believe that such a right should be applied to pricing.
On the other hand, and this is quite natural, sellers believe that their price of goods is quite correct, and maybe even understated. This example shows
clearly an obvious contrast to the «buyer - seller» design view on the price of the goods. Each has its own «fair price» for the goods, and often they are not identical - as a general rule the seller intends to sell as expensive as possible, the buyer to buy goods as cheaply as possible.
What should be done for setting a fair price for both the buyer and seller? And it most important, who can and must do it, who is entitled to determine the criterion of "fair value" for buyers, deciding for others what the profit of the seller (manufacturer) is right? What categories of sellers should set the limit allowances, to what extent and whether it would be fair to them?
Many consumers state in favor of the need to establish by the State so-called limit markups, including permanent consumer goods (necessities) and it is already functioning fractionally on the example of a specific list of drugs sold by pharmacies with a minimum trade allowance. However, these government's actions contradict to the economy postulates, preventing the value of the profits, and for which any commercial organization is created.
At the same time, consumers considering many food prices too high, their wages or other source of income, that is, speaking in a different socioeconomic status (employee, artist, tenant, etc.) are convinced that the value of their income is understated. Introducing the value of our labor, each of us would like to receive adequate remuneration that can provide a decent life and the realization of our own needs.
The right to set the price of goods and services derives from the ownership of them. It is the basis of commodity-money relations. The interference into these relations, even by the government or certain officials of ministries and departments, affects certain restrictions on the right to use the property, altering the economic relations of economic agents, which in turn can give birth to inequality and social injustice.
From our point of view, the State doesn't have the right to indicate by measures of legislative and
coercion commercial organizations what how to do in the context of business, except cases when uncontrolled entrepreneurial activity can lead to adverse socio-political situation, in the result of which there would be a direct threat to internal (state-political, constitutional foundations) and also external (defense, security, economic security) negative factors affecting the State sovereignty of the Russian Federation.
The role of the State, first of all, is the sphere of compulsion and coercion in order to protect all types of property from fraud, violence, crime, external expansion. It does not apply directly to a market economy. On the other hand - a profit of any size, without breaking the law - is precisely the absolute right of the seller and manufacturer. Therefore, the buyer will take the goods at a price which he considers fair to himself and the seller. In the case of excessive commodity price the realization will be low, and it is disadvantageous to the seller. Thus the market mechanism forms the structure, "demand -offers" based including on the establishment of the adequate fair price.
The cited example of contemporary reality shows, that at first glance, the fair price in the market economy — a market (free) price! But if it so immediately possible to equate these concepts, taking into account the various existing models for calculating the cost of goods, including through the involvement of independent experts who can operate outside the economic and legal sphere of a functioning market?
The State is obliged to maintain a constant balance between the freedom in the implementation and realization of entrepreneurial activity and certain mandatory restrictions in the field of entrepreneur-ship in the sphere of pricing. This activity requires a staff of qualified professionals, who must constantly analyze the functioning of markets, explore the pricing process, examine the economic and socio-political factors that could have a significant impact on the formation of the cost of goods, works and services. However, the legislator solved somewhat differently
the problem of formation of a fair price in the contract system in the procurement - below we'll consider it in detail.
It is possible that business organizations, entrepreneurs taking advantage of certain market conditions, can establish a high price of the goods on which the goods will not be able to buy besides no one will trade at a loss voluntarily. There are always market risks, dividing consumers into groups capable or not capable, but in small (insufficient) amount to purchase a particular product, depending on the pricing procedure. Without dwelling on the previously identified relative equality concepts, we propose to consider the emergence and establishment of a fair price in the historical and philosophical aspects.
Initially, the problem of social justice, as well as the fair price of the goods has been designated in the IV century BC by the ancient Greek philosopher Aristotle, who established justice of exchange as criterion of a fair price. Such an exchange, according to the philosopher, had to be based not only on the mutual needs of the parties, but also on the proportions of exchangeable goods, reflecting the volume of the participation of each of the parties. If the strong ties and business relations between the parties were the result of this transaction, the transaction was considered to be fair. "Everybody has a share, and no one suffers loss and cannot profit from the exchange", so Aristotle defined the fair price of the product [2, 154].
At the same time, in his "Great Ethics" the philosopher, focused, contrasting the importance of the reasonable (fair) completion to monopolization, the attention at the need of an equitable exchange of property wealth in the economy. He wrote: "There is a proportional equality in the fact the person having a large property makes a great contribution, and likewise that the one suffered heavy efforts receives a lot, and having suffered a small - small" [3, 30].
Despite the fact that at the time ofAristotle there were no mature competitive markets, providing un-
conditional effects including the formation of prices for goods, works and services, there was no standardization of financial and labor costs, allowing to identify (compare) the contributions of the parties to the proposed the exchange of goods clear and categorical, Aristotle didn't happen to answer to the question of equitable exchange proportion, but his works laid down a certain foundation for the further development of economic thought.
As a development ofAristotle's idea of a fair price Aristotle some scientists took as a basis for a fair price ratio thesis of the contributions of each party into commodity exchange, the others - the thesis of the need as a general measure of exchange. And if the theories of production costs and the labor theory became the results of the first scientists (J. Scott, Adam Smith, David Ricardo, Marx, Lenin, etc.), the latter (St. Augustine, E. Condillac, J. Bentham, G. Gossen, Paul Samuelson, etc.) have formulated a number of theories that display the price of the utility of goods
[4, 10].
In Roman law, the basis of which - freedom of contract, the concept of "fair price" had also formed with economic and ethical nuances and tones. Having divided the factors of pricing into two groups -economic factors covering seller's costs (materials, labor costs, transportation, storage, etc.) and types (factors) of different needs (natural or unjustified), Roman law used the "fair price" as a moral classification of actions, in particular vendors. Moral standards transformed sooner or later into a custom business turnover, which in Roman law was taken into account in determining of the fair price.
Th Aquinas defined the fair price of any items on the basis of the degree of benefits that might be derived from it, "the price of things is not seen by its nature, but on the extent of its use" [5, 11].
Analysis of the philosopher's idea enables to assume that a fair price is formed not only by the material, financial and labor costs, but also the market formula of "supply and demand". The philosopher regards as a fair price - the average price formed
on the market at the moment on a specific product under average conditions, permitting thereby automatically include a fair price and the average profit of the seller of the goods. The analogy of philosophical thought of Thomas Aquinas is possible to find in the domestic civil law. Part 3 of Article 424 of the Civil Code expressly provides that in cases where a paid contract price is not available and can not be determined basing on the terms of the contract, the performance of the contract must be paid for at a price which under comparable circumstances is usually charged for similar goods, works or services. It is necessary the information about the current price in the region (area) market of those or other goods, works and services on the basis of which the parties to the contract can come to an average price - a contract that is "fair price" for all the parties to the contract.
Medieval Europe, having legitimized certain privileges to classes, has left a reasonable basis for thinking about the order of formation of the idea of a fair price, putting it in direct dependence on the subject of the legal system "seller" - "buyer". In his monograph "Development of competition law ..." Pisenko IKA. notes that the inevitable dictatorship of monopoly sellers, driving up prices for basic necessities, caused a strong reaction of not only wide strata of the common people, but also of the nobility and the Catholic Church. Not by chance in canon law, along with a general discussion of profiteering and greed, the rule, according to which the seller had to ask for the goods "fair price" had developed [6, 118].
The Christian idea of "fair value (price)" and "reasonable income" became the basis of a number of municipal statutes and regulations of the royal power, which forbade outbidding of goods, departing from a strict set of trade rules — the time, the place where the commercial transactions, etc., as well as the right fixed the prices of many tradable goods, sometimes in the form of special listings [7, 49].
Evolution of the "fair price" comes to the fact that by the end of the XV century under it not only the typical market price is understood, but that price at
which was appointed "with the assistance of trusted people to define it in accordance with the principle of universal justice" [8].
This was another wave of the activity in the part of the research of a "fair price", and then it was forgotten until the middle of the XX century, when the influence of the State on the price formation process became one of the most important priorities and instruments of domestic economic policy. When calculating and setting of prices of goods, not only the interests of producers but also the interests of the consumers of products were considered. At the same time the government solved problems of preventing inflation through the regulation of prices because of shortages of certain commodity segments of the market, rising prices for raw materials, fuels and lubricants, the development of competition and prevent monopoly manufacturers, as support of a specified minimum subsistence level, and the achievement of certain social outcomes by providing the population with a sufficient amount of the goods of prime necessity.
We see that in this instance the State had assumed the right and the responsibility in this case to set limits (cost of living) for the use and maintenance of a fair price under the market economy. This kind of socio-economic functions of the State is applicable to any type, including Western and Asian countries. Without the support of the population, including socially disadvantaged, there won't the State as such. The social function of a 'fair price" is concluded in the need to establish and maintain a "fair price" for certain types of goods, works and services in order to support certain strata of the population, and therefore support the functioning of the State as a whole.
Let's consider how to determine the "fair value" in the individual groups (categories) of the population - religious organizations. Religious organizations shall act in accordance with its internal regulations, which do not contradict the legislation of the Russian Federation, and have the capacity envisaged in their charters. The State ensures the respect
of these internal statutes, if they don't contradict the legislation of the Russian Federation [9].
is the doctrine of fair price is of particular interest on the example of the Roman Catholic Church, developed in opposition to the Roman law, which allows to determine the price of the goods as a result of free contract. Sergeev P. V. notes that, since the canon law only recognizes a fair price, i. e. the price which complied with proportional equality, based on the exchange of equivalents, the conclusion of trade agreements with the Roman Catholic religious organizations in the framework of business activity does not make sense, since none of the parties must not have profit as a result of the transaction, ("By what measure you measure, it will be measured to you"). The author concludes rightly that the law enforcer, considering the question of the legality of contract pricing for the commodity organization of Catholic religious persuasion should study a half-thousand-year tradition of theological interpretation of the concept of a fair price. It is necessary to take into account the uniqueness of its own procedures for determining the price for the goods of various religious organizations (for example, in the Islamic tradition there is a set of rules governing the amount of the gap between wholesale and retail prices) [10].
Failure to comply by the parties of the doctrine of fair price, including by making a profit together with the rule of Article 15 of the Federal Law of 26.09.1997 number 125-FZ "On Freedom of Conscience and Religious Organizations" conditions on the cost of the contract may become the basis for recognition of the transaction void void by virtue of article 168 of the Civil Code. Thus, it seems very interesting the relationship religious organizations with counterparts and government in the part of the mechanism of regulation of prices for goods as a condition of the contract price for the goods already pre-ordained rule of Article 15 of the Federal Law of 26.09.1997 number 125-FZ "On Freedom of Conscience and religious organizations". The ratio of internal statutes of religious organizations and
contractual prices for the purchased or sold goods religious organization requires further deep research and analysis.
At the present stage of economic and political development of the State the economic concept of the definition of "fair value" is actively developing according to which the price of goods laid exclusively reasonable cost and share of profits may not exceed the average market income. The State thus gives customers the opportunity to purchase certain types of products at the best price, based on an assessment of the consumer basket and the purchasing power of the population of a given region, and sellers to extract even a small, but still a profit. This formula will allow the manufacturer to provide the level of income required for the functioning of the company, did not significantly exacerbating the problem of social inequality of the population, but would not achieve the main goal of the commercial organization — profit and gain income (maximum) on the result of work, including the intellectual.
Let's note that during almost all the historical stage of the development of competition in Russia violation of antimonopoly legislation in the part of the cartel, syndicate agreements and collusions was classified as a criminal offense with all the consequences and sanctions. For example, Article 913 (l) of the Penal Code prohibits "the intentional excessive, not justified by the conditions of production and marketing, the rise by the merchant or an industrialist, and heads of the cases of companies, associations, establishments and companies, members of their boards and attorneys in prices for food items if the perpetrators took advantage of this to be felt particularly among the local needs of the population in these subjects, except cases of price increases on items when the price of these items has been defined in the special procedure established by law" [6, 74].
However, as K. A. Pisenko notes such cartel, syndicate agreement that regulated the production of goods and pricing issues were directed to a greater extent to overcome the economic crises, prevention
of devastation that could follow because of excessive fall in prices for goods as a result of intense competition and overproduction of goods, including even below cost, which in turn made it impossible for the lack of profit to enterprise and conduct business. Hence the intention to enter into agreements with competitors and to standardize the volume of production, product launch and establish at least a minimum price of their sales, as high as it would have covered the costs and give at least some profit to industrialist (manufacture) [6, 58].
The concept of "fair price" in the Russian procurement legislation is absent. However, the legislation of the Russian Federation on the procurement rules contains enough rules and articles, pointing indirectly to the formation of analogs of a "fair price" formation.
It is noteworthy, but significant "contribution" to the formation of fair prices for specific goods, works and services in a specific region is made by the participants of procurement by bidding for bidding by submitting their quotations.
Without conducting an in-depth analysis of the order of formation of the contract price, we have the right to stay and to identify the following key criteria for determining the price by any party to the purchase:
1) amount of financial and operational capacity procurement party, the degree of congestion, the possibility of transformation in the case of a win and contracting;
2) factor of competition in this market segment on the subject of trading;
3) complexity and categorical terms of documentation on procurement and contract established by the customer;
4) planned reduction of the threshold values of the initial (maximum) contract price for an adequate understanding of the possible profit margin on the contract.
The above criteria demonstrate that the offer price by the contract party of the purchase in addition to all other economic justification entirely
depends on the intended size of the profit. Naturally, as the price of the proposed contract is higher, the profits of a commercial organization are higher. However, a very high bid by participant of contract purchase price reduces the potential possibility for winning and receiving the contract.
Therefore, the problem of a fair price from the point of view of a purchases participant is a search for the best compromise between laborious formation of his greatest contract price and the contract price offered by other competing parties to procurement within the framework of some trades. In this case it is necessary to form his highest contract price so that it would significantly less than the contract price offered by a competitor. The above clearly shows that the state of competition in the market of goods, works and services, plays an important and sometimes decisive role in shaping a fair contract prices. We emphasize that only fair competition promotes adequate process of forming a fair price, which impacted certain historical factors of formation and development of antitrust law in Russia.
Monitoring and support of fair competition within the framework of compliance with the anti-monopoly legislation in the Russian Federation is entirely entrusted to the Anti-Monopoly Service (FAS Russia), which related in its decisions on cases of the violation of the antimonopoly and procurement legislation has repeatedly stressed that the establishment of false contract price does not contribute budget savings, but also limits fair competition, the opportunity to participate in the procurement of the greatest number of persons.
The introduction of the contract system in the procurement marked the past centuries perennial problem of the definition of "fair price" in the framework of the formation IMCP, of which accuracy and validity depends directly on the planning and implementation of all customer needs, cost-effectiveness, budget and off-budget funds. In late 2011, the system not providing for mandatory IMCP justification procedure when placing orders, on the
contrary demanded that all, without exception, customers not only the calculation by IMCP, but also the documentation about the ground of such price. The idea is revolutionary and necessary, but given that the lack of established mechanism for calculating IMCP, customers are free to decide the issue of the contract price and the choice of the method of its calculation. To minimize the risk of corruption and other abuses in the procurement sphere of authorities in Russian regions develop their own methods of calculating IMCP, which are required to follow all the customers in the region.
Despite the fact that in the contracts for the supply of goods, works and services the contract price is not an essential condition of the contract, its value is quite important, taking into account the provisions of the Federal Act from April 5, 2013 No. 44 "On the contract system in procurement of goods, works, services for state and municipal needs", according to which the supplementary rules of the contract can't be concluded in the absence of its price, which is as a general rule is fixed and can't be changed. Price is also one of the criteria for selection and evaluation of potential participants in the procurement of all types of tenders or request for proposals, and with the request for quotations or auction in electronic form is the only criterion for the selection of the winner, as the lower the offered price, there are more chances to win, and most importantly - effectiveness for the customer on the issue of financial savings.
The position of the legislator in the legislative consolidation of the concept of effectiveness or efficiency of use of budgetary funds is very interesting. Thus, in accordance with Article 34 of the Budget Code of the Russian Federation under the principle of effectiveness and efficiency of budget funds use the achievement of participants in the budget process given results with the least amount of resources and the best possible result with a certain amount of budgetary funds is meant.
The norm of the Code allows to conclude, that actually end in itself of the Law on Procurement is
to minimize the consumption of the budgets of various levels and off-budget sources of funding rather than the effectiveness of the use of these funds. This means effectively — not necessarily cheap!
"In the development of our assumptions we'll give the conclusion made by G. I. Martynenko, who notes that the price alone is not an adequate indicator of the costs. The application with the lowest price won't necessarily provide the best value for money" [11].
Consequently, there is a certain specificity of formation of the contract price (especially the national competition and leveling the profit in certain cases) in the contract system in the procurement sphere, which does not allow to say fully with full confidence that the order of forming IMCP is identical to the procedure for establishing a "fair price".
The legitimate question is — is it possible in the process of public procurement, in compliance with the rules of budgetary legislation, including on minimizing the expenditure side the talk about the establishment or use of fair price in the contract system and for whom it would be fair?
Let's consider detail category of IMCP having two basic properties. First - it has the time interval, that is, it is primary, and all other proposals for the contract are secondary (subsequent). The second property of IMCP — it is the maximum and represents the limit, above which no cost changes won't occur in the force of law. So it is very important and reasonable to calculate, prove and establish it. Properly calculated IMCP, from our point of view, can be, if not a fair price, then an analog of a fair price for both purchases parties, and for the customer. This conclusion is based on the theoretical and practical aspects of construction ofpossible variants of development of the procurement process at various options for establishment by the customer IMCP.
The first option is when the customer has correctly identified IMCP in compliance with all requirements and procedures, in accordance with the current laws, having used an array of data
and information on the cost of goods, works and services that are the subject of the contract within the boundaries (limits) formed and functioning of the market, as well as alternative sources of information (other functioning markets, regions, countries), taking into account the respective correlation of price indices. As a result, the customer receives the required (desired) result of the purchase - and the satisfaction of their needs, and budget savings. It is an ideal option that is not often possible to meet in practice, since the customer and his contract service doesn't possess all the necessary knowledge of the economic, legal, social and political constituents for the proper determination of the full IMCP. Large amounts in the conditions of on-time, acute shortage of contract services workers don't allow to make an adequate analysis of the market, which indicates the lowest possible chances of the customer to set the correct (desired) IMCP fair practice.
The second option, in which the customer overstates IMCP, on the one hand has though imaginary, but the positive trend of budget savings, achieved by reducing IMCP procurement participants in the competitive rivalry to an objective and fair market for the purchase of certain participants. This is imaginary competition, although the result will be similar to the price of the market! But, if there is no competition and there is only one party purchases or only authorized to participate in the procedure and has no intention to reduce IMCP likely contract by IMCP, originally overstated by the customer due to its improper justification and definition. That is to prevent possible cases, because of the lack of competition participants of procurement the Procurement Law established the obligation of the customers to conclude preliminary agreement with a single supplier contract in the supervisory organization. The object of attention and study by the supervisory organization in the course of such coordination is the correct definition and justification of IMCP. If the fact of overstatement of IMCP the supervisory body refuses to agree to the customer, after which
the latter is entitled to re-conduct the procedure for the changes and proper calculation IMCP [12, 61].
The third option is in which the customer understates IMCP. In this case, there is a high probability of narrowing the range of potential participants in the procurement by "absenteeism purchase" or receiving substandard goods, works and services, as well as high-volume forced claim work performed by the customer with counterparty. Of course, the result of poor performance by counterparty obligations under the contract possible in the first embodiment of determining the optimal (fair) price on material understatement party purchases directly in the procedure, but for this case it is provided other mechanisms to protect bona fide customers.
Using any of the above options to define IMCP, the customer would have to take into account a set of common elements of traditional marketing (market research): product, price, place, product promotion.
Some experts point out that since the contract price in public procurement sets not the seller (manufacturer) but the customer (buyer), then it is prematurely to talk about the maximum price, at best, such price can be indicative or minimum [13, 12].
Only the manufacturer (seller) or a qualified person can be fully aware of all the costs incurred for the production of concrete goods and estimate the fair margin, allowing "to maintain the production". However, when placing orders earlier and now in the procurement system, focusing on budget savings, the legislator has bound the customer to count IMCP actually vesting powers to the customer of "pricing" in the procurement system. Customers having received the right to set the price too high or too low, actually have a significant impact on the formation of prices in the region.
Despite the absurdity of the above-described "quasi-pricing" process, one algorithm has been developed currently in the procurement system. It allows customers to unify the system of setting IMCP. The legislator supposed the mechanism of formation and study IMCP as part of the study
on the issue of pricing of the market in pursuit of the principle of respect and the establishment of a "fair price". The Law on Procurement established a direct duty of formation and study by customer of IMCP. A special procedure set out in the Order of the Ministry of Economic Development 2/10/2013 number 567 [14] has also been developed.
The following calculation methods of IMCP based on the analysis of research in the Law on Procurement have been established: comparable uncontrolled price method (market analysis); normative method; tariff method; design and estimate method; cost - based method.
Since each of the above methods requires a large amount of knowledge and generalists experts, which most customers hasn't, the set duties turn into a formality, without providing real purpose of the above pricing mechanism, and the issue of forming a fair IMCP in public procurement has been open. Only in one case - the implementation of procurement with a single supplier the customer together with the supplier determine all pricing factors.
The downside of public procurement is the lack oflegislation fixing a minimum price contract, as noted in his work by K. V. Kichik. We share fully the point of view of the young scientist who believes rightly that the minimum price can act as a lower "border" price threshold below which the participants ofplacing the order may not indicate the price of their offer in the bidding or request for quotations [13, 13].
Drawing an analogy with the formation of a "fair price", the minimum price contract is equated to the value of the cost of production of goods without any profit — it makes only its cost price. Establishment of a minimum price would help not only to ensure a minimum return of supplier costs without profit, but guarantee the fulfillment of all obligations under the contract in full. Therefore, conscientious and professional purchases participant, knowing the order of the formation of the price of goods, will never propose in its bid price, the price below the minimum threshold.
Practice in the field of procurement has repeatedly shown that the obligation of the customer to establish a maximum limit price purchase threshold, the lack of low-end threshold allow unskilled participants to purchase or any raiders to win using a dumping price decline, resulting in a significant volume with claims and judicial work of the customer, as well as the disruption of the process meet state needs for goods, works and services.
Despite the time-tested economic postulate -goods of appropriate quality for the optimum, not the minimum price FAS of the Russian Federation stated and continues to state strongly against setting the lower threshold prices, which is contrary to the principle of effectiveness of the budget process. This legal position of the individual officers involved in the formation of the procurement system in Russia has led to the fact that in the Procurement Law a minimum contract price has not been legislated, but it was set the dumped customer protection mechanism from unreasonably low prices participant purchases at auction.
The establishment of anti-dumping measures by legislation in place the lower price threshold allows us to say that the State at the present stage of economic and political development does not consider the minimum price to guarantee the efficiency of spending of the budget process, the development of competitiveness and economic development of a single industry. Taking into account that the minimum price is able to minimize the risks of the customer in the field of improper selection of the counterparty, its replacement by dumping mechanism will only temporarily hide the naked and obvious problems of the procurement system.
Consideration of the direct dependence of formation of price thresholds (minimum and maximum) led to the conclusion that the «fair value» in procurement may be in the range of the specified thresholds. For a more detailed study of this issue we believe it rational to appropriate legislatively not only lower price of threshold — the minimum price of the contract, but also the method of its calculation.
In summary, we note that the legislator in order to not only improve the efficiency of budget spending, but also the development of competition, by establishing a "reasonable price", in this case, in the absence of the lower price threshold IMCP uses tools, which were considered by many philosophers and economists as components for determining the "fair price". Undoubtedly, legislative consolidation of these methods of forming IMCP is a significant achievement of the Russian Federation in the procurement system. However, at this stage of the start of the innovation it is necessary to ascertain the fact that the customer (rather than the supplier - manufacturer) is imposed the duty and the responsibility for the correctness of the IMCP, in accordance with the purposes and functions of the Law on Procurement. At the same time it has virtually no motivation of its correct definition.
Currently, the fair price is used mainly in the accounting with regard to the evaluation of various groups of fixed assets, however, and in this procedure of assessment due to the lack of uniform standards there is necessary clarification. In our opinion, the main problem is the imperfection of the theoretical and methodological basis for the definition of fair price in the field of public procurement. The legislator has somewhat expanded the potential capabilities of the Law on procurement in terms of setting a fair price - this is the introduction oflife-cycle contracts. The criterion of the cost of the product life cycle or created as a result of the work object includes the costs for the purchase of goods or performance of the work, subsequent maintenance, operation during the term of their service, repair and disposal of the goods delivered or created as a result of the fulfillment of work by the object. The economists found that long-term contract at the price calculated on the results of monitoring of the market, meets best of all the criteria of real (fair) price. Therefore, when calculating the NMC contract of the life cycle the customer, having taken into account the cost of further maintenance and operating costs of the goods,
in our opinion, will be closer to the establishment of a fair price for the goods.
The legislative consolidation of the principles of the contract system in the procurement of the procurement law was a significant step forward in the development of the sphere of procurement in the Russian Federation. These principles, as a guiding rule of all participants of the contract system, represent the subjective aspect of their behavior in terms of definition and formation of fair prices in procurement. Before 2013, there were no individual and directly established principles in this industry. Thus the legislator has identified the following principles of openness, transparency of information about the contract system in the area of procurement, competition, customers, professionalism, encourage innovation, the unity of the contract system in the procurement, responsible for ensuring the effectiveness of state and municipal needs, the effectiveness of procurement.
In conclusion, we note that the main lever of resolving the problem of correct determination of
the fair price by the customer is tightening procedures for internal and external control (audits), which is required to assess stepping the correctness of the applied methodology for determining IMCP, thereby having minimized the risks of negligence and bad faith on the part of the customer's individual officers.
We consider it appropriate to introduce in the contract procurement system instead IMCP a fair price of the goods, works, services, expressed in the fair value range limit (maximum) and lower (minimum) price of the contract. The proposed value range will clearly reflect all possible vendor fair margin - margin besides the cost of production. It won't allow participants to procurement bidding offer the price, obviously unrealistic and impossible with respect to the required quality of the goods, works and services. These changes will be a positive step towards the establishment of an adequate cost, reliable information about purchases, raise the quality of reporting and transparency in this area.
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