Government procurement is not only a financial control mechanism — it is also a geopolitical tool. Through it, the state influences markets, protects domestic producers, and imposes restrictions on foreign participants when necessary. Below, we explain who may participate in Russian public tenders.
General Rule: Foreign Participation Is Permitted
Under Clause 4 of Article 3 of Federal Law No. 44-FZ, a participant in a procurement may be any legal entity regardless of its organizational form, form of ownership, place of registration, or origin of capital — with the exception of offshore companies. Natural persons, including foreign nationals, may also participate provided they have registered as a sole proprietor (IP) in Russia.
Accordingly, foreign and out-of-region companies are in principle eligible to participate in government procurement — unless they fall within specific restriction categories.
Exception 1: Offshore Companies
Companies from “offshore zones” (Cyprus and others) are excluded from participation in procurements. This restriction was not in effect from the very beginning — those who were accredited on trading platforms prior to its introduction continue to participate. In paper-document procedures, contracting authorities screen out offshore entities directly through the Unified State Register of Legal Entities (EGRYUL).
Exception 2: Small and Medium Business Procurement
Contracting authorities are required to place at least 15% of their annual procurement volume with small and medium-sized enterprises (SMEs). The definition of an SME is established under Russian law and does not extend to foreign legal entities. Accordingly, foreign companies may not participate in procurements designated specifically for SMEs.
Exception 3: Political Instruments
A notable example involves Turkish-registered companies, which were barred from government procurement by a government decree from January 1, 2016 through May 31, 2017. The restriction was purely political in nature and was lifted as quickly as it was imposed. Similar measures are possible with respect to any country.
Category-Specific Prohibitions and Restrictions
Prohibitions (complete exclusion of foreign goods):
- Procurement for defense and national security purposes
- Certain types of machinery and industrial equipment
- Light industry goods
- Foreign software
Exception to the prohibition: if no domestic or Eurasian Economic Union (EAEU) equivalent is produced, a foreign product may be admitted.
Restrictions (foreign participation is permitted, but subject to a price preference adjustment):
- Certain categories of medical devices
- Radio-electronic products
- Certain food products subject to countermeasures
- Essential medicines listed in the relevant register
Under Order No. 155 of the Ministry of Economic Development, a supplier of a restricted foreign product automatically receives a 15% reduction in the contract price upon evaluation — as a preference for domestic competitors.
Practical Conclusion
Participation by a foreign company in Russian government procurement is achievable, but requires careful analysis of each specific procurement: its subject matter, category, and procedure. The rules are complex even for domestic participants.
Veritas Law Group offers comprehensive legal support for foreign companies participating in Russian government procurement: document review, tender preparation, appeals to the Federal Antimonopoly Service (FAS), and court representation.