1. 4.1 Customer support
    2. 4.2 Supplier relationship management
    3. 4.3 Public and government relations
    4. 4.4 Company’s transactions

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4.2 Supplier relationship management

Purchase activities during the reported period were regulated by the PAOPublic Joint-Stock Company Rosseti Uniform Purchase Standard(95).

Principles for building-up purchase activities of the Company:

Principle 1:

Reasonable use of special techniques to enhance the effects of market laws in each case of purchase.

Principle 2:

Application of compulsory procedures to each purchase case over a specified value (also applicable to smaller purchases, if deemed required), that imply:

  • market analysis and planning of demand;
  • purchase transparency; equality of rights, justice, zero discrimination or unwarranted competitiveness restrictions towards participants;
  • onest and reasonable selection of the most preferable offers after thorough analysis of benefits and expenses (primarily, price and quality of produce);
  • target and efficient expenditures to acquire goods and services and measures aimed at cost-cutting;
  • unrestricted access to procedures by setting immeasurable requirements for a bidder.
Principle 3:

Systemic approach, comprising regulatory environment, prescribed setup of purchase administration and oversight, trained employees, smooth-running purchase infrastructure (information support, e-commerce means, certification, professional advisors).

Principle 4:

Compliance with corporate unity of procurement rules.

Principle 5:

Oversight of authorities and liability of purchasing employees.

The Uniform Purchase Standard describes the following purchase types: tender, auction, request for proposals, vendor quotations, ordinary purchase, small-size purchase and single-vendor purchase, vendor tender participation purchase.

In 2018, the Company conducted 3,451 purchases worth RUB 27,007,917.532 thousand (plus VAT), namely:

Purchase type Purchases Purchase value
pcs % of total purchases RUBruble thousand, plus VATvalue-added tax % of total value
Open tender 233 6.752 13,332,840.067 49.366
Open auction 13 0.376 3,667,035.000 13.578
Open request for proposals 739 21.414 2,904,981.680 10.756
Open vendor request 324 9.389 280,909.971 1.040
Vendor quotations after open competitive procedures 1,566 45.378 4,113,247.772 15.230
Single-vendor purchase 234 6.781 1,455,182.032 5.388
Purchases from sellers 4 0.116 310,548.786 1.150
Open tender for the right to conclude framework agreements 82 2.376 0 0
Single-vendor purchases after failed tenders 256 7.418 943,172.224 3.492

There were 3,213 e-commerce procurement procedures worth RUBruble 25,242,186.713 thousand plus VATvalue-added tax (100% of total purchases and 100% of total value, net of single-vendor purchases and purchases from sellers). The economic effect from the purchases amounted to RUBruble 1,122,548.649 thousand plus VATvalue-added tax or 4.257% of the announced price targets. Open purchases (open tender, open request for proposals, competitive dialogue, close requests for prices after open competitive dialogue) contributed 93.46% to the total purchase value.

Purchases from small-and medium-size businesses totaled RUBruble 16,183,688.477 thousand plus VATvalue-added tax (3,207 purchases) or 71.801% of the total value and 96.248% of the total purchases (comprising purchases that are not taken into account when calculating the annual total value).

SMEsmall and medium enterprises purchases amounted to RUBruble 14,044,701.276 thousand plus VATvalue-added tax (2,889 purchases) or 62.311% of the total value and 86.704% of the total purchases (comprising purchases that are not taken into account when calculating the annual total value).

The total innovation-related expenses of the Company (technologies, solutions, goods, works and services, stipulated by the Innovation Development Program), comprising designing, installation, precommissioning services and implementation, reached RUBruble 262.6 million in 2017, corresponding with the cost target — 3.55% of actual investment program costs, and RUBruble 343.5 million in 2018 (expectance), corresponding with the cost target — 4.0% of actual investment program costs.

The following activities are enforced to enhance economic metrics, improve and promote purchase transparency: