Transparency International Georgia, funded by the Open Society Foundations, presents a report analyzing simplified public procurement and corruption risks.
From June 1, 2020, to December 31, 2021, Georgia’s government agencies signed up to 21,000 large simplified public procurement contracts with a total value of up to GEL 1.7 billion. Simplified procurements on Covid-19-related needs amounted to about GEL 715 million. Out of the GEL 1.7 billion, GEL 1.2 billion was spent on the grounds of holding an event of state and public importance and urgent necessity.
Out of the simplified public procurements of GEL 1.7 billion, donors of the Georgian Dream and the presidential candidate supported by the party, Salome Zurabishvili, obtained contracts worth GEL 156 million. This amount was distributed among 210 companies and 11 natural persons that donated more than GEL 14 million – directly or through their affiliates – to the Georgian Dream in the years 2013-2021, including up to GEL 5 million after the start of the pandemic.
Without the public procurements directly related to the pandemic, the companies of the ruling party donors got up to 17% of all simplified public procurement contracts signed with private companies.
From June 1, 2020, to December 31, 2021, direct procurement contracts worth GEL 9 million were obtained by 192 newly founded companies (less than six months after their registration). Among them, 22 companies were awarded contracts within 10 days after their founding. For example, the state-owned Crop Management Company awarded a contract worth GEL 900,000 to DGL Company six days after it was founded.
It is mainly local municipalities that are distinguished by awarding contracts to newly founded companies. The participation of newly founded companies in public procurements, especially in simplified procurements, increases the risks of corruption and raises questions about the quality of goods or services provided.
As for simplified public procurement objects, the largest amount – GEL 486 million – was spent on healthcare services, which mainly encompassed the treatment of Covid patients, which is followed by the procurement of construction works, with GEL 276 million. About GEL 152 million was spent on renting hotels as quarantine spaces and “Covid-19 hotels”.
The largest amount – GEL 355 million – was spent by the LEPL National Health Agency through simplified public procurement. This agency concludes contracts for the treatment of Covid-19 patients in medical establishments.
As for suppliers, the highest amount – GEL 44 million – was received by JSC Evex Hospitals, which was followed by Academician Nikoloz Kipshidze Central University Clinic LLC, with GEL 27 million.
Large suppliers also included state LEPLs and LLCs, as well as N(N)LEs. They obtained contracts with a total value of up to GEL 355 million during the pandemic.
- Investigative agencies should take more interest in public procurement contracts that contain signs of corruption;
- When using simplified procurement, the contracting authority should be obligated to substantiate and make it publicly known on what basis it selected the supplier;
- Contracting authorities should refrain from awarding simplified procurement contracts to newly founded, inexperienced companies as much as possible, or substantiate such decisions with a higher standard than usual;
- The State Procurement Agency should have stricter approaches while permitting simplified public procurement.
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