GEO

Prime Minister encourages simplified procurement, fosters malpractice

17 March, 2015

 

In comments at a meeting with heads of local municipalities (Gamgebelis) and central Government members on 11 March 2015, Prime Minister Irakli Gharibashvili noted that allocated funds have not been expensed.  He urged governors, if needed, to announce simplified online tenders or request permission for direct procurement.

The Prime Minister urging officials to carry out procurements through simplified process is unacceptable.

The Law on State Procurements regulates the application of different procurement methods – including simplified online tender or the simplified procurement – is allowed. These regulations are not subject to change according to desires or needs of procuring organizations.

Simplified procurements are when a state agency executes an agreement with a company directly. In such cases corruption risks are much higher; agreements may be executed with companies on close terms with officials or affiliated with the authorities. Further, simplified procurements mean that the state is unable to save funds  by choosing the most efficient and economic bid, as  in the case of a public tender process. When using a simplified online tender, for instance, a procuring agency is not required to request proof of qualification documents from the bidder, except for special cases, thus increasing corruption risks. Importantly, tenders carried out through online procurement system in 2013 have saved 230 million GEL.

As per the 2013 report of the State Procurement Agency, the portion of simplified procurements in 2013 constituted 1.08 billion GEL, equaling 39% of total procurements. Under the Law on Procurements, simplified procurements can be based on a relevant monetary threshold or some exceptional case, including an urgent need and carrying out "the event of state and public importance in tight deadlines without obstructions" with the Government's permission. The Prime Minister's directive does not refer to statutory cases only and intends to enable various budgetary spending institutions to procure any goods and services by bypassing transparent procedures of an online tender.

We believe the Government must strive to eliminate this malpractice and reduce the share of simplified procurements in the state procurements as much as possible. In contrast, the Prime Minister's statement will boost these practices further and lower the degree of transparency in the state procurements sector.

Author: TI Georgia