The Sagarejo City Hall awards a large direct procurement contract to a company founded two weeks before - საერთაშორისო გამჭვირვალობა - საქართველო

The Sagarejo City Hall awards a large direct procurement contract to a company founded two weeks before

16 August, 2023

Horizonti 23 LLC was founded on June 23, 2023, and two weeks later, the City Hall of the Sagarejo Municipality awarded it a contract worth GEL 86,859 by the simplified (direct) procurement method. The company is supposed to carry out the rehabilitation of internal roads and a kindergarten yard in the territory of the municipality.

The owner of Horizonti 23 LLC is Nino Kvlividze, while its director is Giorgi Kvlividze, who are members of one family. Until July 2021, Giorgi Kvlividze’s company, Maia LLC, had participated in public procurements, but the State Procurement Agency included the company in the list of warned suppliers on March 28, 2022. Maia LLC received the warning due to failure to fulfill a contract concluded with the Sagarejo City Hall in May 2021. A company that has been warned is not prevented from participating in public procurements, although collaborating with it carries a high risk. The contract due to which Maia LLC received a warning remains in the category of unfulfilled contracts in the electronic system of public procurements to this day.

Maia LLC was awarded public procurement contracts worth GEL 1.5 million in the years 2017-2021. Of this, 19 contracts with a total value of GEL 1.3 million were awarded as a result of electronic tenders, while 7 contracts worth GEL 245,000 – through simplified procurements. Ninety-nine percent of the GEL 1.5 million received by the company came from contracts awarded by the Sagarejo City Hall (23 out of 26 contracts). 

In fact, Maia LLC relied on a single procuring entity. It participated in 22 tenders announced by the Sagarejo City Hall and won 18 of them. The practice of conducting these tenders by the City Hall raises doubts that the tenders were tailored to Maia LLC from the very start. There are several circumstances that indicate this:  

  1. In 8 of the 18 tenders, Maia LLC did not have any competitors.   
  2. In 8 tenders, the Sagarejo City Hall awarded a contract to Maia LLC after it had disqualified competing companies. In 6 of these tenders, the City Hall disqualified 2 companies that had offered a lower price, while in 1 tender, it disqualified 4 such companies.  
  3. In 17 of the 18 tenders, the final amount of the contract increased, i.e., Maia LLC ultimately received a higher amount than the bid it had made in the tender. Presumably, the City Hall intentionally announced the tenders with a lower price than necessary, in order to restrict competition.

On the basis of the facts we have mentioned, we call on investigative agencies, the State Audit Office, and the State Procurement Agency to study the tenders announced by the Sagarejo City Hall which were won by Maia LLC.