• In 2022-2023, the level of competition in government tenders decreased.
• In 2024, every second large tender (more than GEL 5 million) had only one participant.  
• As the level of competition decreases, so do the savings from bidding.
• The simultaneous reduction in competition and doubling of suppliers indicates that tenders are being conducted in a non-competitive manner, casting doubt on the widespread use of so-called “tailored tenders.” Examples [1] of such tenders have been previously reported by Transparency International - Georgia.

Public procurement is mainly conducted through the tendering process. The objective of the tender process is to foster a competitive environment among suppliers of goods and services. Conversely, the competitive process between companies enables government agencies to achieve cost savings from the funds allocated for purchases.

The State Procurement Agency has been reporting on competition in tenders since 2015. In 2015, the mean number of bidders per tender was 2.02. In 2016-2017, the figure increased to 2.14 but subsequently decreased to 2.05 in 2018-2019. In 2020-2021, the number of bidders increased again, likely due to the pandemic. The private sector operated under restrictions during the pandemic, making public procurement more attractive to companies. The number of announced tenders also decreased. In 2022-2023, competition in tenders decreased again, and according to the latest data, it amounted to 1.95 in 2023. The level of competition was lower in 2023 than in 2015.

A review of the procurement items reveals that the lowest level of competition, with 1.68 bidders participating in a single tender, is observed in the procurement of services. The highest level of competition is observed in the procurement of construction works, with 2.25 bidders participating in a single tender. However, compared to 2015, the level of competition in the construction sector has declined from 2.7 to 2.25.

A logical connection can be established between the level of competition and the savings of funds in the tenders conducted between 2015 and 2023. The average level of competition in one tender conducted in 2015-2019 was 2.09, with an average savings rate of 10.3%. In the 2020-2021 period, when the level of competition increased to an average of 2.21, savings increased to 12.7%. In the 2022-2023 period, the level of competition averaged 1.93, while savings decreased to 7.6%. To illustrate, in 2023, savings reached a total of GEL 451 million. However, if the savings rate observed in 2015-2019 (10.3%) had been maintained in 2023, savings would have been GEL 278 million higher.

It is also noteworthy that the number of suppliers registered in the public procurement system has increased significantly, while the average participation rate in tenders has decreased. In 2015, 25,045 suppliers were registered, whereas in 2023, this figure increased by a factor of 2.2 to reach 56,232. An increase in the number of suppliers could lead to an increase in the average bidding rate. However, this has not been the case. The number of conducted tenders did not increase, which could be one of the arguments for the reduction in competition. To illustrate, in 2017, 33,095 tenders were conducted, with an average of 2.14 companies participating in each tender. In 2023, 32,076 tenders were held, with an average of 1.95 companies participating in each tender.

There is a high proportion of tenders where there is only one bidder who wins without competition. To illustrate, of the tenders announced between January 1 and July 31, 2024, for purchases exceeding GEL 5 million, as of August 23, 76 tenders had been completed (contracts signed), of which half (38 tenders) had only one bidder. The total value of contracts awarded in the abovementioned 38 tenders is GEL 610 million. In 15 tenders, there were two bidders, while in 10 tenders, there were three bidders. There were only 13 tenders that had four or more bidders.