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TI Georgia on Simplified Public Procurement Amid Pandemic

Transparency International Georgia, a local watchdog, issued today a report on the simplified public procurement contracts placed amid the COVID-19 and about the risks associated with the practice. 

The watchdog found that in the reporting period from June 2020 to December 2021, 21,000 large contracts – worth GEL 1.7 billion (USD 534 million) – were signed through simplified state procurement.

TI Georgia said that of the total, GEL 1.2 billion (USD 376.8 million) was spent on “measures of state and public importance and urgency.” GEL 715 million (USD 224.5 million) was specifically spent on Covid-19 related expenditures through simplified procurement contracts.

The top three types of expenses were health services, with GEL 486 million (USD 152.6 million) spent on simplified procurement, followed by construction services – GEL 276 million (USD 86.7 million), and hotel rentals for quarantine and isolation spaces – GEL 152 million (USD 47.7 million).

The report found that Evex Hospitals, one of the largest hospital chains in the country, received GEL 44 million (USD 13.8 million) in the contracts, the largest amount per service provider. It was followed by Kipshidze Central University Clinic with GEL 27 million (USD 8.5 million).

Meanwhile, the National Health Agency spent the most funds on simplified procurement, GEL 355 (USD 111.5 million) in total.

‘Corruption Risks’

TI Georgia said GEL 156 million (USD 49 million) in simplified procurement deals were made with donors of the ruling Georgian Dream or President Salome Zurabishvili — whose presidential bid was backed by the ruling party.

The simplified deals were struck with 210 companies and 11 persons, who directly or through affiliates donated GEL 14 million (GEL 4.4 million) from 2013 to 2021. Of the amount, GEL 5 million (USD 1.5 million) was contributed after the pandemic began, the watchdog added.

The report found that in total the donors received about 17% of non-pandemic related simplified procurement contracts the government had signed with private entities.

Also, TI Georgia disclosed there were 192 companies that had been registered less than six months before receiving their simplified public procurement deal secured GEL 9 million (USD 2.8 million) worth of contracts.

Of the 192 firms, 22 scored a contract within ten days after registration. In one case, a company established six days earlier received a deal worth GEL 900,000 (USD 283 thousand), the report found.

Simplified procurement deals between state bodies and freshly-founded firms were most prevalent in regional municipalities, according to TI Georgia.

Watchdog stressed that such practices “increase the risks of corruption and raise questions about the quality of provided goods or services.”

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