Simplified Procurement – Corruption Risks in Non-Competitive Government Contracts December 2013 Transparency International Georgia 26, Rustaveli Avenue, Tbilisi Tel: (+995 32) 292 14 0 Web: http://transparency.ge/en Email:
[email protected] An electronic version of this report, interactive visualizations and source data is available at http://transparency.ge/en/simplified-procurement. Scan with your mobile device The report was prepared with financial support from the Open Society Georgia Foundation, the Official Development Aid of the Slovak Republic (SlovakAid) and the Swedish International Development Cooperation Agency (Sida). The content and opinions expressed in the report are those of Transparency International Georgia and do not reflect the position of the donors. Executive Summary This report finds that extensive direct contracting by the Georgian government has resulted in numerous cases of companies linked to public officials receiving large, non-competitive contracts and that numerous beneficiaries of this practice in 2011 and 2012 made financial contributions to the ruling party, some of which may constitute kickback payments. Transparency International (TI) Georgia analyzed more than 430,000 non- competitive government contracts awarded between December 2010 and September 2013. In 2011, the government issued direct contracts worth more than GEL 959 million, GEL 1.17 billion in 2012 and approximately 450 million in the first nine months of 2013. Last year, these contracts accounted for 18% of all government spending, equal to 4.7% of the Georgian economy (GDP). Direct procurement is likely to result in wasteful spending, as there is no opportunity for other qualified bid for the same contract and bring down the price.