On February 10, the Parliament of Georgia adopted a new law “On Public Procurement” in the third hearing. The draft law was prepared by the State Procurement Agency, within the framework of the EU Association Agreement, with the aim of approximating Georgian legislation with that of the European Union. The adopted law aims to ensure the effective and fair management of funds allocated to public procurement, enabling integrity and accountability, and directing the process while taking into account environmental, social, and economic aspects from the perspective of sustainable development.
IDFI prepared an analysis of the draft law in 2022 prior to the first hearing. In the analysis, IDFI discussed the significant changes introduced in the new legislation and how well they accomplished the obligations taken by Georgia within the frameworks of various international platforms, as well as how well it responded to the recommendations given to the government by the local non-governmental sector across the years. As no substantive changes were made in the text of the draft law prior to its adoption in the third hearing, the previous analysis remains relevant.
According to IDFI’s assessment, the new law, for the most part, accomplishes the goal of meeting the challenges in terms of approximation with EU legislation, and as such, most of the changes can be evaluated positively. Highlights include the introduction of the idea of subcontractors and its subsequent regulation, which will significantly reduce corruption risks. Another positive step is the detailed list of potential conflicts of interest, and its application to subcontractors.
The new law also clearly defines the rules for the appointment and early dismissal of the members of the Dispute Resolution Board, which had been a recommendation by IDFI for a number of years. For example, in 2020, in an overview of the Dispute Resolution Board of that time prepared by the organization, IDFI noted that it was important to include such rules not in a bylaw, but rather the text of the main law; Increasing the term of office of members and raising their qualification requirements; As well as other proposals, the main goal of which was to increase the degree of independence of the board. In light of these recommendations, the changes made in the parts of the law concerning the Dispute Resolution Board are to be welcomed.
Nevertheless, several circumstances remain that limit the effectiveness of the newly adopted law. For example, in the assessment of the public procurement legislation prepared by IDFI within the framework of the Transparent Public Procurement Rating (TPPR), in the legislation in force at the time, the possible number of exemptions for simplified procurements was noted as a problem. The new law not only does not resolve the problem, but expands the list by including additional situations where negotiation procedure without prior publication can be used.
As it currently stands, the law defines several procurement procedures and instruments in general and vague terms. These are planned to be further specified in bylaws to be adopted in the future. IDFI will closely follow this process and prepare analyses after their adoption. For example, during the discussions of the draft law in the Parliament, it was mentioned that not conducting appropriate market research would carry an administrative penalty, which is not something that is currently mentioned in the text of the law. However, an order from the Procurement Agency is to regulate the procedure in the future, which likely means that a bylaw will contain the specifics for the corresponding rule.
After the law has entered into force, IDFI plans to reassess the Georgian public procurement legislation and system within the framework of the Transparent Public Procurement Rating (TPPR). In the past, Georgia achieved a fairly high position in the rating, being the 3rd, after Ukraine and Moldova. This standing, however, may change when TPPR is updated for the year 2023. In this regard, it will be interesting to see the assessment results for Georgia.
The detailed analysis of the new law can be found in the attached document.
/public/upload/Analysis/the_draft_law_on_public_procurement.pdf
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