Georgian Electronic Government Procurement System
State Procurement Agency of Georgia

The Problem

The first Georgian Law on State Procurement was passed in 1999. It was elaborated on the basis of the model law of the UN Commission on International Trade Law (UNCITRAL). In 2006 a new law on the State Procurement took its place. Shortly after the World Bank prepared comprehensive assessment of the State Procurement System of Georgia (CPAR). Standards proposed by Organization for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) EU served as criteria of assessment. Report published in 2008 evaluated the State Procurement System of Georgia in its entirety as “a high-risk environment”.
System was still reputed as a most odious legacy of the communist regime. Risks of the discrimination and other negative moments existed. Corruption was deeply inherent to System. So called “kick backs” were not something unusual, as well as bribery, trade of influence and accepting illegal presents. These deficiencies undermined society’s confidence towards the procurement institutes and damaged stability of the system. The lack of transparency proved to be an unresolved problem. As usually, suppliers lacked full information on tenders. Costs on administrative issues were very high and unjustified as well.
One of the defects of System was that all procurement procedures were executed only by means of the paper work. Such practice was ineffective. During 5 years by the end of 2010 about 20 million paper copies were produced, that caused a lot of difficulties in document registration process and in procedures on determination of the conformity of documents to existent requirements, that caused high risks of corruption abuses.
Some formal requirements made additional administrative barriers for normal tender process. So suppliers had to contact various administrative bodies to obtain qualification documents, which sometimes were needless. It was taking much time and money to collect qualification documents. In addition to these indirect expenses, there was established a tender participation fee (200 GEL – 120$). At the very end, the costs of participation in tenders were inevitably high. This, on one side, discouraged many companies from the participation in tenders and, on the other side, conditioned raise of monopolistic tendencies and formation of the caste of privileged suppliers.
According the old procedures, bidders had to visit at least 4 times the procuring entity to take part in tender procedures, and the winner had to visit it one more time additionally. At this point, geographical factor could not be underestimated. Some companies found themselves in disadvantageous position in comparison with those ones that were located in Tbilisi. Of course, mentioned shortcomings hampered formation of the competitive environment in the State Procurement System of Georgia.
In fact, almost all core international principles on efficient public procurement activities were broken. That is why the existing Georgian State Procurement System was considered being unsuccessful and irrelevant for the State that faced the numerous challenges. Reforms of the System were urgent.

Solution and Key Benefits

 What is the initiative about? (the solution)
On 1 December 2010 the traditional paper based tendering system was replaced with a new e-procurement system. Since that day all tendering procedures have been exclusively executed by means of the Georgian Electronic Government Procurement system (Ge-GP). Presently, all procedures (from tender announcement to conclusion of contract) are executed on-line. By the end of 2011 Public Funds Savings generated by Ge-GP amounted to GEL 182 million ($110 million), which was 14% of the total value of the announced tenders. One of the main effects of Ge-GP is high level of transparency of procurement procedures decreasing risks of corruption. All procurement related information is open and available online, including annual procurement plans of all (more than 3000) procuring entities, tender notices, tender documentation, bids and bidding documents, decisions of tender evaluation commission, all relevant correspondence, all contracts. The number of tenders raised remarkably. 2000 tenders were conducted In 2008, in 2009 – 2300, while in 2011 the it exceeded 33000. This progress was determined by the decrease of the threshold for simplified procedure. Earlier versions of the Law stated that a direct contract could be used if estimated value of goods/services was less than $30000 and value of works less than $60000. After Ge-GP implementation all tenders should be conducted electronically if their estimated value is more than $.3000. By virtue of mentioned innovation procurement procedures became more transparent. This provides equal opportunities for bidders despite their geographical location. Fair competition between suppliers has been forming.
For the short period of time the level of corruption came down. Only few instances of wide scale corruption scheme were detected and it lost organized features.
List of blacklisted companies is integrated in Ge-GP automatically preventing such companies from participation in procurement. Protection of the bidders rights to appeal unfair treatment is guaranteed by Dispute Resolution Board, comprising of SPA and NGO representatives on equal footing. E-module for submitting complaints to the Dispute Board was launched from November, 2011. Bidders are able to submit complaints electronically. This procedure is greatly simplifying the appeal process and makes dispute resolution more transparent and increases public engagement in the state procurement processes.
Ge-GP simplified procurement procedures. Administrative requirements are minimal. List of obligatory documents to be obtained by bidders from state bodies shall be short and well justified. Qualification criteria and technical requirements are verified on pass/fail basis for the winning bidder after completion of e-auction procedure. The necessity of bidders’ physical visits to procuring entity is diminished. Only the winner has to do it only once. Participation cost in procurement procedures is 30$ that is four time less than it used to be.
The EU Common Procurement Vocabulary is used to describe procurement objects. One of the functions of CPV codes is prevention of spiting of contracts.
Ge-GP is helpful for suppliers to plan sale strategies. Information about all tenders, notifications on the announcement of tenders of their particular interest are always available. Around 11000 registered active users – both procuring entities and suppliers make use of Ge-GP.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
Implementation of Ge-GP is an idea and initiative of Georgian Government. They originate from the politic-economic course of the country one of the goals of which is to ensure the rational management of the public finance and at the same time to contribute to fair and non-discriminatory contest on the market. Reform in State Procurement System is an element of the State strategy on the economic liberalization and struggle against corruption.
At the initial stage of reform it was necessary to change significantly the current legislation by means of implementation of the novelties and creation of the new regulation mechanisms. Amendments for the secondary legislation were also urgent. In 2005 a new Law on State Procurement was adopted, it was put into force in 01/01/2006. The core amendments to it were done in 2009-2010 that served as a base for the implementation of the Ge-GP. For implementation and administration of the Ge-GP the State Procurement Agency (SPA) was established. It is accountable to the Georgian Government. It was the SPA that became the main institution responsible for the realization of the State procurement policy. The SPA is the main state body implementing and developing Ge-GP. It is completely responsible for the successful realization of the reform. Team of young managers was employed. They had a developed vision of reforms and skills to work effectively with new technologies.
As for technical assistance for implementation of the Ge-GP a significant role belongs to the National Agency of Public Registry (NAPR), that already have a big experience in using electronic means providing their services to population. NAPR provided Ge-GP with software support. The SPA continues its cooperation with NAPR in development of the software support and in implementation of program novelties. Nowadays with the growth of efforts the SPA faces the necessity of building up productive capacities of the Ge-GP. The need in the independent separate server evolved from the practice. This problem could not be resolved without technical and financial assistance of international agencies. So, by the virtue of World Bank financial assistance the SPA purchased necessary technological devices and appropriate program resources.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
Priorities were accentuated during implementation of the Ge-GP. These priorities were the part of the general anti-corruption State strategy. These were to ensure rational expenditure of funds designated for the state procurement, as well as promotion of healthy competition in procurement area, to guarantee fair and non-discriminatory approach towards participants and transparency of procedures. The set priorities implied promotion of the publicity of state procurement and confidence building measures. While planning implementation of the Ge-GP two models of its development were considered – stage by stage model and mode of drastic revolutionary changes. The choice was made in favor of radical reforms. That is why electronic tenders became obligatory for all procuring entities and suppliers. In December, 2010 after 4 months pilot approbation of the Ge-GP and organization of special trainings-seminars for the representatives of the procuring entities it became possible abolish paper tendering procedures to switch to 100% electronic tendering system. The strategy oriented on the radical changes proved to be effective.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
Some key organizational steps were made while implementing the Ge-GP. Elaborated strategy implied drastic revolutionary changes in the existing State Procurement System. Since August 1, 2010 while pilot approbation of the Ge-GP took place, the SPA organized the series of seminars for more than 1000 prospective Ge-GP users. In assistance with professional and business associations the SPA held numerous meetings with representatives of business sector to inform them on advantages of new system and its terms of usage. Ge-GP User Manual with the detailed explanation of e-tendering procedures was developed and made available for all interested users. Development of electronic payment (tender participation fee/guarantee) modules was also crucial.
After implementation of the Ge-GP measures on elimination of its defects were taken. Everything was done to simplify operations, made them easily understandable and comfortable for users. Design of the SPA website is very important. It’s content was translated into English. Nowadays any legislative act, concerning procurement system, manuals for the users of the Ge-Gp , any kind of notifications and information is available in Georgian and English languages. Tender announcements in English serve as a good precondition for the rise of number of bidders at the expense of the foreign companies. This moment contributes to the development of the Georgian Procurement System.
Now Procurement System in Georgia, its legislation and practice strive to conform to international standards, to borrow and implement technological innovations in this field.
Maintenance of the dialog between state bodies and a private sector is also important.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
The main obstacle endangering the Ge-GP implementation was the lack of experience in implementation of such systems in Georgia as well as the lack of financial and human resources to implement such a comprehensive and ambitious project.
The situation was even worse because of the skepticism of international donors about the possibility of the SPA to implement the reform in a very short time with no strategic development plan and with scarce financial and human resources. The same was true about general Georgian public that was even more skeptic about the SPA’s ability to bring any innovation in the State Procurement System. So big was the inertia of the past in attitudes toward it as an odious state body. An opinion was expressed that technical reform is not a sufficient to eradicate corruption in the sphere, to change mentality of the staff. Not many persons working in the procurement system had any experience of working with computer, especially those who were employed in rural regions.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
There were two alternative scenarios of Ge-Gp development – getting off-the-shelf solution abroad or in-house development. During discussions the prevailing opinion was to borrow similar system from the country that had already implemented the same. At first the choice was made in favor of Korean experience. But it proved to be expensive. Its total cost was $10 million which was at least 20 times more than the annual budget of the SPA. The deployment and development of off-the-shelf solution requires intense involvement of foreign specialists and even in the case of unforeseen minor changes they had to be brought to Georgia. It would be impossible to react promptly in the unforeseen circumstances. So, decision was made in favor of in-house solution. Specialists of NAPR were invited. Over all, much less than $ 1 million was spent on the Ge-Gp development and maintenance which is unprecedentedly small amount for such case. This spending was divided in following way: Ge-GP software - $150 000, hardware and infrastructure components - $500 000, information managing system - $70 000, website – $10 000, informational campaign $30 000.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
As mentioned, the Ge-GP was put to motion from December 2010. The flexible procurement legislative regulation system is put in place to face challenges of the Ge-GP. The main aim of the Ge-GP is constant improvement and creation of conditions for procuring entities as well as suppliers. It is important that the website of the SPA, which the way of access to the Ge-GP, is permanently among 5 best administrative electronic resources this years. Just during one year of Ge-GP operation, the number of unique visitors exceeded 211 000, while total page views amounted more 6 226 000.
A lot of international organization missions’ assessments confirm the effectiveness of the system. So for example,EBRD Public Procurement Assessment Review of laws and practice in the EBRD region, 2011” made the following evaluation of the State Procurement System reforms in Georgia:
“In the Eastern European countries, including Georgia and Russia, the basic policy features of public procurement are in place. However, only Georgia scored a high compliance rate, as most integrity safeguards and procurement efficiency instruments recommended by international best practice were adopted in Georgia in 2010;
In four out of five countries there is no opportunity to appeal to independent remedies body; judicial review is provided for but the courts do not decide on remedies (only compensation). Only in Georgia is the remedies body fully independent;
The best result in the region was achieved by Georgia (83 percent) which indicates high compliance with international standards. Three other countries’ national frameworks were evaluated as medium compliant with scores below 75 percent: Russia almost 75 percent, Belarus 74 percent, and Moldova 71 percent. Ukraine’s result of 59 percent shows low compliance. More specific scrutiny of the laws reveals bigger differences in some of the indicators;
The results of Georgia are better than the average in all the Core Principles benchmark, especially in the transparency, flexibility and efficiency of the public contract indicators;

Analysis of the local practice leads to the conclusion that Georgia has a well developed public procurement framework;
In some countries in the sub-region barriers to international trade were identified, with domestic preferences allowed. In this sub-region only in Georgia are modern procurement techniques and electronic communication generally available.”
,,Transparency International Georgia” reports that: Perceived corruption in Georgia is lower than in several European Union member states, including Slovakia, Italy, Greece, Romania and Bulgaria;
"In the past year, we have seen the successful introduction of an electronic, transparent procurement system, which has been a very positive development", says Eka Gigauri, TI Georgia’s Executive Director. "The government’s steps to make data accessible to citizens online and promote e-governance are very positive. We encourage the government to further increase these efforts particularly in regards of some state agencies, which are considered less transparent." (
Georgia is ready to share its experience with African and Oceania region countries, according to the wish expressed by these countries on international forums. World Bank and Asian Development Bank plan on conducting researches of our reforms for later implementation in other countries.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
Today it is possible to identify the main elements of success of the reform as well as to analyze experience accumulated for this period. Success of such system depends on the will of the State and its orientation towards modern, competition based, liberal economic, also demolishing corruption. Exactly this approach gave impetus to the implementation of the Ge-GP in State Procurement System. The accurate identification of priorities and result oriented strategy was essential for the precise planning of state’s procurement reform.
Besides, mobilization of resources, creation of friendly and comfortable environment was conducted from the beginning to the end reform.
Ge-Gp is accessible for even those people who don’t have experience of using such programs. The principle that is observed carefully is that Ge-Gp should be widely spread and there should be a permanent communication between its authors and potential users. It will help to overcome the possible challenges of the previous obsolete practice. The lack transparency and high risk of corruption were the most serious defects of the old Procurement System. Now we can definitely say that this defect was overcome. System stopped the privileged treatment of some companies, because it became public that strengthened the possibility of monitoring from the special bodies as well as from society itself. After reform the number of registrations of various entities as users of Ge-Gp increased remarkably. Among new users we can see great amount of entities that earlier did not experienced confidence towards Ge-Gp or had no idea about its existence.
The another step that was made by reforms authors was maintaining of permanent and close contacts with business sector that contributed to confidence building between State and the last one. Businessmen’ recommendations were actively accepted during reform process.
The fact that absolute majority of the interested parties have internet access which significantly contributed to the sustainability of the s Ge-GP and its success in such a short time.
Ge-GP ensure rational expenditure of funds designated for state procurement, promoted of healthy competition in the area of the production of goods, provision of services and the performance of construction works necessary for the state.

This process showed once again that active and result oriented actions are necessary. Every successful step of the program was becoming the base for another successful one.

Contact Information

Institution Name:   State Procurement Agency of Georgia
Institution Type:   Government Agency  
Contact Person:   Tato Urjumelashvili
Title:   Chairman of SPA  
Telephone/ Fax:   +995577244422
Institution's / Project's Website:
Address:   28, Pekini Ave.
Postal Code:   0160
City:   Tbilisi
Country:   Georgia

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