Simplified public procurement during COVID-19: transport goods and services
From June 1, 2020, to September 30, 2021, Georgia’s government agencies signed up to 6,200 simplified public procurement contracts for the purchase of transport goods and services. The total value of these contracts was up to GEL 43 million.
Tbilisi Transport Company (spent GEL 16.2 million) and the National Tourism Administration (spent GEL 4.3 million) spent the most money in this regard.
Out of GEL 43 million worth of simplified public procurement contracts almost half — the contracts of GEL 21.3 million — were given to the companies the owners of which in various years have donated to the ruling Georgian Dream party or Salome Zurabishvili.
This GEL 21.3 million was distributed to 27 companies and two individuals who jointly donated more than GEL 953,000 to Georgian Dream in 2013-2021. About half of this amount was donated to the ruling party after the pandemic started.
One of the highest risk carriers of corruption in public procurement is when simplified procurement contracts are awarded to companies that fund a ruling political party directly or through their affiliates.
Recommendations
- Investigative agencies should be more interested in public procurement contracts containing signs of corruption;
- In the procurement of transport goods and services, the signing of simplified procurement contracts should be maximally limited unless it relates to the after-sales service of vehicles purchased from a particular company.
Introduction
Since 2020, due to the pandemic, the share of simplified (direct) contracts in public procurement has increased. When the share of simplified procurement increases and, at the same time, it is carried out expeditiously in certain force majeure situations, the risks of corruption and improper practices rise.
Transparency International Georgia published a report on public procurement during the state of emergency (March 21, 2020, to May 22, 2020) last year, examining corruption risks in public tenders and simplified procurement.[1]
This time we offer the analysis of simplified public procurement from June 2020 to October 2021. The study is divided into three parts. The first part of the study, which was about the simplified procurement in the construction sector, has already been published.[2] This second study analyses simplified public procurement contracts in the sector of Transport Goods and Services. This is one of the major categories of public procurement and includes the purchase of vehicles, vehicle spare parts, and accessories, and vehicle repair, and other services. The reporting period of this part is from June 1, 2020, to September 30, 2021. The data processed by us does not include the simplified procurement that relates to purchases made by Georgian embassies and consulates abroad. Procurement information is taken from the webpages of Transparency International Georgia: tendermonitor.ge and politicaldonations.ge.
The third, concluding part of the study will summarize all the important issues of simplified public procurement in the last year and a half.
General statistics
From June 1, 2020, to September 30, 2021, up to 6,200 simplified public procurement contracts were signed for the purchase of transport goods and services. The total value of these contracts was up to GEL 43 million.
The largest contracts were signed by Tbilisi Transport Company LLC, a company owned by Tbilisi City Hall. In particular, this company signed 6 simplified procurement contracts worth up to GEL 16.2 million.
In second place among large buyers was the LEPL[3] Georgian National Tourism Administration, which is part of the Ministry of Economy and Sustainable Development. This LEPL signed simplified public procurement contracts worth a total of GEL 4.3 million for the purchase of transport services. The agency's largest contracts were for transporting passengers to quarantine areas to prevent the spread of the coronavirus.
During the reporting period, simplified public procurement contracts totaling more than one million GEL were also signed by i) LEPL Emergency Coordination and Emergency Assistance Center of the Ministry of Internally Displaced Persons from the Occupied Territories, Labor, Health and Social Affairs of Georgia; ii) Tbilservice Group LLC, owned by Tbilisi City Hall; iii) the Emergency Service of the Ministry of Internal Affairs (MIA), iv) Department of Tourism and Resorts - a subdivision of the Autonomous Republic of Adjara, and v) the Ministry of Education, Culture and Sports of the Autonomous Republic of Adjara (see Figure 1).
Data source: https://www.tendermonitor.ge/en
As for the suppliers, in the period from June 1, 2020, to September 30, 2021, Tegeta Motors LLC received the largest contracts — totaling up to GEL 17 million — for the supply of transport goods and services. Then comes Georgian Bus LLC with GEL 3.5 million and GT Group LLC with GEL 1.5 million. According to the value of the contracts, 5 of the largest suppliers are donors to the ruling Georgian Dream - Democratic Georgia (Georgian Dream) party. Detailed information on this topic is given in the following section.
Data source: https://www.tendermonitor.ge/en
Participation of ruling party donors in simplified public procurement
One of the highest risk carriers of corruption in public procurement is when simplified procurement contracts are given to such companies that fund a ruling political party directly or through their affiliates. At such times, signs of political corruption appear.
During the study period, out of GEL 43 million worth of simplified public procurement contracts for the transport goods and services almost half — the contracts of GEL 21.3 million — were given to the companies the owners of which in various years have donated to the ruling Georgian Dream party or Salome Zurabishvili, a 2018 presidential candidate backed by the ruling party. In particular, GEL 21.3 million was distributed to 27 companies and two individuals who jointly donated more than GEL 953,000 to Georgian Dream in 2013-2021 (Table 1). About half of this amount was donated to the ruling party after the pandemic started.
Data source: https://www.tendermonitor.ge/en; https://transparency.ge/politicaldonations/
Below is additional information on such companies that have received simplified public procurement contracts worth more than GEL 40,000 from June 1, 2020, to September 30, 2021.
Tegeta Motors LLC
From June 1, 2020, to September 30, 2021, Tegeta Motors LLC received 662 simplified public procurement contracts with a total value of approximately GEL 17 million. Contracts were mostly for small amounts. There were only 10 contracts where the contract amount was more than GEL 20,000. Among the large contracts was the 4.5 million euro (approximately GEL 16 million) contract with Tbilisi Transport Company, which was signed on June 11, 2020. The subject of the contract was the provision of services for public transport, in particular buses.
In 2012-2021, Tegeta Motors received contracts worth up to GEL 40 million through simplified public procurement, and approximately GEL 133 million — through public tenders.
During the study period, the subsidiaries of Tegeta Motors LLC — Toyota Center Tegeta LLC, Tegeta Premium Vehicles LLC, Tegeta Retail LLC, Tegeta Construction Equipment LLC, and Tegeta Truck and Bus LLC — received simplified public procurement contracts totaling approximately GEL 1.2 million.
Tegeta Motors LLC and its affiliates have donated GEL 235,000 to the Georgian Dream and Salome Zurabishvili since 2017.
G-T Group LLC
From June 1, 2020, to September 30, 2021, G-T Group LLC received 180 simplified public procurement contracts with a total value of about GEL 1.5 million. 80% of the contracts were signed for amounts less than GEL 20,000. The GEL 300,000 contract signed on January 25, 2021, with Tbilservice Group was one of the major ones. The subject of the contract was the repair of vehicles and related equipment.
In 2012-2021, G-T Group has received contracts worth up to GEL 15 million through simplified procurement, and– GEL 167 million — through public tenders.
G-T Motors LLC, a subsidiary of G-T Group LLC, received 200 simplified public procurement contracts worth a total of approximately GEL 694,000 during the study period. 75% of the contracts were signed for amounts less than GEL 20,000. The three largest contracts (GEL 60,000, 80,000, and 100,000) were signed by the company with the Department of Environmental Supervision of the Ministry of Environment and Agriculture. The subject of the contracts was the repair of vehicles and related equipment.
In 2012-2021, G-T Motors has received contracts worth up to GEL 10.4 million through simplified procurement, and– GEL 64 million — through public tenders.
Individuals affiliated with G-T Group LLC have donated GEL 180,000 to the Georgian Dream and Salome Zurabishvili since 2016.
Iberia Auto LLC
From June 1, 2020, to September 30, 2021, Iberia Auto LLC received 28 simplified public procurement contracts with a total value of approximately GEL 917,000. Most contracts were for small amounts. Among the large contracts were two contracts with the Center for Emergency Coordination and Emergency Assistance, which were valued at GEL 350,000 and 300,000, respectively. The subject of the contracts was the repair of vehicles and related equipment.
In 2012-2021, Iberia Auto has received contracts worth up to GEL 3.6 million through simplified procurement, and– GEL 12 million — through public tenders.
90% of Iberia Auto LLC is owned by Iberia Business Group LLC, the director of which has donated GEL 3,000 to Georgian Dream. The owner of Iberia Business Group is IBG Holding LLC, 24% of which is owned by Tariel Khechikashvili, the former Minister of Sports and Youth Affairs, and 29.2% — by his wife Ekaterine Inasaridze.
Transporter LLC
From June 1, 2020, to September 30, 2021, Transporter LLC received 23 simplified public procurement contracts with a total value of about GEL 520,000. Most contracts were for less than GEL 5,000. Among the large contracts was GEL 492,560 contract signed with Tbilservice Group LLC, in September 2020. The subject of the contracts was the supply of road marking paints.
In 2017-2021, Tranporter LLC has received contracts worth up to GEL 1.3 million through simplified procurement, and GEL 1.6 million — through public tenders.
Persons related to Transporter LLC have donated GEL 100,000 to the Georgian Dream and Salome Zurabishvili since 2018.
MyGPS LLC
From June 1, 2020, to September 30, 2021, MyGPS LLC received 17 simplified public procurement contracts with a total value of about GEL 270,000. Of these, 15 contracts were for amounts less than GEL 5,000. Among the large contracts were the GEL 176,469 contract signed with the Zugdidi Municipality in January 2021 and the GEL 86,585 contract with the Martvili Municipality. The subject of the contracts was the transportation services for school children.
In 2012-2021, MyGPS LLC has received contracts worth up to GEL 3.3 million through simplified procurement, and GEL 26 million — through public tenders.
Until October 1, 2021, Temur Matua owned a 20% stake in MyGPS LLC. He donated GEL 60,000 to Georgian Dream, in 2020.
City Line LLC
From June 1, 2020, to September 30, 2021, City Line LLC received 2 simplified public procurement contracts with a total value of GEL 71,414. In July and September 2020, Kutaisi City Hall signed GEL 18,614 and GEL 52,800 contracts with this company. The subject of the agreements was the transportation of the beneficiaries of the "free travel program".
In 2012-2021, City Line received 12 simplified public procurement contracts worth a total of GEL 826,000 but it has not participated in public tenders.
The director of City Line LLC donated GEL 15,000 to Georgian Dream.
Autotechno LLC and Agrotechno LLC
From June 1, 2020, to September 30, 2021, Autotechno LLC received 4 simplified public procurement contracts with a total value of GEL 34,000. Out of this, the company received 3 contracts from the N(N)LE[4] Amenity Management Center of Zugdidi Municipality. The subject of the contracts was the repair of vehicles and related equipment.
In 2012-2021, Autotechno LLC has received contracts worth up to GEL 100,000 through simplified procurement, and GEL 800,000 — through public tenders.
Agrotechno LLC received one simplified public procurement contract worth GEL 15,000 during the study period from the National Forest Agency of the Ministry of Environment and Agriculture. In 2015-2020, Agrotechno has received 8 contracts with a total value of GEL 142,000 through simplified procurement, and – GEL 5,000 - through public tenders.
The owner of Autotechno LLC and Agrotechno LLC has donated GEL 80,000 to Georgian Dream since 2013.
Publication of this report was made possible with the support of the Open Society Foundations and the Ministry of Foreign Affairs of the Kingdom of Norway. The views expressed in this publication are those of Transparency International Georgia and do not necessarily reflect the views of the donors.
[1] Public procurement during the state of emergency: Basic data analysis and corruption risks, Transparency International Georgia: https://bit.ly/3qYUDoR
[2] Simplified public procurement during COVID-19: construction sector, Transparency International Georgia, https://cutt.ly/zY5JXmz
[3] Legal Entity of Public Law
[4] Non-Entrepreneurial (Non-commercial) Legal Entity