Georgia’s chain of public-service halls – a fast-food-style dispenser of everything from ID cards to property registrations – broke a mold in the post-Soviet world, where taking care of such tasks usually means taking a long journey though the labyrinths of government bureaucracy. The bold undertaking had been an achievement of ex-President Mikheil Saakashvili that has weathered the country's ongoing storm of revisionism. But it couldn't handle an actual storm.
The company that constructed the Tbilisi House of Justice was not chosen through an open tender, but via direct contracting; a practice that "is likely to result in wasteful spending, as there is no opportunity for another qualified bid for the same contract to bring down the price,”, the Georgia chapter of anti-corruption watchdog Transparency International argued at a December 6 presentation.
In 2012, under former President Saakashvili, the government dished out 1.17 billion lari (about $700 million) to companies under such contracts; an amount equivalent to "4.7 percent of the Georgian economy," according to TI. The deals "accounted for 18 percent of all government spending . . ."
Georgian law restricts direct government contracting, but exceptions apply to contracts related to cases of urgent necessity, special government decrees or for amounts under 5,000 lari ($2,936).
Such contracts became less frequent under former Prime Minister Bidzina Ivanishvili, but the practice has not disappeared. In the first nine months of 2013, direct contracts accounted for 450 million lari (about $270 million) of government spending, TI said. Among them is work on a fresh presidential administration building for newly elected President Giorgi Margvelashvili.
Notably, the recipients of such contracts have changed with Georgia's governments. While construction, as under Saakashvili, is still the biggest area of activities, "[t]he companies that were getting these contracts under the previous government are not getting them now,” said TI Georgia analyst Mathias Huter.
Other payments also appear to be part of this direct-contract habit. TI alleges that Saakashvili’s United National Movement received hefty campaign donations from individuals linked to the companies that were awarded non-competitive government contracts.
More recently, one company, Elita Burgi, which received 84,439-lari ($49,553) worth of non-competitive and classified government contracts in 2013, can be linked to a company that owns part of the land on which Ivanishvili's business-center is located, TI reported. In 2013, Elita Burgi donated 50,000 lari ($29,343) to the ruling Georgian Dream's presidential campaign.
Georgia's relatively transparent online government procurement system facilitated the conclusions in the TI report. But whether or not the government will take TI's advice to end non-competitive procurement deals and save itself some embarrassment the next time it rains remains to be seen.