Revamping Public Procurement: New Reforms Set to Strengthen the State and Business Ecosystem

With backing from the USAID Economic Governance Program, a forthcoming law set to take effect in 2025 will bring transformative changes to public procurement in Georgia.

Zaza Nanobashvili, Deputy Chairman of the State Procurement Agency, shared on the "Business Partner" program that this legislation will be enacted on January 1, 2025. It signifies not only Georgia's commitment under the Association Agreement but also its dedication to cooperative initiatives within the Georgia-NATO Essential Package (SNGP) framework.

This reform is monumental. By introducing modern procedures and tools, it rejuvenates the operational dynamics for both the state and businesses, steering them towards a healthier and more transparent milieu.

Nanobashvili clarified the nuances of the so-called "black lists." The business community had expressed concerns over equating companies that inadvertently missed deadlines with those engaged in deceitful practices. Both faced a one-year exclusion from state procurement opportunities. Addressing these concerns, the new system introduces tiered consequences:

• A 3-year blacklisting for offenses such as supporting terrorism or economic fraud.
• A 2-year exclusion for dishonest practices.
• A 1-year penalty for failure to meet obligations, with a provision for warnings in cases of genuine unforeseen challenges.

Interestingly, while previously a company blacklisted for a year had to wait out the full term, the new provisions allow for an early exit if the company undertakes significant organizational, technical, and staffing reforms.

The legislation also foresees mandatory certification starting in 2027. Nanobashvili pointed out that all officials in purchasing roles must undertake a certification process. Earning this certificate becomes paramount, as by 2029, officials will be barred from overseeing public procurements without it.

This year saw the formulation of the "On State Procurement" legislation, a move that aligns Georgia's public procurement system more closely with EU standards. The law also lays down new guidelines for streamlined procurement processes. This reform journey, which began in 2010, is expected to culminate with the adoption of nearly 30 normative acts by 2025.