Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
The Competition and State Procurement Agency is a state organization that governs government procurement through the e-tender system introduced in 2011. State purchases in the range of GEL 5,000- to 200,000 ($1,610—64,516) are conducted through a simplified electronic tender which is a substitute to single-source procurement. Purchases above GEL 200,000 ($64,516) mandate a call for a regular e-tender.
The Law on State Procurement requires an international tender announcement for contracts exceeding GEL 2 million (around $645,516) for products and services, and GEL 4 million (around $1.29 million) for public works projects.
Budgetary constraints limit the government’s purchasing power. International organizations and foreign governments finance many major procurement purchases, and respective tenders are carried out in line with their regulations and requirements.
Credit terms are one of the most important factors in government purchasing decisions. Product quality and supplier reputation are other factors. However, government procurement is often driven by a lowest bid consideration versus a best value for money approach, which can lead to the cheapest offer winning at the expense of quality.
The time allowed for preparing bids after the announcement of a tender is frequently short. Documentation requirements, including Georgian translations, can be onerous for companies not based in Georgia. In addition, some companies experience challenges with qualifying for tenders due to narrow specificiations or lack of familiarity with U.S. products.
Information about tenders is available from the Georgian Competition and State Procurement Agency and individual ministries such as the Ministry of Defense.
The Georgian government finances some public work projects through borrowing from Multilateral Development Banks. Please refer to the “Project Financing” Section in the “Trade and Project Financing” chapter for more information.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.”
Financing of Projects
For project financing and risk insurance, American investors and exporters may contact the U.S. International Development Finance Corporation, formerly the Overseas Private Investment Corporation, which provides direct financing and insurance coverage against political risk, currency inconvertibility, expropriation, and political violence.
The Political and Economic Section of the U.S. Embassy in Tbilisi can provide contact information and assistance to any U.S. firm about export financing, insurance, local and domestic business associations and partners, and business climate information.
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Trade Finance Guide. The U.S. Department of Commerce’s International Trade Administration has a Foreign Commercial Service Officer stationed at each of the five different MDBs: the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Georgia is a borrower from Multilateral Development Banks such as European Bank for Reconstruction and Development, Asian Development Bank, and World Bank.
Learn more by contacting the:
- Commercial Liaison Office to the Asian Development Bank
- Commercial Liaison Office to the European Bank for Reconstruction and Development
- Commercial Liaison Office to the World Bank.
Georgia also has other internal sources of project financing separate from the banking sector, such as the Co-Investment Fund and Partnership Fund, and the government supported “Produce in Georgia” program. For additional information on this topic, including content of relevance to U.S. investments, please visit the U.S. Department of State Investment Climate Statement.