Scope of the Law and the Defense Exception
The Law on State Procurement establishes the general legal, organizational, and economic principles of carrying out state procurement, but with respect to the defense sphere the very first article contains a significant exception: the rules established by the law apply to all types of state procurement except procurements connected with state secrets as defined by the Law on State Secrets. The list of objects of procurements connected with state secrets and the procedure for carrying out such procurements are approved by the Government of Georgia. Defense procurement is thereby divided into two regimes: classified procurements follow the special procedure established by the Government, while the remainder fall under the general procurement law.
The list of exceptions is broader still: the law does not apply, for instance, to procurements connected with the monetary and currency policy of the National Bank of Georgia, nor to the cases provided for by the Product Safety and Free Circulation Code and the Law on Energy Labeling. Determining the correct classification of a procurement — whether it falls under the general regime — is therefore the first question of the legal analysis of any defense-sector purchase.
Electronic Procurement Means and Simplified Procurement
Electronic state procurement is carried out by means of a competition, an electronic tender, or a consolidated tender, and, by decision of the procuring organization, a simplified procurement may likewise be conducted electronically under the procedures established for the electronic tender. Simplified procurement is admissible where the supply of goods, performance of works, or provision of services is the exclusive right of a single person and no reasonable alternative exists. At the same time, exclusivity is denied where the estimated value of the goods or services exceeds two million lari, or of the works four million lari, and another person exists abroad, within a reasonable territory, capable of the same supply or performance; or where the value does not exceed those thresholds and another person exists within the country.
Tender Announcement and Deadlines
In an electronic tender, the tender commission, in the name of the procuring organization, publishes the announcement and tender documentation in Georgian in the Unified Electronic System of State Procurement; publication in English is optional, yet where the estimated value exceeds the monetary thresholds established by the European Union directives applicable to procurement, publication in English is mandatory. The announcement receives a unique number and is deemed officially published, which secures international visibility of the announcement.
The deadlines are fixed by law: for the procurement of goods and services with an estimated value of up to one hundred fifty thousand lari, at least seven days are set aside for familiarization with the announcement and documentation and for the submission of proposals, of which the first five days are allotted to familiarization and the following two to submission; above that value, at least ten days, with the first seven for familiarization and three for submission. For suppliers this means that the time to react to a tender depends on the value threshold of the procurement, and monitoring of the system must be systematic.
Appeal to the Council
The decisions or actions of the procuring organization or the tender commission may be appealed by both a person wishing to participate in the procurement and a candidate, where the complaint concerns the tender announcement and documentation, or a decision taken before the start of the receipt of tender proposals. After the start of the receipt of proposals, only a candidate may appeal. In a simplified procurement whose value reaches or exceeds the thresholds established by the EU directives, a person registered in the system as a supplier may also appeal a decision connected with the conclusion of the contract. For suppliers in the defense sphere this mechanism is the principal guarantee of a competitive environment.
Practical Guidance for Participants in Defense Procurement
For a supplier, the first step is registration as a supplier in the Unified Electronic System and systematic monitoring of announcements: as the structure of the deadlines shows, the window for submitting a proposal is only two days in smaller procurements and three in larger ones, so readiness must be created in advance. The procedure for submitting the affidavit, qualification documents, and a sample is determined by a subordinate normative act, and it is precisely this documentation that often becomes the ground for rejecting submitted proposals.
Frequently Asked Questions about Defense Procurement
Does the general law apply to defense procurement?
Not to classified procurements: their list and procedure are approved by the Government; all other procurements fall under the general regime.
Which thresholds define exclusivity?
Two million lari for goods and services and four million lari for works: above those thresholds the existence of another supplier negates exclusivity.
How much time does a supplier have to bid?
At least seven days in total for smaller procurements, the last two for proposals; ten days for larger ones, the last three for proposals.
Who may appeal?
An interested person and a candidate regarding the announcement and early decisions, a candidate after the opening of bids, and, in large simplified procurements, a registered supplier.
How We Help on Legal.ge
The Legal.ge team assists both suppliers and procuring organizations in defense-sector procurement: we classify the procurement between the general and special regimes, prepare tender proposals and affidavits, analyze the grounds for simplified procurement, and lodge complaints before the Council. Contact us through the Legal.ge website on any tender-related matter.