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International Donor Organizations Should Involve Georgian Companies in Major Infrastructure Projects

The Caucasus Business Week (CBW) has inquired why Georgian companies fail to win infrastructural projects and whether they genuinely have low qualifications.

“Placing focus on quality improvement and rejecting price as the only criterion can ensure a company’s growth and quality improvement”, Ana Sabakhtarashvili, director of Association of Infrastructure Developers, told Maia Tskitishvili, Minister of Regional Development and Infrastructure.

Negotiations should be conducted with donor institutions with the aim to involve Georgian companies in major infrastructure projects. These resources genuinely exist, and it is possible to diminish or fragment project scales in certain cases.  Small sections may be entrusted to domestic companies. Similar approach could be the only solution, Sabakhtarashvili said.

Secondly – all contracts must name a domestic subcontractor. Today, a similar strategy is carried out in certain deals, however, this practice should be established in all negotiations, Sabakhtarashvili noted.

‘We seek to achieve this objective with our donors. They cooperate with local subcontractors anyway, because otherwise it is impossible, physically. Moreover, this amount should increase for nominated subcontractors”, Sabakhtarashvili noted.

Frequently, tenders are held, and the final price radically differs from the initial price, and this is not good. Somebody may appraise this as efficient spending of state finances, but the law price signifies that either a company fulfills the project with low-quality work, or it does not invest money in development and labor safety, she added.

The existing state procurement system is oriented only towards price, and enables companies to offer the lowest price, she noted.

“The only mechanism for growing companies and improving their quality, besides a focus on quality and rejecting the price as the only criterion, consists of the obligation to care for a project. One company should be responsible for design, fulfillment and care. In this situation, companies will be able to perform works with higher quality, and lower expenditures will be required”, Sabakhtarashvili said.

The Ministry of Infrastructure is conducting negotiations on the aforementioned issue with the Association of Infrastructure Developers and the private sector, she added.