Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Georgia, based on a desk review. The review applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective GPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
  
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
  
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.
  

The Factsheet is intended to be a living document to promote knowledge sharing and support training activities at ADB. It will be revised and improved as new information is uncovered and advances are made. If you have new information, please contact ychu@adb.org.

Over 5.8 billion GEL was spent in 2019 on goods, services, and infrastructure projects, representing around 30% of Georgia’s Gross Domestic Product (GDP). Green and sustainable procurement are not currently recognized or supported in national laws and policies. However, the country is exploring the use of the green economy as a strategy to support national development. A major driver is the EU Association Agreement signed in 2014 which contains a specific commitment to adopt SusPP.

A shift to a green economy offers many benefits for the country. Georgia is located in one of most biodiversity-rich areas of the world (the Caucasus and Iran-Anatolian hotspots). However, land degradation and coastal damage has impacted the tourism sector, costing 5% of GDP in 2018. Air and water pollution is growing rapidly, as well as waste generation.

Georgia has great potential to utilize renewable energy resources. Its national electricity mix is relatively green with 25% generation from renewables, mainly hydropower. Its economy is relatively low in carbon intensity compared to neighbouring countries, however remains three times more intensive than the OECD average. Emissions are generated mainly due to energy, transport, industrial and agricultural activities, sectors that can be prioritized in ongoing SusPP implementation discussions.

>> Snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Early Stage

Key Achievements

• High-level commitment to SPP due to EU Association Agreement
  
• Online Green Technology Sector marketplace makes buying green easy
  
• Local companies have received support to adopt green technologies
  
• Pilot sustainable public procurements have been successfully completed
  

Potential pathways forward

• No clear policy vision to a green development pathway or infrastructure
  
• Public procurement legislation does not explicitly allow SPP
  
• Few tools and training available to support procurers to choose green
  
• No monitoring system to track sustainable procurements
  

>> Timeline of Implementation of Sustainable Procurement Activities

2010

2014

2016

2017

2018

2019

2020

2022

2023

New Procurement Law adopted.

E-Government Procurement system launched

Signed EU Association Agreement to align with EU standards

Signed OECD Green Growth Declaration

Joined the EU Energy Community

City of Tbilisi adopts Green City Action Plan

Mobile app promoting green technologies in Georgia launched

National Energy Efficiency Action Plan 2019-2020 adopted promoting energy efficient lighting

Law on Energy Labelling adopted

Law on Energy Efficiency and Law on Energy Performance of Buildings adopted

Pilot green procurements supported by the EU

Knowledge exchange workshop on GPP

High-level dialogue on SusPP

New Procurement law adopted to align with EU standards, setting sustainable development as a procurement objective

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Sustainable public procurement (SusPP) is not promoted in any national strategy or policy in Georgia to date. However, a key driver for SusPP exists in the country due to the Association Agreement (AA) with the European Union (2014). Chapter 3 (Title VI) of the AA commits the country to strengthen cooperation on environmental issues, thereby contributing to the long-term objective of sustainable development and greening the economy. The AA specifically calls for the establishment of national systems for sustainable public procurement and ecolabelling.

Georgia also joined the OECD Green Growth Declaration in 2016, which aims for the development of a low-carbon sustainable economy and “smart, safe and sustainable” infrastructure. In 2017, Georgia became a Contracting Party of the EU’s Energy Community, and has made progress in improving energy efficiency, renewable energy development and environmental protection.

Environmental issues are addressed through a number of sector-specific strategic documents including the Social-economic Development Strategy “Georgia 2020” (2014) and Third National Environmental Action Programme for 2017-2021 (2018). The National Waste Management Strategy 2016-2030 sets out targets to recycle 30% of plastic waste by 2020, 50% by 2025 and 80% by 2030. The country submitted its Intended National Determined Contributions (INDC) to the Paris Agreement on climate change in 2015 aiming for a 15% GHG reduction by 2030, later increasing ambition to a 35% reduction by 2030.

The Ministry of Economy and Sustainable Development has led plans to develop a green growth strategy since 2016, an effort that benefits from support from several international donors and programs including GIZ, EBRD, EU4Environment, USAID, UNDP, Government of Sweden and the World Bank. The country participates in the Batumi Initiative on Green Economy (BIG-E), which operationalizes the Pan-European Strategic Framework for Greening the Economy. However, no formal policy has been adopted to date.

SusPP can be complementary to the operationalization of several environmental regulations and policies.

• Waste: Since 2019, municipalities have been obliged to introduce waste collection systems for paper and cardboard, glass, plastic and metal, and plans are in place to establish energy recovery plants by 2025. Draft Decrees have been prepared to recycling and recovery of packaging, waste oil, tires, vehicles, batteries, accumulators and other e-waste.
• Buildings: The National Action Plan on Energy Efficiency 2019-2020 recommended the introduction of efficient lighting systems for public buildings, schools and street lighting. The Construction Code was revised in 2019 to integrate "greening coefficients (K3) that define the minimum green space coverage in development zones.
• Vehicles: Georgia has adopted mandatory vehicle inspections and fuel standards to meet EU standards to combat the high level of transport-related air pollution. Electric vehicles are exempt from import duties and supply of electric buses is exempt from VAT with the right to credit.

The City of Tbilisi has adopted a Land Use Plan with the "green city" concept. It aims to shift from fuel-based to electric public transport system.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

The Georgia Parliament adopted a new law "On Public Procurement" (PPL) in February 2023, with implementation planned to start in January 2025. The draft law aims to fulfil the obligation set out in the EU Association Agreement to align Georgian procurement legislation with EU standards. Key clauses that support SusPP in the new PPL include:

• "promotion of sustainable development" as a goal and principle of procurement.
  
• introduces the concept of life-cycle costing and allows procurements to be awarded on the basis of best price-qualify criterion.
  
• allows for competitive dialogues and innovation partnerships, two procurement approaches that have been used in the EU to identify new green market products and technologies. These market-led procurement approaches allow procurers to engage in dialogues with "complex" markets where the definition of technical specifications are difficult.
  
• allows for public procurement to achieve social objectives, especially in the purchase of services. Allows the setting aside of reservations for people with disabilities and members of other vulnerable groups, including women - especially suppliers with at least 30% of employees from such groups. (Art. 35)

The PPL authorizes the use of framework agreements, centralized procurements and joint procurements, all approaches that can simplify, aggregate demand for and reduce costs for sustainable products and services. Procuring bodies can conduct market research to inform annual procurement plans, providing an opportunity for procurers to engage with suppliers to uncover the latest green market developments.

Other relevant laws include the Law of Georgia on Environmental Protection that allows for the creation and regulation of ecolabeling, although no national ecolabel currently exists. The Law on Energy Efficiency promotes the use of energy service companies (ESCOs). The Law on Energy Performance of Buildings set out minimum energy performance requirements and a national calculation methodology for buildings.

Pillar 3: Institutions & Capacity

The Public Procurement Agency (renamed in 2023 from its previous name, the State Procurement Agency) acts as the central procuring authority in Georgia. It is responsible for drafting procurement legislation and regulations and supporting the legality of procurement practices. It operates under direct supervision of the Government of Georgia (Prime Minister’s Office, Administration of the Government of Georgia). Procuring Committees may also be formed when specialized expertise or oversight is needed for a specific purchase or series of purchases.

The 2023 law "On Public Procurement" envisages the creation of a new legal entity under public law to be named the Central Procurement Authority (CPA). The CPA is mandated to coordinate centralized procurements and must be created by January 1, 2027.

Another key institution is the Environmental Information and Education Centre, the national body legally mandated to support the setting up of eco-labelling systems and eco-standards.

A Training Centre was established in 2014 which provides procurement related information and help services for the public and private sector. The new PPL also creates a certification system for "public procurement specialists". Each procuring organization is required to designate at least one "certified" staff member who will directly carry out procurement activities.

Awareness raising efforts on SusPP have been organized in 2022. A knowledge exchange workshop was organized in March 2022 to support the Procurement Agency's work on green procurement and drew upon expertise from the U.S. Environmental Protection Agency (EPA), various U.S. federal and state agencies, UNEP, ECPAR and other groups. This was followed by a High Level Dialogue on Sustainable Public Procurement in October 2022 with attendance by procuring authorities and policy-makers, business associations, NGOs, and international development partners.

Pillar 4: Market Practices

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

Companies across Georgia have made significant advances in recent years in adopting resource-efficient business practices and technologies. The European Bank for Reconstruction and Development (EBRD) directly supported several Georgia companies to upgrade their operations for improved energy efficiency and health outcomes. Resource Efficient and Cleaner Production (RECP) clubs have been created, which gather and support SMEs in various Georgia municipalities to shift to greener operations and technologies. Under the EBRD’s Green Cities initiative, a startup competition has been launched in Georgia and neighbouring countries in October 2022 to accelerate new market solutions that enhance energy sustainability and security in urban environments. A new program to support Georgian enterprises to conduct Product Environmental Footprints (PEF) and join the EU Single Market for Green Products is planned in 2023.

Public procurers can quickly identify companies with green solutions through the online Green Technology Sector marketplace, which lists eco-friendly suppliers in Georgia for products in 15 categories (e.g. heat pumps, irrigation systems, motors, refrigeration).

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Public procurement reform in Georgia has been gradual since its independence as a post-soviet country. A major advancement was made in 2010 with the creation of the country’s e-procurement system, leading to increased transparency and reduction in corruption. However to date, no clear operational tools have been put in place to support green and social procurements. No national ecolabel program exists in Georgia. However, the country has a system of product labelling for biological, organic, and chemical free production for goods mainly from the agricultural sector.

Despite the lack of supportive tools, sustainable procurements have taken place in the country through pilot projects. The European Union has supported several green procurements pilots, including energy-efficient schools and day care centres. Projects include energy-efficient renovations of 26 public buildings and three kindergartens, including installation of solar panels, thermal insulation tiles, energy efficient light bulbs, double-glazed windows and more.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

Currently there is no active monitoring of GPP practices in Georgia. The country does benefit from an e-procurement system capable of tracking procurements launched in 2010. However, no criteria on green or social procurement are currently tracked in the e-procurement system.

Projects Supported by ADB

Current ADB operations in Georgia are implemented under the country partnership strategy (CPS).

Other Initiatives supported by National/International Agencies

• EU4Environment: UNEP supports the Georgian Environmental Information and Education Centre and procurement authorities to review and elaborate legislation on Sustainable Public Procurement (SPP). EU4Environment will assist the State Procurement Agency in drafting concrete legal provisions/articles, by-laws and guidelines on SPP and organise a series of awareness raising events to help businesses better respond to public tenders with sustainability criteria.
  

• Green Economy Financing Facility (EBRD): The EBRD supports Georgian businesses invest in high-performing green technologies by providing financing through local financial institutions. The Facility provides direct financing, features businesses on online marketplaces and hosts accelerator and training programs.
  

• Government of Sweden: Work is underway to conduct a mapping of the circularity of the Georgian economy to inform the development of a Roadmap to Circularity and adoption of a Circular Economy Strategy.
  

References

EBRD, 2013. "Reform in Georgia: 'Everyone sees Everything', Law in Transition online.

EBRD, 2018. Georgia Tackles Energy Efficiency Challenge with National Action Plan.

EU Memo/14/430, "The EU's Association Agreements with Georgia, the Republic of Moldova and Ukraine" Factsheet, 23 June 2014.

GIZ, 2022. Supporting Climate Resilient Economic Development in Georgia: Application of the E3.GE Model to Analyse the Economy-Wide Impacts of Climate Change Adaptation.

Government of Georgia State Procurement Agency "Georgian Successful Reforms of Public Procurement Path Towards the Risk-Based and IT Based Approach."

Institute for Development of Freedom of Information (IDFI), 2022. Analysis and Assessmentof the Draft Law on Public Procurement.

Price Waterhouse Cooper (PWC). Green Economy in Georgia - Regulatory Overview.

United Nations Econoic Commission for Europe (UNECE), 2022. Handbook on innovation enhancing procurement for Georgia.

World Bank, 2020. Georgia:Towards Green and Resilient Growth.

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