Nika Melia, Tbilisi mayoral candidate from the United National Movement, organised a meeting with bus drivers on 5 May 2014. He talked about the necessity of renewing municipal buses in the capital city. Melia stated the following: “New buses should have been put into operation this year. Tbilisi City Hall announced a tender for purchasing 100 new, environmentally friendly buses adapted for disabled people; however, this project was not implemented due to the fact that City Council did not allocate the required amount of money.”

Nika Melia also explained that in the case of his victory in the elections, the tender for purchasing buses would be announced again with the new buses ensuring comfortable transportation for residents of Tbilisi.

FactCheck

took interest in the issue of municipal buses and checked the accuracy of Nika Melia’s statement.

Tbilisi City Hall announced a tender on 4 November 2013 for the purpose of purchasing 100 new buses for the capital city. The tender amount (GEL 55,500,000) was incorporated into the Tbilisi city budget for 2014. According to the requirements of the tender, the buses had to meet European standards. In particular, a bus should be designed with a capacity for 85 passengers and adapted for disabled persons. The bus should not have steps in front and be equipped with three wide doors. In addition, according to the requirements, there should be enough space for at least one wheelchair. In order to provide bus wheelchair ascents, the middle doors should be equipped with a mechanical lift. Moreover, the bus be provided with heating, ventilation and air conditioning adapted to the climate of Tbilisi and the ventilation should have been provided in the interior space of the bus even when air temperature was equal to 45⁰

C outside.

The following five companies participated in the tender announced by Tbilisi City Hall: Karex, a.s, Tegeta Truck and Bus, Solaris Bus & Coach S.A. Zhengzhou Yotobong Bus Co. Ltd and Xiaman Golden Dragon Bus Co.

Tbilisi City Hall terminated the tender announced for purchasing 100 new buses on 31 December 2013. The non-approval of the city budget by City Council was stated as the reason for this. Tbilisi City Hall made a statement regarding the aforementioned and explained the reasons for the termination of the tender. According to the statement by Tbilisi City Hall, due to the fact that the city budget was not approved in 2014, City Hall was compelled to terminate those projects directed at ensuring the well-being of Tbilisi. Providing 100 new buses fell within the category of these types of projects. According to the explanation by Tbilisi City Hall, it was compelled to terminate the procurement procedure provided by Sub-paragraph g¹

of Paragraph 1 of Article 7 of the Law of Georgia on State Procurement.

According to the explanation by City Hall, based upon Paragraph 7 of Article 7 of the Budget Code, in the case of a non-approval of the budget of the local self-governing unit, the executive body is authorised to issue one-twelfth of the budget appropriations spent on each priority monthly. Allocated appropriations from the Tbilisi city budget for 2013 for the purpose of the construction-development of the city’s transport infrastructure amounted to GEL 122,382,211. Accordingly, the amount of money spent on these priorities monthly in 2014 should not have exceeded GEL 10,198,517. According to City Hall, the following work should have been implemented within the framework of the aforementioned priority: repair-reconstruction of streets and roads, maintenance of street and road signs and traffic lights, vertical and horizontal road marking, reconstruction of the metro dispatching office and other projects which amounted to GEL 83,400,000 in total. According to the statement by City Hall, the amount of advances (30% of the price of a bus excluding VAT and service fee) to be paid for suppliers according to the companies was as follows: KAREX (IVEKO) – GEL 14,729,954, Tegeta Truck and Bus (MAN) – GEL 13,801,629, Solaris Bus & Coach S.A – GEL 14,290,134, Zhengzhou Yutong Bus Co Ltd – GEL 8,671,584 and XIAMEN GOLDEN DRAGON BUS CO – GEL 8,679,828. This clearly illustrates that in the case of the failure of these aforementioned activities, it would have been impossible to pay advances to some companies. In the case of paying the advances, other aforementioned activities could not have been implemented.

It should also be noted here that the first version of the Tbilisi city budget for 2014 was sent by Tbilisi City Hall to City Council in November 2013. The approval of the city budget was delayed for four months. According to the first version, the city budget was determined to be GEL 720,000,000. The second version of the budget was filed at City Council in December 2013 which amounted to approximately GEL 730,000,000. Tbilisi City Hall sent the third version of the budget to City Council in January 2014 with appropriations equal to GEL 785,000,000. The fourth version of the budget with appropriations equal to GEL 850,000,000 was presented to City Council in February 2014. None of the four versions of the city budget was approved by Tbilisi City Council.

Different NGOs responded to the aforementioned issue of the non-approval of the Tbilisi city budget. Transparency International Georgia published a report about the non-approval of the Tbilisi city budget which states that the discussion-approval process related to the budget was ongoing for three months amid political discussions and accusations which themselves halted the processes and ignored the interest of society. Transparency International Georgia considered that the rest of the remarks of Tbilisi City Council on the first version of the budget project for 2014 neither created an insurmountable obstacle nor constituted a basis for the rejection of the budget. In addition, according to Transparency International Georgia, a possible political motivation for delaying the process was verified by the fact that City Council could have presented all of its remarks at the first stage and not step-by-step. If the remark was not managed to be sent on time, City Council would have had the possibility to include amendments to the Tbilisi city budget during the whole year.

In the end, the Tbilisi city budget was approved by Tbilisi City Council on 8 March 2014. Its amount is equal to GEL 785,000,000. From this amount, GEL 88,713,000 is allocated for the repair-construction of transport infrastructure from which GEL 64,313,500 is allocated for street infrastructure construction-repair and maintenance and GEL 24,400,000 is allocated for the development of transport.

In order to study the tender announced for purchasing 100 new buses for the capital city in details, FactCheck contacted Tbilisi City Hall. Papuna Petriashvili, Deputy mayor of Tbilisi told FactCheck

that Tbilisi City Hall planned on purchasing 100 new buses within the framework of the city budget for 2014 as well as constructing a new auto park in Didi Dighomi with a total of 69,000,000 GEL having been allocated for these aforementioned projects. Of this overall amount, GEL 14 million was set for the construction of the auto park and GEL 55 million for the bus purchase tender. Tbilisi City Council removed this line from the budget and annulled the amount. Petriashvili explained that according to the budget adopted by City Council, subsidies valued at GEL 24 million were considered for the development of transport and included the implementation of work such as: regulating traffic lights, repair-modernisation of metro coaches, street marking and so on. According to Petriashvili, Tbilisi City Hall accelerated the decision to terminate the tender due to the fact that City Council mentioned the termination as one of its first remarks. City Council reported that too much money had been provided for organising the tender and constituted a budgetary over-expenditure. He also stated that due to the fact that several foreign companies participated in the tender and some questions existed regarding the approval of the budget (there was a possibility that money would not be allocated in the budget for this tender), maintaining the image and prestige of the country in front of the investors was important. Therefore, Tbilisi City Hall considered terminating the tender as a reasonable decision.

FactCheck contacted Tbilisi City Council for further information. Nikoloz Khachirishvili, Chairman of the Tbilisi Territory Urbanisation and Utilisation Issues Regulatory Commission, told FactCheck

that the provision of new buses was a significant issue and he personally was overseeing the tender process. According to him, the tender announced by Tbilisi City Hall was leaving room for a lot of questions. In particular, Tbilisi City Hall sent remarks to one of the companies which won the tender; namely, XIAMEN GOLDEN DRAGON BUS CO Ltd, which sent an updated version to Tbilisi City Hall after taking the remarks into consideration. Afterwards, however, the company was removed and disqualified from the tender. Xiaman Golden Dragon Bus Co. Ltd then filed a complaint to the National Procurement Agency and won the case against Tbilisi City Hall. The National Procurement Agency imposed the recovery of the company in the City Hall tender after which City Hall annulled the tender itself. According to Khachirishvili, a criminal case has been filed at the Prosecutor’s Office. He explained that due to the fact that the tender process raised many questions, on the one hand and the case was handed over to law enforcement structures, on the other, Tbilisi City Council considered it reasonable not to grant City Hall the possibility to organise a vague tender and annulled the required amount of money in the city budget for 2014 for purchasing the new buses. Khachirihvili added, however, that in the case of a carefully planned and transparent tender, City Council is prepared to review the corrected budget and support it. He said that City Hall has not contacted City Council with this type of request.

Avtandil Sakvarelidze, representative of Golden Dragon, verified the facts given to FactCheck by Nikoloz Khachirishvili.

According to Sakvarelidze, the Chinese company refused to invest in Georgia as a result of the obstacles created by the tender. As a result, the country lost several investments worth tens of millions of US dollars which would have enabled the employment of 500 persons. Moreover, this figure would have been increased up to 3,000 persons and GEL 40,000,000 worth of export production would have been produced in a year. Sakvarelidze indicated that the tender was artificially annulled due to the fact that City Hall had its own favourite company (Solaris) and from the outset was planning to announce this company as the winner. However, since Xiaman Golden Dragon Bus Co. Ltd won the case against Tbilisi City Hall, City Hall then annulled the tender. He explained that City Hall started a new tender worth GEL 71 million on the same day when the previous tender was annulled and argued that the purchase of the new buses being cancelled due to the non-approval of the budget is not true. Sakvarelidze explained that acquiring detailed information about the tender is possible on the electronic tender website.

According to the information published on the official electronic tender website, Tbilisi City Hall announced a tender on 4 November 2013 for the purpose of purchasing 100 new buses. City Hall started to accept applications on 20 November and then annulled the tender on 31 December 2013. The five aforementioned companies participated in the tender. In terms of the price, company Xiamen Golden Dragon Bus Co. Ltd, which was considered as the winner, had the most optimal offer. The company expressed its gratitude towards City Hall for winning the tender on 27 November 2013 and stated that this victory was a great incentive which would encourage foreign investment which in itself would support employment and economic growth.

Tbilisi City Hall returned technical remarks to Xiaman Golden Dragon Bus Co. Ltd on the same day and recommended that detailed documents be uploaded in the unified electronic system within the next three business days otherwise, the company would be disqualified from the tender.

On 2 December 2013, Xiaman Golden Dragon Bus Co. Ltd notified Tbilisi City Hall that the detailed information about the technical specifications of the buses had been translated and uploaded in the electronic system. According to the explanation of Tbilisi City Hall of 6 December 2013, after reviewing the documents uploaded by the company, it was clear that the information about the technical characteristics had not been verified. Accordingly, the company was disqualified from the tender.

On 7 December 2013, Xiaman Golden Dragon Bus Co. Ltd filed a complaint with the National Procurement Agency. The complaint noted that ten comments stated by the tender commission were considered by the company in their entirety but a decision was made to disqualify the company in spite of this. Of important note is that the tender commission does disqualify contestants if the technical documentation uploaded in the system does not contain such data or/and contains inaccuracy whose presentation or/and verification causes a substantial change in the technical documentation or/and which does not increase the price of the proposal.

After reviewing the complaint, the National Procurement Agency adopted the following decision: “An inconsistent decision with the legislation made by the electronic tender commission concerning the state bus purchase about the disqualification of Xiaman Golden Dragon Bus Co. Ltd should be cancelled.”

In order to verify the aforementioned, FactCheck

contacted Tbilisi City Hall with the following questions one more time:

• If the decision about removing Xiaman Golden Dragon Co. Ltd from the tender was caused by the fact that the disqualified company did not present the required documents in their entirety and did not consider the comments by City Hall, then how can you explain the fact that the National Procurement Agency considered this decision as illegal?
• Why did Tbilisi City Hall not consider the decision taken by the Board of Appeals of the Procurement Agency on 24 December 2013 which called for Tbilisi City Hall to annul the inconsistent decision with the legislation made by the tender commission about the disqualification of Xiaman Golden Dragon Bus Co. Ltd?
• According to the legislation, in the case of the non-approval of the budget, Tbilisi City Hall could have paid advances to at least two companies under the conditions of one-twelfth spending of the city’s budget for 2013. Why did Tbilisi City Hall not use this opportunity or why was the tender not delayed until the time when the approval issue of the Tbilisi city budget for 2014 was solved?
• Why was the tender not renewed after the approval of the budget?

Tbilisi City Hall did not answer the aforementioned questions and told FactCheck that the information about the tender could be found on the following electronic website at www.procurement.gov.ge. It is, however, unfortunately impossible to extract information and obtain responses to the aforementioned questions from this web-site. Accordingly, FactCheck

contacted Tbilisi City Hall yet again told the Press Office that the response it prepared and sent was not adequate for the questions posed and did not contain relevant information. The Press Office explained that it could cooperate only through this format and expressed its readiness for further assistance in the future.

Conclusion As the research indicated, the tender which aimed at purchasing 100 new buses for the capital city, was launched by Tbilisi City Hall on 4 November 2013 and terminated by City Hall on 31 December due to the non-approval of the Tbilisi city budget. The required amount of money for purchasing the buses was completely annulled in the Tbilisi city budget for 2014. According to City Council, this aforementioned decision was made because of those questions raised concerning the tender launched by City Hall. In particular, this refers to the disqualification of the winner company in the tender and then the litigation which followed the process, first at the Procurement Agency and then at the Prosecutor’s Office. It does not fall under the competence of FactCheck

to verify whether or not Tbilisi City Hall in fact had pre-selected its favourite company as the winner in the tender.

It should be noted that in the conditions of spending one-twelfth of the budget, theoretically City Hall could have provided two companies participating in the tender with 30% of the subsidies in the form of advances and paid the amount step-by-step after the approval of the budget although this would have left City Hall with a small amount of money for other priorities. It should also be noted, however, that under a new budget City Hall did not ask City Council to correct the budget accordingly and did not raise the issue of conducting a tender.

FatCheck’s research has shown that many have been raised around the bus tender issue. According to verification from one side, the cancellation of the tender was caused by the non-approval of the Tbilisi city budget while another side noted the corrupted bargaining during the tender process and identifies this as one of the reasons for the failure of the project. This presents one of those cases when making a clear and unambiguous conclusion is almost impossible and goes beyond the competence of FactCheck.

What is a fact, however, is that the tender was cancelled, the approval of the Tbilisi city budget was delayed for four months and, resultingly, the matter of municipal transportation still remains a problematic issue.

According to the information and arguments stated by both sides, FactCheck concludes that Nika Melia’s statement, “This year, 100 new, environmentally friendly buses adapted for disabled people were not provided due to the fact that City Council did not allocate the required amount of money,” is HALF TRUE.