YEREVAN. – In 2012 the state budget of Armenia will make public procurement worth of AMD 500 billion ($ 1.2 billion). It is not news that there are corruption risks in the public procurement system.

Even though in 2011 the law on procurement was thoroughly reviewed, the problems did not disappear. The state is the largest buyer in the whole economic system, but most businesses do not participate in the process, that is, a competitive field is not being formed. As a result, the state budget loses at least 20 percent of efficiency only on the public procurement system.

The reason of the loss is that procurement prices are generally much higher than the market prices. Mostly competitions are announced, as a result of which the prices are 20 – 30 percent higher than the price for the same item in any store. In some cases this is simply the result of corruption, and sometimes - the imperfection of procurement procedures. In the case of government departments and NGOs the situation is somewhat different.

Nonprofit organizations generally spend money with loans and grants, and the corruption risks in this area are the most conspicuous. As for the government, here there is a shortage of control. There are departments which change furniture every month. Or, the normal process of photocopying is much more expensive in these structures than in others. The State Commission for Protection of Economic Competition is beginning to carry out some work this year for the first time to initiate legal proceedings in public procurement.