Uzbekistan is considering the use of artificial intelligence tools, risk analysis systems, and integrity ratings to proactively identify problematic participants in public procurement and ensure fair competition among businesses.
Problems with the Current Procurement System
At the first meeting of the Council of the Association of Public Procurement Participants, entrepreneurs, experts, and government sector representatives discussed several serious shortcomings in the current system. The main problem, according to market participants, is the slow response to reports of potential violations.
Businesses face situations where after the winner of a tender is announced, results are canceled, decisions are revised, or conditions are created that make the execution of the concluded contract practically impossible. Appeals to various state bodies, including anti-corruption structures, often do not lead to proper investigations or specific decisions.
Discussion participants noted that despite providing documents and explanations, entrepreneurs often receive only recommendations to forward materials to other departments or advice to resolve the issue through judicial instances. This practice undermines confidence in the public procurement system and creates a sense of impunity for dishonest players, as responsibility mainly falls on suppliers, while the actions of the customers remain outside public scrutiny.
Systemic Approach and Ratings
As one of the proposed solutions, meeting participants suggested moving from reacting to individual complaints to comprehensively analyzing the behavior of all parties involved in the procurement process. This includes creating integrity ratings for both suppliers and the government customers themselves.
This system could take into account the history of organizational interactions in procurements, including the number of terminated agreements, canceled contracts, legal disputes, and other contentious issues. If a supplier systematically violates terms or provides false information, these facts are recorded in their profile, which affects their right to participate in future tenders. Similarly, the market believes that the same accounting should be applied to customers, taking into account cases of regular cancellation of purchases or changes in conditions after concluding a deal.
The Role of Artificial Intelligence
Bakhtiyar Abdullaev, director of the consulting company Inter Investment Consulting, proposed integrating artificial intelligence into the preliminary screening of participants. He pointed out that on electronic trading platforms, companies that lack the necessary experience, resources, or goods to fulfill obligations often win, and then begin looking for ways to solve the problem after winning.
Abdullaev believes that AI algorithms can be used directly on electronic platforms to automatically analyze participants' compliance with specified requirements, such as experience in executing similar contracts, actual availability of products, or production capacity. This would allow companies unprepared to fulfill the contract to be excluded from the procedure, thereby reducing problems for the customers.
Analysis of Practical Cases
Specific examples demonstrating loopholes in the current system were reviewed at the meeting. In the first case, Art Mebel Style won a tender to supply furniture to the Presidential Administration worth 50 million soums. After signing the contract, the customer notified the company of the contract cancellation, closed the funding, and the same lot was re-tendered with another firm winning.
A lawyer analyzing this case emphasized that once the contract is signed, the parties acquire a legal status, and disputes should be resolved in court; however, in practice, the customer often simply notifies the supplier of the cancellation. According to data to be collected, the agency will prepare proposals to strengthen the liability of customers for unjustified cancellations.
In the second case, an example of an organized scheme was presented, where over the course of a year, two firms owned by brothers received 150 contracts from one large company. A company representative reported that his appeals to the Anti-Corruption Committee were repeatedly redirected. According to the agency's assessment, in most such situations, the customer plays a key role, formally conducting the competition but effectively predetermining the partner.
The third mechanism concerned the customer specifying a particular brand when purchasing equipment. Although this is permissible if there is a technical necessity, market participants claim that the brand is most often specified due to the customer's connections with a specific supplier. This excludes honest businesses producing similar goods from the procedure, leading to overpayments and suppression of competition.
Proposed Measures and Outcomes
Measures discussed included strengthening control over goods acceptance and contract refusals: the decision to refuse acceptance must be made by a commission of three or more people. It is also proposed to record violations in participant profiles, which could lead to the inclusion of dishonest suppliers on a blacklist. Information on corruption risks should be transferred to law enforcement agencies.
Another proposal is to make all contract cancellations visible on the platform so that other participants and supervisory bodies can track such patterns. The possibility of out-of-court dispute resolution through special commissions at the procurement platform operators was also discussed, which could speed up the process. A radical option is the outsourcing of large procurements to specialized organizations.
Agency representatives stated that all business proposals will be studied and may be taken into account during the further refinement of legislation and digital mechanisms of public procurement. Previously, experts had called on officials to consider the opinions of businesses when reforming public procurement.
