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Comparative analysis of public procurement efficiency

Priority areas of development: economics, state and public administration
2014
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research: The research aims at the investigation of the effectiveness of different public procurement procedures for different types of goods purchased by governmental and budget organizations and agencies as well as the analysis of costs and effects of various forms of procurement regulation. 

The subject of the research is public procurement system in Russia, regulatory regime and framework of public procurement.

Methodology: Institutional economics and contract theory methods are used for goods, works and services classification, analysis of the public procurement system development trends and its actor’s behavior. Empirical data collected is analyzed with standard econometric techniques. Public procurement cost analysis is based on methodology presented in the report of PwC, 2011; the methodology described in Davison, Sebastian, 2009, 2012 is implemented for the analysis of the influence of individual purchaser characteristics on the effectiveness of contract administration. Collection and processing of data on purchases of certain types of commodities: sugar, gasoline AI-92 was carried out using techniques developed and proven in previous research projects of IIMS.

Empirical base of research: In 2014 in the framework of budget organizations procurement effectiveness research we’ve collected and analyzes the data on the purchases made via auction by a large national research university for the period of 2008-2012, as a result we’ve shown the effects of changes in the regulation forms on the efficiency of procurement.

To study the efficiency of public procurement simple homogeneous goods in 2014 we’ve collected data from the Official website for public purchasing order placement and Federal registry of public contractswww.zakupki.gov.ru and formed a database of contracts concluded in 2012-2013 for the following products:

  • Sugar
  • Gasoline AI-92

The database contains information on bidders, the results of placement of state orders, as well as on the execution of government contracts. We’ve also prepared the reviews of the gasoline and sugar markets for 2012-2014 and conducted the analysis of sugar procurement in the Russian market.

In the study of the influence of personal characteristics of purchasing officials on the effectiveness of contract execution we used the data from a survey of 1600 procurement specialists from National Institute of Governmental Purchasing (NIGP) conducted by B. Davison and R. Sebastian in the United States.

Results of research:

  • Detection of the effect of different regulatory regimes on the efficiency of public procurement, in particular, the level of competition in the auction, the relative decline in the initial price and the delay in the performance of contracts
  • It is shown that the introduction of more flexible regulation of procurement can improve the quality of performance, while the use of more transparent and open procedures leads to increased competition
  • The costs of the state purchaser for the implementation of procurement procedures using the example of the Voronezh State University are estimated and calculated
  • Confirmation of the effect of "economies of scale", according to which the use of more complex procurement procedures is economically justified, especially for larger purchases; as for the small purchases simple procedures should be used
  • The analysis of pricing in repeated public contracts for gasoline AI-92 purchases confirmed the need for wider use of electronic auctions
  • Gasoline purchases inefficiency detected, which indicates the presence of some systemic problems in the market that require a more detailed study
  • An analysis of the relative price indicators for public procurement in the Russian Federation is carried out
  • Significant differences are found in the relative price index of purchases of sugar in the regional context, as well as by types of purchasers and procurement procedures
  • It is shown that the individual characteristics of purchasers that are measurable (level of education, certificates, experience) do not allow definitive conclusions about their impact on the efficiency of contract administration and require a more detailed study

Recommendations on implementation of the results:

The results of the research may be implemented or proceeded in the following ways:

  • The approach to the study of different forms of procurement regulation can be applied to analyze the effects of changes in the regulation, both within a specific organization or in a particular sphere of the public sector. From the point of view of the agency responsible for the public sector sphere, the proposed methodology can contribute to the choice of optimal organizational and legal forms of public institutions, depending on their size and other characteristics of their activities
  • The procurement cost estimation method developed in the framework of the project can be used to optimize the internal procurement procedures in various Russian budget organizations. Moreover, our data also provide a basis for broader conclusions about the necessary changes in the regulation of the procurement system in the Russian Federation, in particular, the use of procedures similar to "regulatory impact assessment" (RIA) in the private sector, at the design stage of new regulations governing the activities of universities and other public sector organizations in the Russian Federation.
  • With regard to the procurement of simple homogeneous goods results confirm the need for greater use of electronic auctions, however, increased control over procurement procedures by regulators may be ineffective and entail high costs. The implementation of the responsibility of the budget organizations heads for the final results of the activity combined with the introduction of more effective internal control mechanisms (including those used in business practice) may be much more effective.

Publications:


Яковлев А. А., Выгловский О. В., Демидова О. А., Башлык А. Н. Анализ влияния повторяющихся закупок на цену простого однородного товара (на при- мере госзакупок бензина АИ-92 в 2011 году) / НИУ ВШЭ. Серия WP1 "Институциональные проблемы российской экономики". 2014.
Tkachenko A., Yakovlev A., Demidova O., Volmenskikh I. Effects of Regulatory Reforms in Public Procurement: the Case of National University in Russia / NRU Higher School of Economics. Series PA "Public Administration". 2014. No. WP BRP 19/PA/2014.
Davison B., Komarnitskaya A.N., Ershova N. V. Examination of the Effects of Personal and Purchasing Unit Characteristics on Types of Problems Experienced and Types of Contracts That Are Problematic // Journal of Management Research. 2014. Vol. 6. No. 4. P. 21-49.
Балаева О. Н., Коробейникова Л. С., Чупандина Е. Е., Яковлев А. А. Оценка издержек заказчика в российской системе госзакупок (на примере Воронежского государственного университета) // Университетское управление: практика и анализ. 2014. № 2 (90). С. 54-69.
Балаева О. Н., Коробейникова Л. С., Чупандина Е. Е., Яковлев А. А. Сколько стоят процедуры госзакупок? Эмпирическая оценка с позиций заказчика / ИГиМУ НИУ ВШЭ. Серия Серия WP8 "Государственное и муниципальное управление". 2014.
Yakovlev A. A., Выгловский О. В., Demidova O., Башлык А. Н. Incentives For Repeated Contracts In Public Sector: Empirical Study Of Gasoline Procurement In Russia / NRU Higher School of Economics. Series PA "Public Administration". 2015. No. WP BRP 24/PA/2015 .
Yakovlev A. A., Tkachenko A., Demidova O., Balaeva O. The Impacts of Different Regulatory Regimes on the Effectiveness of Public Procurement // International Journal of Public Administration. 2015. Vol. 38. No. 11. P. 796-814. doi