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A comparative analysis of public procurement efficiency

Priority areas of development: economics
2013
The project has been carried out as part of the HSE Program of Fundamental Studies.

The subject of the research is the public procurement system in Russia, its framework and mechanisms.

The research is an investigation of the effectiveness of different public procurement procedures for different types of goods purchased by governmental organizations and agencies.

In 2013 the research developed in several directions within the framework of the project. These included:

  • analysis of the effectiveness of public procurement orders placement and performance of contract obligations for simple homogeneous products; investigation of the influence of regional factors and procurement personnel characteristics on the effectiveness of procurement order placement and contract administration;
  • development of a pioneer (in Russia) practice research approach to evaluate the efficiency of various procurement procedures considering the expenses incurred by customers;
  • comparative analysis of the effectiveness of different public procurement regulatory regimes.

The empirical base of the research includes data collected and processed during previous research stages, and also new data obtained in 2013. Firstly, databases on public procurement order placement and contracts for sugar sand and gasoline were expanded, refined and processed during 2013. Among databases of public procurement contracts collected earlier for 5 examples of goods and services representing different types of goods (search goods, experience goods and credence goods) databases on sugar and gasoline contracts were best prepared for econometric analysis in terms of data completeness and quality. Therefore, we made a comprehensive analysis of the effeciency of procurement procedures for these two goods.

Secondly, in 2013 we collected new databases and expanded existing ones on public purchases by several large government funded and autonomous organizations representing the same sphere. Procurements by the first organization were regulated by the 94-FL requirements. Procurements by the second, were initially regulated by the 94-FL until later it introduced its own Procurements Provision as an autonomous organization. A comparative analysis of procurements of these organizations enables us to estimate the impact of different types of regulations on the effectiveness of public procurement.

Finally, within the public procurement expenses research framework we conducted several interviews with procurement unit personnel in a large government funded organization. These interviews allowed us to test the public procurement agent’s expenses estimation and evaluation methodology that was developed within the project framework as a pioneer methodology for the Russian procurement system.

The main results obtained within the project in 2013 include the following:

  • Detection of structural features of public purchase order placement for “search goods” with sugar and gasoline as an example.
  • Investigation of different factors impacting the comparative effectiveness of different procurement procedures (quotation, auction, one-supplier etc).
  • Detection of factors influencing the effectiveness of contract obligation performance for analyzed goods types.
  • Revealing of regional price differentiation in public purchasing of analyzed goods types.
  • Estimation of the impact of different types of regulations (and regulation regime shift) on the effectiveness of public procurement using procurement of three large government funded and autonomous organizations as an example.
  • Developing methodology to estimate and evaluate public procurement expenses for the customer; testing the methodology in interviews with procurement unit personnel in a large government funded organization.
  • Investigation of the degree and nature of some characteristics of procurement personnel and procurement unit which influence public contract administration effectiveness.

The research results obtained within the framework of the project were presented by the project participants at international and Russian conferences, symposiums, workshops etc. These included XIV April International Academic Conference on Economic and Social Development, Moscow, 2-5 April, 2013; International Conference on Applied Research in Economics, Perm, 18-20 September, 2013; Workshop on "Sustainable Public Procurement: Research Trends and New Challenges", Moscow, 4-5 October, 2013 and others.

Moreover, project participants presented a report “An estimation of the benefits and costs in the public procurement system” at the meeting of the “Open Government” Working Group on the Federal Contract System led by A.T. Shamrin on March 1st, 2013. The report contained suggestions on the estimation of public procurement procedures costs for customers, suppliers and regulators based on international experience.

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

  • Empirical analysis of public procurement order placement and contract execution efficiency allows us to better determine how information and analytical functions of the Federal Contract System work and serve as a push for analogous empirical studies of other markets.
  • The approach used for a comparative analysis of procurement by government funded organizations and regulatory regimes effectiveness gives an opportunity to quantify the effect of introducing new regulatory regimes. And this approach may be used by regulators and large governmental organizations and agencies to analyze the results of introducing new regulatory regimes in “pilot projects”.
  • A further stage of research into public procurement costs will include a calculation of procurement costs for the large budget organization whose employees gave interviews. It is also possible to test the methodology on other purchasing organizations and to develop approachs for estimating costs for suppliers and regulators.
  • The results of research on personnel characteristics influencing contract administration problems may help procurement specialists prevent and minimize negative effects of the most common contract administration problems.

Publications:


Bashina Aleksandra. Factors Related to Informal Payments in Public Procurement in Russia // International Journal of Economic Policy in Emerging Economies. 2013. Vol. 6. No. 4. P. 403-430. doi
Yakovlev A. A., Tkachenko A., Demidova O., Balaeva O. An impact of different regulatory regimes on the effectiveness of public procurement / NRU Higher School of Economics. Series PA "Public Administration". 2013. No. WP BRP 08/PA/2013.