Bunching below thresholds to manipulate public procurement

Works with a value above a given threshold have to be awarded through an open auction. Works below this threshold can be more easily awarded through a restricted auction, where the buyer has some discretion in terms of who not to invite to bid. Our main result is that discretion increases the probability that the same firm wins repeatedly, and it does not deteriorate and may improve the procurement outcomes we observe.

The effects of discretion persist when we repeat the analysis controlling for the geographical location, corruption, social capital, and judicial efficiency in the region of the public buyers running the auctions.

Search Search. Volume 67, Issue 3 March Volume 67, Issue 2 February Volume 67, Issue 1 January View PDF. Go to Section. Home Management Science Vol. Decio Coviello. Andrea Guglielmo. Giancarlo Spagnolo. This paper was accepted by John List, behavioral economics. Previous Back to Top. Figures References Related Information. Cited By Bureaucratic discretion and contracting outcomes.

A Non-parametric Analysis for Italian Municipalities. The effects of mafia infiltration on public procurement performance.

Manipulation of Procurement Contracts: Evidence from the Introduction of Discretionary Thresholds

Effect of public procurement regulation on competition and cost-effectiveness. On the Benefits of Set-Asides. Lights on the shadows of public procurement: Transparency as an antidote to corruption. Procurement and Accidents: The Liability Curse. Discretion and Supplier Selection in Public Procurement. The impact of industry consolidation on government procurement: Evidence from Department of Defense contracting.

Corruption in the Times of Pandemia. When the purchasing officer looks the other way: on the waste effects of debauched local environment in public works execution. Political representation and public contracting: Evidence from municipal legislatures. Repeated selection of supplier, factors and results: the Czech Republic. Mutual dependence or state dominance? Large private suppliers and the British state — Social capital predicts corruption risk in towns.

An Assessment for Italy. Procurement auctions under quality manipulation corruption. Political donations and the allocation of public procurement contracts.Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If you continue browsing the site, you agree to the use of cookies on this website. See our User Agreement and Privacy Policy. See our Privacy Policy and User Agreement for details. Published on Apr 23, We investigate the impact of procurement thresholds on strategic behavior of public buyers in Sweden.

At the same time, data limitations do not allow us to access the impact of this strategic behavior on procurement outcomes and efficiency.

This calls for better and more extensive procurement data collection. SlideShare Explore Search You. Submit Search. Home Explore.

bunching below thresholds to manipulate public procurement

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Stockholm Institute of Transition Economics Follow. Full Name Comment goes here. Are you sure you want to Yes No. Be the first to like this. No Downloads. Views Total views. Actions Shares. No notes for slide. Public Procurement Thresholds in Sweden 1.

Thresholds in Public Procurement Regulation The impact of public procurement regulation on the incentives of public buyers and resulting procurement outcomes has recently become the focus of both political and academic debates. This interest is not surprising. Public procurement has been playing an important role in economic life. For example, the annual value of public procurement purchases in the EU is around 2.

For example, the EU Public Procurement Directives establish that national tenders with expected value above certain thresholds should be publicized at EU level and procured in line with the common EU-wide rules.

Regulations for above-the-threshold procurements are typically associated with stronger demands on the transparency of the procurement procedure and a more rigorously regulated procurement format.DG Trade. Discussion Papers. Bedri Kamil Onur Tas, Bernard Hoekman, More about this item Keywords EU Member States ; public procurement ; international competition ; econometric analysis ; All these keywords.

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FRED data. My bibliography Save this paper. Determinants of direct cross-border public procurement in EU Member States. The aim of this paper is to analyse the determinants of direct cross-border public procurement in the EU Member States. For this purpose, we use a unique dataset based on obligatory data published on TED Tenders Electronic Daily which covers public procurement contract award notices for the period and consists of more than 30 variables.

bunching below thresholds to manipulate public procurement

Among others, results of the econometric estimation suggest that the probability of awarding a contract cross-border depends positively on the value of the contract awarded and negatively on the number of offers. Among awarding country characteristics, GDP per capita and euro-area membership are found to positively impact the probability of a cross-border award, while population and the share of government expenditure in total GDP have a negative influence.

Barriers to trade a proxy of tariff and non-tariff barriers are shown to have a significant negative impact on cross-border awards while investment freedom a proxy of openness to FDI is found to have a positive effect on the probability of a cross-border win.Procurement in the public sector demands the highest integrity. One proactive measure a procurement agency can take is to perform a risk assessment within its organization and its processes to identify areas of concern, weakness or high risk in procurement.

Conducting a risk analysis enables action to be taken to correct deficiencies and to avoid greater problems in the future. One way to analyze risk is to develop and use a checklist to measure how well a procurement agency is in compliance with law and ethical standards. Checklists can be valuable to prevent and detect corruption and fraud by guiding procurement staff throughout the process in a more transparent and effective manner while helping to detect and report irregularities.

Using a checklist, a procurement agency can identify any possible irregularities, suspicious cases or difficulties in the procurement process. Checklists are generally developed around the major phases of the procurement cycle and cover the various risks associated with each phase. For instance, here is an outline addressing the major phases or components of the procurement process, along with some of the inquiries that a procurement agency should make to determine whether there are unacceptable risks inherent at each stage.

Phase 1. The Procurement Function. Do an analysis by looking at the legal basis for the existence and operations of the procurement agency, considering issues such as:. Phase 2. Preparation of the Procurement. Take specific procedural steps to prepare a purchase or contract.

Review the specific requirements of a particular purchase both from a legal and financial standpoint, and take into consideration various elements to ensure transparency, fairness and accountability. Questions might include:. Phase 3. The Procedure Chosen to Procure. Is the chosen procedure correct and appropriate for the good or service being acquired?

Sometimes public agencies fail to consider alternatives such as leasing or purchasing through cooperatives, which could result in considerable cost savings.

Some questions applicable here include:. Phase 4. Publicizing the Procurement. The manner of soliciting bids or proposals is not just a matter of meeting the minimal requirements prescribed by law. The manner of advertising should take into account the nature of the good or service being procured and the likelihood that advertising will reach the intended target audience of potential vendors.

In this analysis, one might ask:. Phase 5.This is a blog about the use of emerging technologies to boost the governance of public procurement.

It used to be a blog on EU law, with a focus on free movement, public procurement and competition law issues thus the long archive of entries about those topics. I use it to publish my thoughts and to test some ideas. All comments are personal and in no way bind any of the institutions to which I am affiliated and, particularly, the University of Bristol Law School. I hope to spur discussion and look forward to your feedback and participation. Both papers are by BKO Tas. This paper is relevant in the context of recent discussions about the usefulness or not of procurement benchmarks, and regarding the increasing concern about reduced number of bids in EU-regulated public tenders.

Therefore, not all criticisms below are to the papers themselves, but rather to the distortions that skewed, incomplete or misleading data and indicators can have on more refined analysis that builds upon them. This rule has been interpreted expansively by the Court of Justice of the European Union see eg here. The bunching manipulation scheme significantly diminishes cost-effectiveness of public procurement. The paper employs a regression discontinuity approach to determine the likelihood of bunching.

In order to do that, the paper relies on the TED database. The paper is certainly difficult to read and hardly intelligible for a lawyer, but there are some issues that raise important questions. This is simply an acritical transplant of considerations made by the authors of a paper that examined procurement in the Czech Republic, where the relevant threshold between EU covered and non-EU covered procurement would make sense.

This alone raises some issues concerning the tests designed by the author to check the robustness of the hypothesis that bunching leads to inefficiency in procurement expenditure. More importantly, I am not sure that the author understood what is in the TED database and, crucially, what is not there see section 2 of Tas a for methodology and data description. However, in the specific context of bunching below thresholdsthe TED database is very likely to be incomplete.

They could publish voluntarily, in particular in the form of a voluntary ex ante transparency VEAT notice, but that would make no sense from the perspective of a contracting authority that seeks to avoid compliance with EU rules by bunching ie manipulating the estimated contract value, as that would expose it to potential litigation.

Most authorities that are bunching their procurement needs or, in simple terms avoiding compliance with the EU rules will not be reflected in the TED database at all, or will not be identified by the methodology used by Tas aas they will not have filed any notices for contracts below thresholds.

Even if my guess was incorrect and all notices for contracts with a value below thresholds were accurate and justified by the existence of a potential cross-border interest, the database cannot be considered complete. Moreover, Tas a is premised on the hypothesis that procurement below EU thresholds allows for significantly more discretion than procurement above those thresholds.

However, this hypothesis fails to recognise the variety of transposition strategies at Member State level. In my view, regardless of the methodology and the math underpinning the paper which I am in no position to assess in detailonce these data issues are taken into account, the story the paper tries to tell breaks down and there are important shortcomings in its empirical strategy that, in my view, raise significant issues around the strength of its findings—assessed not against the information in TED, but against the largely unknown, unrecorded reality of procurement in the EU.

I have no doubt that there is bunching in practice, and that the intuition that it raises procurement costs must be right, but I have serious doubts about the possibility to reliably identify bunching or estimate its effects on the basis of the information in TED, as most culprits will not be included and the effects of below threshold national competition only will mostly not be accounted for.Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising.

If you continue browsing the site, you agree to the use of cookies on this website. See our User Agreement and Privacy Policy. See our Privacy Policy and User Agreement for details. Published on Nov 25, We show that different types of contracting authorities exhibit rather different behavior in public procurement. In particular, in Sweden strategic bunching below the EU threshold is only observed for a certain type of authorities.

The identity of the strategically behaving group is also non-uniform across different types of procurement contracts or geographic localities. This suggests that the type of public buyer, and associated differences in incentives and outcomes, should be taken into consideration in designing procurement regulation and more general policy-making.

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WordPress Shortcode. Stockholm Institute of Transition Economics Follow. Published in: Business. Full Name Comment goes here. Are you sure you want to Yes No. Be the first to like this. No Downloads. Views Total views. Actions Shares. No notes for slide. Buyer Heterogeneity in Public Procurement 1.

bunching below thresholds to manipulate public procurement

Nowadays, both the policymakers and the academic researchers agree that the design of public procurement policies and more general regulatory framework can affect the incentives of authorities to behave strategically in public procurement, as well as the procurement outcomes. Whether this effect takes place in reality or not is an empirical question. In a previous policy brief Paltseva and Spagnolo,we addressed strategic behavior of public buyers in Sweden.

More specifically, based on Bobilev et al.In this Procurement in a Nutshell update we will be looking at the finalised below-threshold regime under the now published Public Contract Regulations The regulations are available in full here. Commencement Regulations and come into force on:.

Application of the Below-Threshold Regime As with the draft regulations, under regulationprocurements that are:. Where the rules on below-threshold procurements do apply, Part 4, Chapter 8 sets out the requirements regs Please note regulations and described below do not apply to maintained schools or academies. Advertising opportunities on Contract Finder Regulation Regulation only applies where a Contracting Authority CA chooses to advertise a below-threshold contract award opportunity.

Where it does so:. Advertising information about contracts awarded on Contract Finder Regulation Certain minimum details of any contracts awarded must also be published on Contracts Finder.

Why is it important? CAs must be aware of the circumstances in which they must advertise an opportunity on Contracts Finder and must stop using a PQQ for low value tenders.

There should be a thorough review of all standing orders and procurement processes to ensure that these new requirements are complied with from 26 February How can I find out more? If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated.

We would always recommend that you should seek specific guidance on any particular legal issue. This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.

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