'Sweet Deals': State-owned Enterprises, Corruption and Repeated Contracts in Public Procurement
We show how a price analysis of stable relations between customer and supplier in the public procurement of homogeneous goods can help differentiate opportunistic from honest behaviour among economic agents. We consider two types of stable relations: repeated procurements and connections based on the state ownership of suppliers. On the basis of a large dataset on the procurement of granulated sugar in Russia from 2011 to 2013, we find that for private suppliers, prices of repeated contracts were lower compared to one-time deals when procured through more transparent procedures and higher when procured through non-transparent procedures. For non-transparent procedures, we observe significant overpricing of contracts with state-owned suppliers compared to private suppliers, especially in the case of repeated contracts, whereas for competitive e-auctions, there is only a small difference between the contract prices of state-owned suppliers and private suppliers.
The Handbook of Business and Corruption provides an overview of corrupt business practices in general and, more particularly, in different industry sectors, considering such practices from an ethical perspective.
The paper is about sustainable public procurement as a new global trend in the development of a sustainable economy. The main question raised is the following: how sustainable public procurement could be implemented in Russia? The study aims to investigate the prospects of the implementation of sustainable public procurement in Russia. The author presents the findings of survey, covering public procurement practices of 51 contracting authorities and documentation analysis of 400 public tenders. The analysis of Russian legislation allows to determine the sections of procurement documentation, where different aspects of sustainability could be included. The conducted survey aims to identify the aspects of sustainable public procurement already used by public authorities in procuring practices in Russia. This paper provides the unique survey of sustainable procurement practices across the Russian public sector. Research also shows the prerequisites of implementation of sustainable public procurement in Russia.
The fight against corruption enjoys worldwide attention. But how do you measure corruption? Many social scientists rely on quantitative methods. But these have a weakness. They are blind to the particular social and local context in which people use informal practices. Also, not every informal action is corruption. In order to be able to precisely determine the boundaries and to grasp forms and causes of corruption, corruption research should make more use of qualitative methods and approaches of ethnography.
In 2000s Russian government considered e-auction as the best way to procure goods for public needs. In this paper we confirm this proposition using empirical dataset on 3 thousands contracts for procurement of sugar sand in Russia in 2011. Our data shows that unit prices are higher in the case of long-term contracts. This result can be explained by rigidity of public procurement regulation – because Russian legislation allows only fixed price contracts. Under these conditions suppliers can be ready to participate in public procurement tenders for long-term contracts only if their price includes some “risk premium” covering additional expenses of supplier in case of unfavorable turn in the market. Our analysis shows that sugar prices in Russian public procurement are lower for contracts with higher volume. These results are in the line with conclusions of previous studies of public procurement in other countries. Influence of competition measured by the number of suppliers participating in procurement procedure has quadratic form. It means that the effect of new participant is lower when number of competitors is higher and vice versa. Also our analysis shows that there are essential distinctions in influence of the same factors on contract prices for competitive procedures and void auctions. This result is important for economic policy but additional consideration is needed here.
We address the external effects on public sector efficiency measures acquired using Data Envelopment Analysis. We use the health care system in Russian regions in 2011 to evaluate modern approaches to accounting for external effects. We propose a promising method of correcting DEA efficiency measures. Despite the multiple advantages DEA offers, the usage of this approach carries with it a number of methodological difficulties. Accounting for multiple factors of efficiency calls for more complex methods, among which the most promising are DMU clustering and calculating local production possibility frontiers. Using regression models for estimate correction requires further study due to possible systematic errors during estimation. A mixture of data correction and DMU clustering together with multi-stage DEA seems most promising at the moment. Analyzing several stages of transforming society’s resources into social welfare will allow for picking out the weak points in a state agency’s work.