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Working paper

Evaluation of public procurement costs: Macrolevel assessment based on microdata

Public procurement costs evaluation is important both for procurement optimization at the company level and for evaluating the public procurement regulation system. This paper presents a survey-based methodological approach to public procurement costs evaluation at the macro level. We have modified the PwC approach and developed an alternative public procurement cost evaluation methodology at the macro level. The PwC methodology was adapted to developing and transitional economies and piloted on Russian data. Average costs of each type of procurement procedures implemented in 2016 were evaluated. A regression analysis of factors impacting public procurement costs evaluation revealed considerable differences between respondents who have and do not have experience with complex procurement procedures. Although the average overall costs of public procurements in Russia amounted to about 1% of the total value of concluded contracts, the figure stands at 6.6–8.1% for small purchases. This exceeds the economy from price decrease and calls for a need to simplify regulation of such procurements.