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Set-Asides: The Not-So-Clear Side of Public Procurement
This paper reveals the factors influencing the decisions of contracting authorities to conduct purchases with small and medium enterprises (set-asides). Mechanisms for small and medium enterprises (SMEs) support are heavily regulated by the Russian procurement legislation, and all contracting authorities need to comply with them equally. However, analytical reports and open data indicate that some procuring entities make purchases from SMEs in the volumes, exceeding the given quota, while other contracting authorities do not reach the established threshold. What are the reasons for these differences when conducting set-aside procedures? What motivates contracting authorities to make purchases from SMEs in the volumes, exceeding the quota? Based on the results of a large- scale survey of contracting authorities, the authors show that the expected sanctions for violating the norms and standards to a greater extent than other factors, affect the decision to procure from SMEs. More than a half of the respondents believe that an increase in the quota for set-asides will contribute to more frequent use of them. The results of research show that excessive regulation of public procurement can both motivate organizations to conduct set-aside purchases on a wide scale and also may demotivate some contracting authorities due to rigidity of legal requirements.
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