Abstract
The paper deals with a special sector of public procurement — G2G, in which state organizations act as both customers and suppliers. The analysis shows the convergence between contractual and administrative relations and risks of transferring the negative factors, responsible for market failures, into the administrative system, as well as the changing nature of the state organization. Budget losses in the sector G2G are revealed and estimated. There are doubts, whether the current practice of substitution of market-based instruments for administrative requirements is able to maintain integrity of public procurement in the situation of growing strategic challenges. Measures are proposed for the adjustment and privatization of contractual relations.
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