Comparison of efficiency of public procurement organized by public sector and local monopolies

Abstract

The aim of this paper is to identify the difference between the prices achieved in public procurement by public and private bodies. The analysis exploits the fact that European legislation forced to follow the Public Procurement Act not only public sector but also private companies working in the position of local monopolies (gas supply, water supply, public transport, etc.).The analysis is based on data from the Information System of Public Procurement in the Czech Republic. The data set is created by more than 500 observations containing information about the large construction contracts from the years 2006–2011. Details of these contracts were analysed using regressions. As a dependent variable were used price achieved (in the first model) and the number of bids (in second model). As explained variables were the numbers of bids (only in the first model), type of tender, the contract size, etc. The methodology is based on foreign papers, which are dealing with the issue of competitive effects.The results show that the public sector bodies obtain in their tenders on average more bids than private firms, but their realized prices are higher. Another finding is the influence of the type of procurement procedure. In the public sector are the best rates achieved with open procedures, while in the case of private entities was not identified the influence of procurement procedures.