Abstract
One of the main goals of public procurement centralization is to generate monetary savings directly impacting the total costs of public institutions. It seems to be a remedy in economic downturn, but the impact of centralization may have both positive and negative financial effects. A central procurement organisation constitutes an additional link in the supply chain that makes the distance between the buyer and the supplier longer. Therefore, the existence of this link should be justified, and the evaluation of centralisation impact is one of the key tools in ensuring the procurement centralisation decisions to be beneficial to the state. The aim of the study was to formulate the model which would serve as a basis for evaluating the financial impact of centralised public procurement.
Highlights
Ce n t ra li s a t i o n o f p u b li c p r o c u re m e n t i s a tr e n d th a t i s p i c k i n g u p t h e p a c e i n b o th L i th uania and abroad (Dimitri, Piga, Spagnolo, 2006)
The purpose of this study was to formulate, through analysis and synthesis of knowledge available in the literature, an evaluation model which would form a basis for the evaluation of the financial effects of centralised public procurement
Upon summing up the definitions of centralisation in public procurement, provided in the scientific and legal literature, as well as studies of procurement practice, the authors have formulated the following definition of centralisation in public procurement on a national level: “Centralisation of public procurement is a change in the ratio between centralised and decentralised public procurement on a national level, where the central contracting authority centralises the procurement through contract agreements“
Summary
Ce n t ra li s a t i o n o f p u b li c p r o c u re m e n t i s a tr e n d th a t i s p i c k i n g u p t h e p a c e i n b o th L i th uania and abroad (Dimitri, Piga, Spagnolo, 2006). In Lithuania, a central contracting authority at which public procurement is concentrated was established in 2007. Such authorities exist in the United Kingdom, Germany, Italy, Denmark and Finland. The growth of trends towards centralised public procurement has been speeded up by the current recession. The increasing scope of centralised procurement raises questions about their financial impact. What is the financial benefit of public procurement centralisation for the state and how should it be evaluated?
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