Multiple tools to enhance competition in public procurement

Public procurement accounts in developed countries for about 20% of gross domestic product, thus is seen as a policy implementation tool. During COVD-19 outbreak, public procurement served as a basic tool for equipping institutions and citizens with medical supplies, ventilators, and personal protective equipment. We use data on public procurement in European countries during first wave of COVID-19 pandemic, with aim to study transparency and competition in public procurement process during ongoing state of emergency. Quantitative analysis of the data indicates, that less transparent procurement procedures were primary used during acute outbreak of COVID-19 and that the level of transparency widely varies among countries regardless the extent of the epidemic. Data suggests that the use of less transparent procurement procedures and reduced competition is more suitable for small and medium enterprises, where share of tenders submitted by small and medium enterprises represents up to 87% of all less transparent procedures.

The promotion of international trade is seen as one of the important instruments to ensure development in developing nations and regions. The history of the World Trade Organisation (WTO) and the drafting of many regional and similar international trade agreements are evidence of this. The Southern African Development Community (SADC) is no exception.1 It is therefore strange that many states that are members of the WTO and actively encourage the opening up of international borders to free trade do not include public procurement2 in such free trade arrangements. This is particularly evident in developing states. If the WTO Government Procurement Agreement (GPA), which is a plurilateral agreement, is considered it is clear that many states do not wish to open their internal markets to competition in the public procurement sphere. It is therefore not surprising that public procurement has been described as the last rampart of state protectionism (Ky, 2012). Public procurement is an important segment of trade in any country (Arrowsmith & Davies, 1998). It is estimated that public procurement represents between 10% and 15% of the gross domestic product (GDP) of developed countries and up to 25% of GDP in developing states (Wittig, 1999). Unfortunately, governments often expect private industry to open up national markets for international competition but do not lead the way. Except for the limited use of pooled procurement,3 no specific provision is at present made for the harmonisation and integration of public procurement in the SADC. In view of the proximity of the member states, the interdependency of their economies and the benefits that can be derived from opening up their boundaries to regional competition in public procurement, the possibility of harmonisation and deeper integration in this sphere needs to be given more attention. The importance of public procurement in international trade and regional integration is twofold: first, it forms a substantial part of trade with the related economic and developmental implications; secondly, it is used by governments as an instrument to address socio-economic issues. Public procurement spending is also important because of its potential influence on human rights, including aspects such as the alleviation of poverty, the achievement of acceptable labour standards and environmental goals, and similar issues (McCrudden, 1999). In this article the need to harmonise public procurement in the SADC in order to open up public procurement to regional competition, some of the obstacles preventing this, and possible solutions are discussed. Reference is made to international instruments such as the United Nations Commission on International Trade Law (UNCITRAL), the Model Law on Public Procurement and the GPA. In particular, the progress made in the Common Market for Eastern and Southern Africa (COMESA) with regard to the harmonisation of public procurement, which was based on the Model Law, will be used to suggest possible solutions to the problem of harmonising public procurement in the SADC.

Corruption, being linked to institutions of power, affects the efficiency of using public funds in a country. This happens, in particular, due to distortions in the structure of public expenditure, worsening quality and decreasing accessibility of public services, and overpricing of public services. The consequences of corruption that arise in different areas of human activity often become subject of scientific investigations performed by reputable scientists. However, the issue of the impact of corruption on public spending efficiency in the countries with different levels of democratic development has not been researched. The aim of this study is to determine the impact of corruption on the efficiency of public spending across the world (in 166 countries for the period from 2004 until 2017). The research is carried out by applying regression analysis to indicators characterizing the level of corruption and the efficiency of public spending obtained from large-scale survey data collected by major international organizations and aggregated in the World Bank’s “World Development Indicators” database. The analysis is also performed by using k-means clustering method to group countries into 4 clusters by the level of democracy and to build refined one-factor econometric models for each of them.The study revealed strong correlation relationship between corruption and public spending efficiency. It has been determined that a unit increase in corruption perceptions (a decrease in corruption) leads to a marginal increase in the efficiency of public spending by 0.931 units in the simple linear regression model and by 0.807 units in the multiple regression model. The study also showed that the impact of corruption on public spending varies depending on the level of democracy in a country. In the countries with low democracy levels, a unit decrease in corruption increases the efficiency of public spending by 0.923 units, whereas a similar decrease in corruption in the countries with high democracy levels will increase public spending efficiency only by 0.701 units. The findings of this study allow us to determine with higher accuracy the effects of corruption reduction measures on the efficiency of public spending.

Part I. The WTO Regime on Government Procurement: 1. The WTO regime on government procurement: past, present and future Part II. Expanding the Scope of the Agreement on Government Procurement: Accession and Coverage: 2. Forging a more global procurement market: issues concerning accessions to the agreement on government procurement 3. Accession to the agreement on government procurement: the case of China 4. India's possible accession to the agreement on government procurement: what are the pros and cons? 5. The benefits to developing countries of accession to the government procurement agreement: the case of Chinese Taipei 6. The coverage negotiations for the agreement on government procurement: context, mandate, process and prospects 7. A case study of coverage issues: Canada's sub-central coverage under the agreement on government procurement 8. The procurement of state trading companies under the WTO agreements: a proposal for a way forward 9. Addressing purchasing arrangements between public sector entities - what can the WTO learn from the EU's experience? Part III. Revision of the Procedural Rules and Other Transparency Provisions of the Agreement on Government Procurement: 10. The revised agreement on government procurement: changes to the procedural rules and other transparency provisions Part IV. Developing Countries in the WTO Procurement Regime: 11. Special and differential treatment for developing countries under the agreement on government procurement: the current text and new provisions 12. Building sustainable capacity in public procurement 13. Untying aid through the agreement on government procurement: a means to encourage developing country accession to the agreement and to improve aid effectiveness? Part V. Economic and Social Development (Horizontal Policies) in Government Procurement: 14. The national treatment and exceptions provisions of the agreement on government procurement and the pursuit of horizontal policies 15. The limited case for permitting SME procurement preferences in the agreement on government procurement 16. Social policies in procurement and the agreement on government procurement: a perspective from South Africa Part VI. Enforcement and Remedies: 17. Constructing a system of challenge procedures to comply with the government procurement agreement 18. Designing effective challenge procedures: the EU's experience with remedies 19. The design and operation of a bid challenge mechanism: the experience of Hong Kong Part VII. Multilateralism and Regionalism: 20. Government procurement provisions in regional trade agreements: a stepping stone to GPA accession? 21. A case study of regionalism: the EU-Cariforum economic partnership agreement Part VIII. Challenges and New Directions: 22. Ensuring integrity and competition in public procurement markets: a dual challenge for good governance 23. Developing multilateral rules on government procurement: the value of soft law 24. Work of UNCITRAL on government procurement: purpose, objectives, and complementarity with the work of the WTO 25. Global procurement law in times of crisis: new buy American policies and options in the WTO legal system 26. Procurement rules in times of crisis: lessons from US government procurement in three episodes of 'crisis' in the 21st century.

Public procurements, i.e., purchase of goods and services by various public departments, accounts for a significant proportion of both public expenditure and total demand for goods and services in the economy. Various studies, audit findings of the Comptroller and Auditor General of India, and vigilance reports by India's Central Vigilance Commission have invariably highlighted the incidence of anti-competitive practices in Indian public procurements. Public sector procurements are highly regulated, given the transparency concerns and principal–agent problem.These regulations outlining the rules and procedures in public procurement directly or indirectly influence the short- and long-run market dynamics (with respect to entry, market concentration, prices, innovation, etc.). This paper aims to analyse the impact of existing regulation on competition in public procurement in India through a case study of procurements in the Indian Railways. Based on the key anti-competitive concerns identified in Indian Railways’ procurements, the study outlines an important set of recommendations to enhance the degree of competition in public procurement in India.

Part One Introduction 1 Introduction and Framework for Analysis I. Introduction II. General Approach to the Interrelationship between Competition and Public Procurement Law III. Aim of the Study IV. Structure of the Study and General Overview V. Methodology: An Eclectic and Heuristic Multi-Disciplinary and Functional Approach to EU Law VI. Normative Assumptions VII. Delimitation of the Study: Exclusions and Limitations Part Two Foundations and Principles: The Economic and Legal Basics of Public Procurement and Competition Law 2 An Economic Approach to Public Procurement and Competition I. Introduction II. Types of 'Public Procurement Markets' III. Economic Dimensions of Public Procurement IV. The Role of Public Authorities as Purchasing and Contracting Authorities V. Public Procurement as a Market Failure: Difficulties in Recreating a Competitive Scenario and Competition- Restricting Effects 60 VI. Conclusions to this Chapter 3 Basics of Competition and Public Procurement Regulation I. Introduction II. Principles Common to Competition and Public Procurement Law as Two Sets of Economic Regulation III. The Goal(s) of Competition Law IV. Goals of Public Procurement V. Conclusions to this Chapter: Common Goals of Competition Law and Public Procurement Conclusions to Part Two: Legal and Economic Normative Foundations of a More Competition-Oriented Public Procurement System Part Three General Part: The Building Blocks of a Framework for the Competition Analysis of Public Procurement 4 EU Competition Law and Public Procurement: The Inability of EU Competition Rules to Rein in Anti-Competitive Public Procurement I. Introduction II. The Inability of Rules on the Grant of State Aid and Special or Exclusive Rights to Tackle Anti-Competitive Public Procurement III. The Inapplicability of 'Core' EU Antitrust Rules to Public Procurement: A Jurisprudentially Created Gap in EU Competition Law IV. The Insufficiency of State Action Doctrine to Capture Most of the Anti-Competitive Public Procurement Regulations and Practices V. Preliminary Conclusions: The Insufficiency of Current Competition Institutions and Potential Improvements to Achieve Better Results VI. A Revision of Current Doctrine to Achieve Better Results (1): A More Economic Approach to the Concept of 'Economic Activity' in the Public Procurement Field VII. A Revision of Current Doctrine to Achieve Better Results (2): Setting the Proper Bounds to the State Action Doctrine VIII. Conclusions to this Chapter 5 The Principle of Competition Embedded in the EU Public Procurement Directives I. Introduction II. The Competition Principle Embedded in the pre-2014 EU Public Procurement Directives III. The Principle of Competition Consolidated in Article 18(1) of Directive 2014/24: A Critical Assessment of the Interpretative Difficulties it Creates IV. Implications of the Competition Principle for the Shaping of Public Procurement Rules by Member States: The General Obligation to Develop a Pro-Competitive Public Procurement Framework V. The Principle of Equal Treatment and the Principle of Competition Distinguished VI. Conclusions to this Chapter Part Four Analysis of Competition Distortions Caused by Public Procurement 6 A Critical Assessment of the 2014 EU Public Procurement Directives and the Existing Case Law from a Competition Perspective: Preventing Competitive Distortions by the Public Buyer I. Introduction II. A Competition Appraisal of Potential Distortions Derived from Public Procurement Processes III. Two Examples of Potential Distortions Derived from the Exercise of Public Entities' Market Power IV. Conclusions to this Chapter 7 Complementary Proposals for the Development of a More Competition-Oriented Public Procurement Framework I. Introduction II. Complementary Proposals Aimed at Limiting Publicly Created Restraints of Competition III. Complementary Proposals Aimed at Limiting Privately Created Restraints of Competition IV. Complementary Measures Aimed, in General, at Strengthening the Relationships between Competition and Procurement Authorities V. Conclusions to this Chapter Part V General Conclusions 8 Conclusions: Towards a More Competition-Oriented Procurement System References

The intensity of competition is typically measured according to the number of bidders on any given public procurement market. By analysing the Tenders Electronic Daily database 2017–2020, we examine the conditions in the contract notices which have an impact on increasing competition in launching public procurement procedures. The research findings show that the longer duration of the contract, the lowest price awarding criteria, the division of the subject matter into lots and the possibility of negotiations are essential elements which can activate bidders. These are unequivocal prerequisites for creating effective and fair competition in public procurements.

The article “Legislative Framework of In-house Procurement” examines the importance of the concept of the in-house transactions in Public Procurement. The purpose of the work is to analyse the Legislative Framework from the perspective of the principle of free competition. The study of free competition is based on works and the main ideas of the following authors: Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, John Stuart Mill, John Maynard Keynes, Friedrich August von Hayek and Milton Friedman. Having done the analysis of the EU directives and regulations concerning In-house Procurement (Directive 2014/24/EU; Directive 2014/25/EU; Directive 2013/34/EU; Case C-107/98, Case C-26/03, Case C-84/03, Case C-295/05, Case C-480/06, Case C-324/07, Case C-573/07, Case C-196/08, Case C182/11 and C183/11), as well as normative regulations of several countries, the author made a conclusion, that In-house Procurement contains considerable threats to the principle of free competition in Public Procurement. In-house Procurement contains considerable threats to the principle of free competition in Public Procurement. The data obtained confirm this hypothesis. The results obtained allow us to develop recommendations for the Legislative Framework of In-house Procurement. The results of the research can be used by procurement theoreticians and practitioners.

In an era marked by globalization and fierce competition, the application of the principle of competition in public procurement is essential for ensuring efficiency and transparency in procurement processes. Competition is a fundamental mechanism that contributes to the optimization of public resources, guaranteeing the efficient use of public funds and the provision of high-quality goods and services to the final beneficiaries. By encouraging the participation of multiple economic entities, competition facilitates transparency and prevents corruption. Fair competition also promotes innovation and the continuous improvement of offers, providing more efficient and tailored solutions to the needs of public institutions. The study analyzes both the advantages of applying the principle of competition and the legislative and practical challenges its implementation involves, highlighting the importance of balancing quality and price in public procurement.

Several studies analyze the determinants of public spending efficiency. However, states fragility is often overlooked. This paper contributes to the large literature on public spending by examining the effect of states fragility. The empirical analysis covers 99 developing countries for the period 2006–2019. Using several empirical approaches, this analysis finds that states fragility negatively affects the efficiency of total public spending. The negative effect remains significant when the efficiency score is disaggregated by health and education spending. Using the components of states fragility, only factionalized elites, uneven development, and demographic pressures have no effect on the efficiency of public spending. This suggests that policymakers need to reduce political, socioeconomic, and security weaknesses-the different dimensions of states fragility-in order to increase resilience and manage resources effectively. JEL Codes:H7, H75, H50, I0

The relationship between public procurement and competition has recently been receiving an increasing amount of attention, both in academic and policymaking circles. It is becoming common ground that public procurement holds a complex and bidirectional relationship with market competition and that, consequently, a tighter link between public procurement and competition law enforcement needs to be established.This paper explores the recent OECD push for more competition in public procurement and its role as an influential factor in the ongoing reform of EU public procurement rules. Afterwards, it critically assesses three of the main challenges to keeping public procurement precompetitive: (i) the difficult balance in terms of procurement transparency created by the clash between competition and corruption concerns; (ii) the magnification of the undesired (potential) anticompetitive effects of public procurement that centralised procurement may generate, as well as its increasing use as an improper tool of market regulation; and (iii) the possible competitive distortions and the potential advantages resulting from the generalization of eProcurement. The conclusions extract some common patterns derived from the previous analysis and suggest some policy recommendations mainly oriented at boosting oversight and professionalization of procurement.

The article analyzes the main changes to the procedure of public procurement in Ukraine, the features of bidding, competitive dialogue and negotiation procurement of goods, works and services to meet the needs of the state and the local community are determined by. The adoption of the Law of Ukraine "On public procurement" provides for the introduction of transparency from planning to delivery of goods, ensuring accessibility for analysis and control of the public, the efficiency and effectiveness of the appeal, raising professional buyers, optimizing functions of the competent authority in the public procurement, improving the rules and conditions of public procurement, creating additional conditions to combat corruption, promoting the implementation of the Association Agreement between Ukraine and the EU. According to Art. 12 of the Law of Ukraine "On public procurement" procurement can be made by applying one of the following procedures: the open tenders; the competitive dialogue; the negotiation of the purchase. According to Art. 12 of the Law of Ukraine "On public procurement" the customer makes the purchase procedure by using electronic procurement system. Previously, the using of electronic means in the purchase procedures was a right and not an obligation of the customer. Introduction of e-procurement and electronic appeal aims to increase competition in public procurement and reducing corruption. The open tenders are based on the principles of openness and equal (non-discriminatory) access to the procurement of all participants, however, with the mandatory using of electronic procurement and the electronic auction. The competitive dialogue are used by the customer in the event that it is impossible to determine the required technical, quality characteristics or the subject of procurement are consulting, legal services, development of information systems, software, research, experiment or development, the performance of research and development, construction, determination requirements for the implementation of which requires negotiations. The negotiation of the purchase is a prototype of public procurement procedures, which assumed the old law, and is used as an exception. Major changes in the conduct of public procurement procedures lies in the fact that the customer performs procurement procedure through the using of e-procurement system. Previously, the using of electronic tools in the procurement procedures were right but not an obligation of the customer. This will reduce corruption and increase competition in this area.

У статті визначаються поняття контролю у сфері публічних закупівель та органи державної
\nвлади, які відповідно до законодавства його здійснюють, аналізуються повноваження органів конт-
\nролю у сфері публічних закупівель та окремі проблеми його здійснення.

In its 2011 Proposal for a new Directive on public procurement, the European Commission included the consolidation of the general principles of procurement. For the first time, in addition to the ‘classic’ triad of equality, non-discrimination and transparency, it expressly included the principle of competition amongst such general principles. In the 2011 Proposal, the Commission referred to an objective concept of restriction of competition, which would be proscribed by the future Directive. Successive negotiations allowed the Council and the European Parliament to alter the drafting of this provision. The final text in Article 18(1) of the 2014 Directive thus contains a different version of the principle of competition. In this final version, both a subjective element and a presumption of distortion of competition are included, which could diminish the effectiveness of the principle. Moreover, both deviations from the initial proposal by the Commission are difficult to reconcile with the existing case law of the Court of Justice of the European Union (CJEU).This paper traces the legislative evolution of the principle of competition in public procurement and looks for explanations for the alteration of its initial drafting. Looking to the future, it considers whether the CJEU will stand by the new drafting and limit the principle as desired by the Council and the Parliament or, conversely, it will promote a functional approach along the lines of the objective conception initially proposed by the Commission. This paper proposes that the second option is preferable and, in any case, more likely in view of the CJEU's treatment of similar issues in other areas of EU public procurement law (such as the classical anti-circumvention provisions), as well as EU economic law more generally (and, remarkably, competition law and the granting of State aid).

The notion that the US federal government provides equal opportunity for all businesses to potentially receive contracts may be, as discussed in Plato's Republic, a noble lie. In this context, the noble lie represents government's attempt to advance an agenda that is ostensibly in the public interest yet is empirically untrue. Using the 'full and open competition' designation and number of offers as a measure of actual competition for government contracts, this research shows that competitive contracting by the US federal government is more an ideal than actual practice. Based on these findings, it is asserted that full and open competition is consistent with a noble lie, existing as an ideal not regularly attained, but nonetheless offered in service of other ends. Contextualising and linking the noble lie with trust signals areas for future research regarding competition in public procurement.