Perceived ethical risks in public procurement in Hungary (2009–2021)

Abstract

The conduct of participants in the public procurement market, their flexibility in terms of compliance with the rules and unlawful conduct cannot be studied only and exclusively within the framework of corruption research. This paper aims to present how market participants’ perceptions of unethical conduct have changed over 13 years. Our findings demonstrate that the market of public procurements should not be held uniformly responsible for cases of corruption in spending public money. The paper summarises the results of five surveys carried out between 2009 and 2021. Participants of the public procurement market reported that misconduct was a major issue in public procurement in Hungary over the entire reference period. Grievances were the most pronounced on the part of tenderers. In the assessment of market participants, the regulation performs moderately in curbing practices restricting competition. At the same time, they rated their own and other participants’ ethics medium at best in the whole reference period. Only contracting authorities reported some general improvement, in a single year (2021). There is a general market consensus that procurements of construction projects, services and high-value procurements are the most prone to corruption. In this respect, market participants perceived an improvement in 2021, at least in comparison to 2018. Respondents identified the highest risk of corruption in the planning, evaluation and performance stages. Based on our panel data regressions, the general level of ethics as perceived by market participants was stagnant, while corruption exposure followed an inverted U curve, peaking in 2018 and dropping between 2011 and 2009 levels in 2021. The reasons behind that slight improvement are clear. Digitalisation has made communication more traceable, and the controllability of the procedure has inspired optimism in market participants. In other words, transparency and accountability have a strong influence on the perceived level of ethics in public procurement.