Public Procurement: A Competition Perspective

Abstract

Public procurement of goods and services accounts for 25–30 percentage of GDP in developing countries. Since this involves public resources, it is important to optimise efficiency of procurement which in turn is positively correlated with the level of competition in the market. Paradoxically, various factors make public procurement especially vulnerable to a host of anti-competitive practices. The article examines various anti-competitive practices that may potentially affect the efficiency of public procurement as well as ‘red flags’ in various stages of the bidding process that could possibly point to bid rigging. However, by properly designing the procurement process, risks of bid rigging can be significantly reduced. Data from various countries show huge savings to public treasuries resulting from implementation of public procurement reforms. The article also attempts to discuss the evolution of competition law in India over the last seven years of operation of the Competition Act, 2002. Apart from the crucial role of the Competition Authorities, the article underlines the need for procurers to be proactive. Effective public procurement reforms in India would require close cooperation among various stakeholders, such as the Department of Expenditure, Central Vigilance Commission (CVC), Comptroller and Auditor General (CAG), Competition Commission of India (CCI) as well as procurers.