The mafia influence in the business context: Infiltration of criminal firms in the public procurement market

The authors conducted a study aimed to identify the role of «Big Four» («Big 4») audit firms in the public procurement market in Ukraine.The purpose of the article is to answer the questions: whether Ukraine is in a general trend of most countries in the concentration of audit market; what is the share of revenues of the «Big Four» audit firms in the performance of audit services in the public procurement system in Ukraine. First of all, in order to get answers to these questions, the authors conducted a study of the main trends in the development of the «Big Four» companies in Ukraine. It was found that the characteristic competitive environment in the market of audit services, the impact on competitiveness of pricing policy and regulatory requirements, relating to the acquisition of audit services by public sector entities through a public procurement system "ProZorro". An element of price regulation and compliance with the transparent conditions of the competitive environment is the participation of audit firms in the public procurement system. As a result of processing data on procurement of audit services for the period 2008-2019, the authors calculated key indicators that characterize the concentration of the audit market. Based on the data on the amount of remuneration for various types of audit services using the public procurement system "ProZorro", aspects of pricing policy and the role of the companies of the "Big Four" in the market were established. The values indexes indicate that the companies of the «Big 4» do not have a complete monopoly in the segment of procurement of audit services, having certain dominant positions in some years, and the indexes indicate a trend towards effective competition in the audit services market in Ukraine.

The aim of this research is to contribute to the limited existing research on the subject of SME access to international procurement by analysing whether the dynamic capabilities of learning and knowledge management would allow SMEs to overcome the internal and external barriers of the international public procurement market. By means of CAQDAS software and in-depth interviews with management-level executives responsible for international procurement, the authors analysed the barriers faced by Spanish firms in the public procurement market, and studied the dynamic capabilities developed to overcome those barriers. Results show that SMEs develop dynamic learning and knowledge management skills and that these are embodied in knowledge acquisition and transformation capabilities. The authors provide SMEs with ideas not only about the learning and knowledge capabilities required in the international public procurement market, but also about the key barriers they may find. Moreover, suggestions for public administration are also provided. The value of the paper is twofold, on one hand, the paper tackles the problems of the market barriers in international public procurement from the perspective of how SMEs can overcome them. On the other, it is the first time that research integrates these two areas of analysis i.e. international public procurement and barriers overcome by dynamic capabilities.

In the EU and in individual Member States some deficiencies in the functioning of the public procurement market may hinder or, in some cases, even prevent the achievement of basic objectives of the legal regime of public procurement. Such deficiencies can be eliminated successfully or, at the very least, mitigated through establishment of a public (administrative) supervision over the public procurement market. The purpose of this article is, first of all, to determine the need for a public (administrative) supervision over the public procurement market in UE. Also, upon prior verification of this need, to propose some essential elements of the legal structure of such public supervision over the public procurement market in the UE. An analysis of various elements of the said structure will be made from two points of view: the actual and/or anticipated impact of these elements on the public procurement market; and the relation of those elements to the basic national constitutional legal principles relating to the organisation of public authorities and to the relationship between public authorities and individuals.

Small and medium-sized enterprises are believed to be a key driving force of economic vitality, innovation and new job creation. For a few years the European Union has been monitoring SME performance and the quality of public procurement procedures to make access of SMEs to the public procurement market easier and provide for their greater participation in this market. These activities have their origin in the assumption that having in mind the size of the public procurement market and public resources involved, suitable shaping of this area may improve effectiveness of selected policies at the EU level and in particular member countries. The directives concerning public procurement should ensure opening the market of public procurement for all enterprises irrespectively of their size. Recently the public procurement market in Poland has been continuously growing which doubtlessly resulted from Poland’s accession to the European Union. The aim of this paper is to give evidence of SME position on the public procurement market and to attempt to answer two basic research questions. Firstly, is the market potential fully used as far as applying for awarding public contracts by SMEs is concerned? And secondly, what are the main obstacles determining the access of SMEs to the public procurement market? This is done by reference to available statistical data and two studies that were carried out by the author.

Globally, public procurement has been used as a tool to support small and medium size enterprises (SMEs) due to the important role they play in the economy. SMEs participation in every sphere of economic activities including public procurement is one of the ways the sector can promote economic development of the country. However, SMEs sometimes are usually reluctant to sell to government. The purpose of the study is to investigate the factors affecting effective participation of SMEs in public procurement market in Zambia. This study employed cross sectional descriptive design, with a quantitative approach. Data was collected was collected from a total of 186 respondents drawn from SMEs registered with PACRA and operating in Lusaka, the capital city of Zambia. Random sampling was used in selecting SMEs, and respondents included company/business owners, managers as well as supervisors. Data collected was analysed using exploratory factor analysis and regression analysis. The findings revealed that regulatory framework factors, SMEs capacities factors, public procurement tendering factors and SMEs attitude factors are significant determinants with a combined effect size of (0.675) and a coefficient of determination of 43.9%. Further, based on the Hierarchical regression model, the study finds that the largest predictors of SMEs effective participation in public procurement market are public tendering process and SMEs attitude towards public procurement. Findings of this research can potentially contribute to high participation of SMEs in the public procurement market in Zambia.

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 aim of this paper is to use network analysis as a monitoring tool for the competitive conditions and the behavior of the contracting authorities and companies in the public procurement market. The proposed method examines the market using network entropy and conditional network entropy, along with each agent's metrics. Network entropy offers information about the market conditions for the authorities and companies’ groups. The conditional network entropy measures the distribution of contracts across sellers or buyers for each group. The findings are signals of possible dominant positions and preferential treatment. In the second stage, the agency uses the agents’ degrees and entropies, unweighted and weighted, to inspect for possible preferential treatment or market dominance by specific agents. We applied the method in the pacemakers’ public procurement market using data from 33 countries from the period 2009–2019. The findings indicated that even though the network entropy and the conditional network entropy indicated that the market operated competitively, the examination of the companies’ degree centrality reveals the presence of at least one dominant company.

The purpose of this study is to examine the current status and problems of the direct production verification system, and to present improvement plans if improvement is needed. In order to deliver competitive products between SMEs in the public procurement market, a direct production verification certificate must be attached. This direct production verification system was introduced to solve the problem that real added value is not created by supplying the products of partner companies as they are. Therefore, it prevents the delivery of products from large corporations, imported products, and simple bidding arrangements, and provides opportunities for participation in the competition system among SMEs only for products that are directly produced. This is because the fundamental purpose of the direct production verification system is to strengthen the competitiveness of SMEs participating in the public procurement market and maximize the creation of added value of domestic companies. With regard to the direct production verification system, both positive and negative opinions coexist. First of all, on the positive side, first, the competition system among SMEs through direct production verification promotes technology-oriented competition and alleviates the impact of economic fluctuations in the event of a recession by expanding opportunities for start-ups. The competition system between SMEs promotes technology-oriented competition among SMEs in contrast to general competitive procurement, which decreases sales by keeping SMEs’ sales constant even in times of severe economic crisis, and guarantees more opportunities for start-ups. It is argued that it plays a role in mitigating the impact of economic fluctuations. Second, it is argued that the competition system between SMEs is being used as a means to achieve the policy objectives of maintaining quality through various quality certification systems in the public purchasing market, providing equal opportunities through a fair bidding process, and protecting SMEs. In addition, it is known that SMEs own production facilities above a certain level and produce them directly to participate in the public procurement market, resulting in a great import substitution effect. And some of the problems of the current direct production verification standards are summarized below. First, as high fixed costs form a barrier to entry into the market, some top companies take the lion’s share the public purchasing market. Second, the price competitiveness weakened in the private and overseas markets due to high fixed costs. Third, it is difficult to specialize in the production process and maintain price competitiveness because the effects of division of labor based on the global value chain cannot be utilized. Fourth, there may be a legal dispute due to the issue of equality between items due to the absence of the basic principle of the direct production verification standard. In order to improve the above problems, this study suggested several alternatives. First, it is to strengthen global competitiveness and create a sound corporate ecosystem through cooperation between companies and revitalization of division of labor. To this end, cooperation between companies should be encouraged by expanding the collaboration regulations applied to the supplementary rules to all items. And in case of emergency, even if production capacity is insufficient, a system should be established so that production capacity can be expanded through cooperation. Second, parts and outsourcing production supplied by domestic SMEs should be recognized as direct production, enhancing the expertise of the production process, and strengthening the linkage of the value chain to reinforce global price competitiveness.

The research objective is to study and summarize the experience of the European Union countries in the field of public procurement monitoring; to study the activities that form its mechanism; to analyse forms of monitoring. Also, the current state, problems and prospects of creation and implementation of the mechanism for public procurement monitoring in Ukraine are studied; administrative and corruption risks are revealed. Methodology. Theoretical and methodological backgrounds of the research are formed on the basis of the provisions, categories, and concepts of economic theory, national and world economy, strategic development of public procurement, modelling. Laws and regulations that are regulators of the public procurement system and its monitoring, the works of domestic and foreign scientists on investigated issues were of greater importance. The system-structural analysis and synthesis, general scientific methods and methods of economic research are used to analyse and evaluate the phenomena and processes that accompany the functioning of the public procurement market and the mechanism for its monitoring. In particular, historical and dialectical methods (when studying the development of public procurement system in Western countries, the definition of stages and trends in its formation, the development and adoption of treaties for the regulation of public procurement within the European Union); method of expert assessments (for assessing the regulatory and legal support for public procurement monitoring); abstractlogical method (when establishing the factors for the formation of a monitoring mechanism in the field of public procurement in Ukraine, in particular, the institutional and organizational-economic features of its implementation, when assessing the criteria and performance indicators for the functioning of the monitoring system and its impact on the public procurement market, for theoretical generalization and conclusions formation). Results. The results of the research showed that the system of public procurement in the member countries of the European Union and its monitoring processes are still in the process of reforming, despite being the most organized, open, and predictable in the world. At the same time in Ukraine, the process of developing and implementing a mechanism for monitoring public procurement is only a few years old. At the same time, the development of the field of public procurement and the mechanism for its monitoring is accelerating, which is conditioned both by the position of civil society and by the presence of significant corruption risks. Practical implications. The study of the experience of the public procurement monitoring system in the EU countries makes it possible to use the result (in the form of conclusions and generalizations) to adapt foreign monitoring instruments to the domestic realities of the public procurement market in order to achieve maximum effect in the form of budgetary savings. Value/originality. Harmonization of the organizational and economic mechanism for public procurement and its monitoring in the countries of the European Union and Ukraine will provide a mutual opportunity for both foreign and domestic economic entities to become full participants in the public procurement markets; will make procurement, conducted in Ukraine, clear and accessible to foreign participants.

The aim of the paper is to study public procurement market in the European Union (EU) from the perspective of small and medium sized enterprises (SMEs). An important component of the analysis is the European Code of Best Practices Facilitating Access by SMEs to Public Procurement Contracts of 2008, providing guidelines and good practices, and ongoing public procurement reform. SMEs are found as significant source of jobs, growth and innovation, thus, their share in public procurement should be higher than the current 45% of aggregate contract value above EU thresholds. Thus, SMEs perform much below their economic weight. Considering the fact, that public expenditures on goods, services and works account for approximately 14% of the EU’s GDP, public procurement may be recognized as the important trigger of economic recovery after the global crisis 2008+. Worth mentioning, public procurement may contribute to realization of the key EU2020 horizontal policies, focused on establishing more green, innovative and socially-inclusive economy. A key objective of newly established legislative measures is to open-up national public procurement markets to companies from the other EU countries, including cross-border procurement. Among important solutions aimed at enhancing higher participation of SMEs in the EU public procurement market there are, among others, fragmentation of contracts, reduction of turnover required to enter tender procedure and simplification of documentary requirements.

The article is devoted to topical issues of formation and, as a consequence, the implementation of Ukraine’s tasks aimed at improving the development of market relations of member countries on the basis of European principles. The purpose of writing this article is to study the general theoretical foundations of the public procurement market in Ukraine on the experience of European practice, as the European integration direction of Ukraine opens new opportunities for the country to reach a qualitatively new level. With the start of operation of the Free Trade Area of Ukraine with the EU, a new stage of Europeanization of national legislation has begun, which is designed to ensure the economic integration of Ukraine with the EU by removing obstacles to mutual trade. The authors note that in order to become a full member of the European Union, Ukraine is creating a practice of eradicating corruption in the public sector and improving legislation in the field of public bidding. The article outlines the legal nature of public procurement in Ukraine, defines the place of this institution in the European integration direction of the state. The paper examines the legal regulation of relations in the field of public procurement in the EU, aimed at ensuring the functioning of the internal market based on the principles of non-discrimination, competition and transparency, which also affects the order and conditions of «horizontal» goals, establishing negative obligations not to violate the basic principles and rules of procurement. The publication concludes that the access of companies from EU member states to the public procurement market of Ukraine will increase competition. This will help to spend budget funds more efficiently and encourage domestic companies to be more competitive.

National treatment is an essential principle of international trade. However, countries can use public procurement systems to protect their domestic markets from foreign producers through protectionist policies. Although the principle of national treatment is formally institutionalized in the Russian procurement system, the government has established extensive mechanisms to restrict access to foreign goods in the public procurement market. This study focuses on analyzing changes to restrictions on foreign goods in Russia's public procurement market that took effect on January 1, 2025. The analysis reveals four significant changes, including combining all rules for not providing national treatment into one regulatory act – Decree No. 1875. Using the practical case, it was demonstrated that it is not possible to win at an auction with a foreign good over a Russian good if only two bids are submitted for participation. The overall direction of the public procurement system's development in relation to the application of protectionist measures aligns with the economic ideology of the «special path».

Abstract: Although the public procurement system in Bosnia and Herzegovina is represented the area of the legal profession because it is defined by laws and regulations, it is actually more important for economists and all public officials in the country. The subject of this work is theoretical. and practical aspects of applying the transparency to the system of public procurement in the context of strengthening market competition in Bosnia and Herzegovina, and the market economy in general. The special significance of this work lies in the fact that for the first time, research methods were applied to reveal the market strength of the contracting authorities (buyers) and market competition among suppliers (sellers) in the public procurement market in Bosnia and Herzegovina, as measured by their market shares. Based on such findings, the relations of market strength of contracting authorities and the level of development of competition on the public procurement market in Bosnia and Herzegovina in the period from 2010 to 2012 was examined in terms of choosing more or less transparent procurement procedures. Keywords:public procurement system, transparency, market competition.

The aim of the work is to examine how the role of universities in the public procurement market and in public-private partnership is perceived by both the contracting authorities and the contractors.It was verified whether the entities participating in public procurement and public-private partnership see the need for cooperation with universities, and whether there is a link between the declared need for cooperation and the assessment of real actions taken or provided by universities.The work is based on a survey conducted between March and May 2020 among 520 institutions representing contractors and procurers in public procurement.The highest evaluation was given to the activities of public universities in the field of public procurement and public-private partnership in Lubuskie and Śląskie (opinion of procurers) and Lubelskie and Warmińsko-Mazurskie (opinion of contractors).With the use of logistic regression models it was verified that there is a positive relation between the evaluation of the university's activities and the declared need for cooperation between the university and the analysed entity.

The article deals with a judgment that is important from the perspective of interpreting the public procurement law on contract modifications, namely, the judgment of the CJEU of 7 December 2023. The judgment draws attention to at least two incorrect practices. First, “unforeseeable” circumstances, the occurrence of which may justify a contract modification, are sometimes interpreted too broadly. Second, contract modifications that are not made “explicitly” (by an agreement or annex modifying the contract) are not treated as contract modifications within the meaning of the regulations. The conclusions resulting from the judgment are a relevant signal for the entire public procurement market, a signal whose identification by participants in the public procurement market is mandatory. The article takes a closer look at the motives of the CJEU, as well as the implications of the ruling for participants in the public procurement market and empirical research. According to the author’s research, the contract modification rationale for the occurrence of “unforeseeable” circumstances is often used as a justification for contract modification. However, research supports the thesis that there are numerous cases in which it may be questionable to apply the rationale allowing contract modification due to the occurrence of “unforeseeable” circumstances. The correct interpretation of the CJEU judgment in question is all the more important in view of the above (the author’s research) and in terms of the potential increase in the number of public contracts (associated with the use of European Funds). Modification of a contract covered by EU funding in a manner that is not in compliance with the law may result in a 25% adjustment of the funding received.