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Fostering efficiency in public procurement through the detection of malpractice

Efficiency in public procurement can be obtained by reducing waste of public money. Waste occurs because of slack or corruption and exists in the form of excessive procurement expenditures and inefficient allocation of public contracts. Detailed administrative data on public procurement makes it possible to approach the concepts of inefficiency and malpractice from innovative angles. The waste of money can be due to decisions of public authorities on the auction design. Public authorities conduct auctions to purchase goods, services and works. They could, for example, decrease the time firms get to apply for participation to limit competition and facilitate favoritism. Furthermore, the waste of public money can occur in cycles. Politicians running for election could mobilize voters by agreeing with gas stations to suppress fuel prices prior to elections in return for procurement contracts allocated through unfair competition. Expenditures may also rise when politicians leave office before elections take place. First, corrupt politicians may conclude more procurement contracts in return for bribes to accumulate private wealth. Second, politicians may exert less control over costs and expenditures may soar. The project will contribute to the relevant scientific literature and help us understand whether and how efficiency in public procurement can be improved as it constitutes a significant share of total public expenditures and GDP.

Date:1 Oct 2020  →  Today
Keywords:public procurement, auction design, corruption
Disciplines:Public economics, Law and economics, Political economy