22(34)
Results and Analysis
Gains
The relative gains from procurement as previously defined, (EX–EX
min
)/EX,
were computed for all 126 procurement operations in the sample. The
average gain in central government is 25.0 percent, and in local
government, 16.9 percent. The grand average is 21.8 percent. This result
agrees well with the conclusion from the previously cited literature survey
by the Australian Industry Commission (1996), although the method used
is different.
The gain from exposure to limited competition was also estimated by
calculating the difference between the average price and the expected
minimum price among three randomly selected suppliers. In this case, the
expected gain (computed for central government only) is 20.3 percent.
Costs
The average cost of a procurement operation estimated by an experienced
consultant in the VHS Agency is between 5 and 10 percent of the contract
value. The lower value is supported by detailed information from the
Agency for Public Management, as discussed in more detail below, as well
as from other sources. Compared with an average gain in central
government procurement of 25 percent, procurement seems to defend its
position well. Naturally, there are also start-up costs for low contract
values, so a break-even point is to be determined.
Detailed information on the procurement cost was supplied by a few
municipalities and county councils, as follows:
The municipality of Jönköping reported an average cost of 2 200
EUR per procurement.
The municipality of Örebro reported a lower bound of 2 000 EUR
and an average cost of 5 500 EUR.
The county of Skåne reported costs of 6 to 7 percent of the contract
value for small and medium-sized operations (50 000 to 100 000
EUR).
The municipality of Sundbyberg reported an average cost of 10–
11 000 EUR per procurement.
