6(34)
formalized procurement procedure alternatives. The sample is admittedly
limited, but in certain respects the conclusions are so sharp that they can
be expected to survive when the empirical basis is extended in future
studies.
Problem posed and restrictions on the solution
The basic question asked in the study is whether a national threshold below
the EU threshold is justified and if so, at what level. A number of related
questions have to be answered with this purpose in mind:
Quality aspects
: Many procurement operations rely on one or
several quality dimensions that are somehow related to price. How
should these quality dimensions be handled analytically? What is,
more generally, the relationship between quality and price in actual
procurement operations?
Expected gains:
What gains can be expected from a formal
procurement subject to competition compared with direct
procurement not preceded by formal exposure to competition?
Transaction costs:
What are the transaction costs for the different
parties involved, primarily procuring entities, but also suppliers,
supervisors, and courts?
Threshold values:
Given an estimate of typical gains and costs in
procurement operations, what is a reasonable threshold level for
the application of formal procurement procedures?
A number of restrictions apply to the policy discussion. One threshold
value is to be applied across a wide variety of sectors, procuring entities,
projects, procurement officials, and so on, which necessitates a fairly
stylized description of the process to be regulated. The procedure to
be followed is supposed to be based on
sealed bids
; that is, secrecy
concerning the number and identity of tenderers is maintained during
the tender phase of the procurement process. Tenders are evaluated
by using the
lowest price
or
most economically advantageous offer
. The
latter procedure may rely on a number of factors, such as technical merit,
delivery date, aesthetic characteristics, and price. Producers can be
assumed to behave differently depending on which criterion is used, but the
same threshold should apply for these two categories. Whether the same
threshold should be used for all
levels of government
is an open question;
currently, a lower value applies for central government in Sweden than for
local government and other public entities, apparently more in order to
confirm a higher degree of autonomy in the latter category than for
economic reasons.
Earlier Work
A number of attempts have been made to estimate the benefits associated
with public procurement rules. The general difficulty stems from defining
a precise counterfactual situation in the absence of a procurement
framework. The most common solution is to study a situation before and
after some change has occurred, an approach that entails certain risks.
