Analysis of Factors of Overpricing in Public Procurement: A Study for Low-performing EU Countries

ABSTRACT

The paper deals with the issue of overpricing of public procurement in low-performing EU countries. It examines a uniquely large sample of public procurement in 11 Central and Eastern European countries. Hierarchical regression is used to analyze the factors that influence public contract. Our results indicate that institutional factors have a greater impact on overpricing than individual decisions by the contracting authority. Our analysis for low-performing EU countries provides interesting results and also draws attention to behavior that is not typical of the better established and more advanced EU countries. Our results are particularly important for public policy in each country, as they show the direction of regulatory action in the field of public procurement. The results introduce a debate on the appropriateness of “one size fits all” regulations within the EU.     

The Impacts of Different Regulatory Regimes on the Effectiveness of Public Procurement

The combination of two reforms in Russia, reform of public-sector entities and of public procurement, enables us to estimate the results of a transition from rigid to more flexible regulations in public procurement (PP). We consider two public universities in 2011–2012. The procurements of one university were regulated by rigid Federal Law during the entire period; the procurements of the other university were regulated by Federal Law until June 2011 and then by a more flexible regulation. Using the difference-in-differences methodology, we assess how the transition to this new regulation affects the main PP parameters. We show that more flexible regulation leads to a decline in bid competition but improves contract execution.     

A Comparative Analysis of SME Friendly Public Procurement: Results from Canada,Hungary and Italy

This paper studies SMEs’ participation in public procurement in light of perceived barriers and expected benefits of accessing the public marketplace. It presents a comparative analysis of SMEs’ participation in three countries that share similar approaches to SME-friendly public procurement. A common survey protocol was developed to be administered to SMEs in the three countries. Data collected were then analysed using regression methods. Findings suggest that some issues that are typically considered critical barriers, namely administrative requirements and award based on lowest price do not hinder participation. However, findings also suggest that firms’ characteristics associated with size are still relevant hindrances, and that SMEs’ involvement are affected by a shortage of tangible (human and financial) and intangible resources (experience). These findings provide guidance to fine-tune public procurement policies directed to SMEs.     

Evaluating the Effectiveness of Public Procurement Performance Management Systems in Local Governments

Increasing the effectiveness, efficiency, and compliance of public procurement (PP) has become an ongoing concern for governments. Public administrations at different levels are realising that – in order for PP to fulfil its mission – appropriate control and diagnostic systems must be put in place. This study aims to investigate the architecture of PP performance measurement systems (PP-PMSs) in local governments, drawing on four case studies from Italy and four from Wales. The theoretical background is provided by the emerging literature on procurement PMSs in the private context as well as the specific literature on the public sector. PP-PMSs are specifically analysed with respect to performance areas covered (i.e., cost, quality, time, compliance, innovation, sustainability). Results show that performance dimensions should be extended beyond traditional cost measures, with KPIs not limited to those imposed by national/regional regulation. Furthermore, we show that this is likely to happen where the procurement function is recognised as strategic in the public institution.     

Organizational Forms and Incentives in Public Procurement: Natural Experiment at a Large Public Sector Organization in Russia

This article analyses how the intensification of centralized monitoring within public organization may impact incentives for efficiency in those divisions of the organization that have different levels of financial autonomy. The efficiency of divisions’ activities was estimated through their procurement effectiveness. All the divisions were classified as non-commercial units (NCU) funded by the government or as income earning units (IEU) operating in the market and having broader financial autonomy. The results show that under standard monitoring, the IEU had more efficient procurements compared to the NCU. After intensification of centralized monitoring, the differences in performance became insignificant. These findings show that stricter monitoring is efficient for organizations with soft budget constraints, while for organizations with hard budget constraints it is preferable to use more flexible regulations.     

Corruption,Centralization and Competition: Evidence from Russian Public Procurement

ABSTRACT

This paper estimates the impact of corruption on the incentives of procurers to maintain honest competition in tenders. Customers, who procure for themselves, and Agencies, who procure for the customers in their region are considered. Basing on a large dataset of open auctions conducted by Russian regional-level authorities in 2011, the analysis shows that in highly corrupt regions, Agencies fail to arrange competitive tenders and most of auctions have one bidder. Customers attract more bidders for large contracts, but rebates are usually low. Therefore, procurement centralization may reduce the corruption of Customers, but cannot solve the problem of low competition.     

Who Is Inclined to Hide the Truth: Evidence from Public Procurement

ABSTRACT

This paper presents a survey-based methodological approach to detect potential opportunism by counterparts who are linked with agents through contractual relations. The methodology proposes asking counterparts about attitudes toward some behaviors of agents, which are undesirable from the principal and benevolent counterpart perspective. The approach identifies the potential opportunism of counterparts based on the intensity with which they justify such behavior and provide unrealistic assessments of commonly known problems. The approach is especially important in a situation where the rules are inconsistent with reality and the principal can no longer disentangle the benevolent and opportunistic behavior of the agent. The authors test this approach by conducting a survey of procurers and suppliers of public procurement contracts in Russia.     

Full and Open Competition in Public Procurement: Values and Ethics in Contracting Opportunity

ABSTRACT

Governments have sought to respond to increasing pressures to accomplish aims with efficiency and at low cost. A perception of the potential for corruption and waste of public resources has been met with calls for transparency and accountability. Competition is believed to lead to impartial, optimal outcomes, but attention paid to competition in the literature suggests that the benefits are not universally clear. This paper considers ‘full and open competition’ as a policy promise, ethical obligation, and a matter of justice, drawing upon work of John Rawls and others, in the United States case. The research question is: What do Federal procurement data tell us about the nature of full and open competition in practice? This study draws upon contract data available from the U.S. Federal government, for fiscal years from 2015 to 2018. Through an ordinal regression, it is suggested that variation in the extent of competition results in part from size of project, size of the business (or potential business) receiving the project, and the industry classification, particularly in cases centering on commercial acquisitions. While ‘full and open competition’ is frequently employed, the difference between the normative value of the concept in statute, and practical outcomes in implementation, is clear. This difference has consequences for both vendors and the government.     

Human Resource Management and Organizational Behavior of Public Research Institutions

The purpose of this article is to analyze the organizational behavior of public research organizations based on their human resources development and management. The study here focuses on the largest Italian public research body. The pyramid of R&D people shows the irregular spatial structure of the research personnel per macro regions and the index of seniority indicates older research personnel in the North and Central Part of Italy than in the South Italy. The analysis of human resources displays organizational weaknesses and threats for public research labs generated by research policy based on shrinking public research lab budgets and downsizing of research personnel. Some critical human resource management implications are discussed in order to improve the strategic change and research performances of public research institutions in turbulent and fast-changing markets.     

Accountability in Public Management Networks: An Analysis of Cost Monitoring in Chicago Municipal Networks

Public management networks (PMNs) continue to proliferate as governance becomes more complex, and so does the need to hold them accountable. Agency and collaboration theories provide a solid foundation, but additional constructs are necessary to adapt to this dynamic era. Building from Bovens et al. (2008), the authors offer an ecological framework of third-party accountability that incorporates a number of prominent accountability theories under the same construct. Employing a mixed-methods research design that examines eight local PMNs in the Chicago region, the study finds that an exemplar accountability mechanism—additional cost monitoring—occurs more often in situations predicted by the framework. Additionally, qualitative interviews of network participants suggest that cost structures can differ by network type, which is verified quantitatively.     

A Public Administration Headache: An Evaluation Analysis of Prison Policy and Recidivism Toward Social Reintegration

We focus on discovering, describing, and understanding prison recidivism; secondly, we intend to know if the prison policy contributes to deterrence of crime; thirdly, we want to know if prison labor and vocational education and training influence the rate of prison recidivism by increasing social reintegration or decreasing prison recidivism. We use a sample of n = 1643 prisoners, multivariate clustering methods, focusing on latent class models, to trace the profile of prisoners, and we use the chi-square test to test dependence/independence of some variable pairs. Data support the heterogeneity of inmates, resulting in two clusters, recidivists (50%), and nonrecidivists.     

The Effect of More Demanding Public Services Quality Standards on the Organization of Service Providers

ABSTRACT

This research aims to investigate the effects that more demanding quality standards have on the organization of public service providers. A hypothetical research model showing the relationship between the quality of public service and the organization of public service providers was tested through a survey carried out with managers of water companies located in Italy. Results show that the new regulations impact on the organization in terms of resources and the performance management system, while the degree of centralization (i.e., the hierarchy of authority and degree of participation in decision-making) is not significantly related to the more demanding quality standards.     

Talking the Talk of Public Service Motivation: How Public Organization Logics Matter for Employees' Expressions of PSM

This article aims to move beyond the public-private dichotomy in studying public service motivation (PSM) by showing how organizational logics matter for the type of PSM (instrumental, normative, or affective) that employees express. Using data from 50 interviews in police stations, prisons, hospitals, municipalities, and schools, we show that differences in service logic (the user's feeling of the desirability of a service) and user logic (people-changing or people-processing services) matter for employees’ expressions of PSM in that this results in different emphases within public service motivation. We conclude that institutions such as organizational logics matter for PSM expressions and that research on PSM should account for differences between public service-providing organizations.     

Municipal population size and the benefits of inter-municipal cooperation: panel data evidence from Japan

ABSTRACT

Intermunicipal cooperation (IMC) facilitates efficient public service delivery. This study measures how the benefits municipalities gain through IMC differ according to municipal population size and service provision type. Focusing on public health and fire protection services, this study employs panel data regression for 1,706 Japanese municipalities over a five-year period, 2012–2017. This study has several major findings. First, an increase in the IMC spending ratio reduces public spending in both the studied services. Second, the marginal effect of IMC varies depending on the size of the municipal population. More specifically, the marginal effect of IMC on public health has a narrow confidence interval with a wide ranging population scale, while the marginal effect of IMC on fire protection produces negative values for only 151 municipalities due to extensive standard error. These findings can help municipalities take advantage of IMC to improve public service delivery.     

The New Mode of Public Governance and Public Accountability in Developing Countries: An Analysis with Particular Reference to Bangladesh

Public accountability is a fundamental element of good governance. All countries all over the world strive to ensure the accountability of public officials by adopting different kinds of mechanisms. Following the liberal democratic tradition, most countries in the world have relied on the legislative instruments, executive means, judicial and quasi-judicial processes, official rules, codes of conducts, official hierarchies, public hearings, interest groups, media scrutiny and so forth for ensuring public accountability. However, in recent years, the new mode of public governance has brought new dimensions to the discourse on public accountability. This new mode focuses largely on the market- and society-centered mechanisms. This article is an attempt to assess the effectiveness of these market- and society-centered mechanisms in ensuring public accountability in Bangladesh. The article has the following objectives:

(a) to explore contemporary debates on the market- and society-centered mechanisms of public accountability;

(b) to sketch the state of public accountability in Bangladesh; and

(c) to analyze the effectiveness of the market- and society-centered mechanisms in view of the contemporary socio-economic and political dynamics of Bangladesh.     

Institutionalized Governance: The Case of the National College for School Leadership

The article is based on data from the Knowledge Production and Educational Leadership Project (funded by the UK Economic and Social Research Council RES‐000-23-1192) where we investigated the relationship between the state and public policy and knowledge in England during the New Labor governments from 1997. The relationship between the state and civil society is one of institutionalized governance where the public institution in the form of the national ministry and the establishment of Non-Departmental Public Bodies remain important in policymaking but is increasingly inter dependent with networks of advisors and private consultants who “enter” government as policy designers and deliverers. We intend to develop this through using the National College for School Leadership as a case study based on primary documentation and interview data.     

Italian Utilities and Public Control: Evidence of Merger Effects

ABSTRACT

Increasing competition-induced mergers amongst public utilities may favour in Italy a reduction in public control and an increase in fair value accounting. In this context, conducting a multiple case study characterized by an innovative comprehensive approach, it is investigated how the peculiarities of the sector affect integration and the subsequent accounting representation of the post-merger entity. The findings show, firstly, the persistent will of the public shareholders to maintain control and, secondly, shed light on a form of interconnected ‘accounting levelling out’ that seems ill-suited to represent the economic reality of the most significant post-merger companies, despite New Public Management provisions.     

Public Service Motivation in Ghanaian Civil Service: A Case Study of Ejisu-Juabeng Municipality

Civil servants are perceived to possess altruistic motive known as Civil Service Motivation (PSM) which promotes public interest as confirmed in some developed countries. Using the Ejisu-Juabeng Municipality as a case study, this article assesses the existence of PSM in the Ghanaian public sector and finds that PSM exists in the public service but its existence does not ensure maximum output. The workers professed having motives such as sense of social justice, compassion, commitment to public interest, self-sacrifice, and sense of civic duty but indicated their unwillingness to commit their future to the public sector because of poor working conditions.     

Organizational Trust and Accountability Reforms in Public Management: Analysis of Inter-agency Implementation Relations in Kenya

Contemporary governments have persistently responded to accruing implementation blind-spots by further restructuration of public bureaucracies. This has come with increased agencification and coordination efforts to enhance organizational efficacy and to produce trust for legitimation purposes. Accountability reforms in particular rarely address non-formal implementation processes that seem to characterize these efforts, mainly, inter-organizational trust. This is despite mounting evidences on the centrality of organizational trust in collaborative implementation processes of policy reforms. Basing on qualitative data from Kenya, this paper explores the production of organizational trust and its influence on the implementation environments for accountability reforms between oversight and governmental institutions. Data indicate that common difficulties in collaborative-implementation framework like fragile horizontal accountability-relations, misinterpretations of authority, obsession with control and autonomy, poor organizational-communication mechanisms, public trust deficits, poor internalization and institutionalization, etc. also correspond to problems of organizational trust. So, it is suggested that besides building public and interpersonnel trust, a policy design should also device steps that can strengthen internal-accountability systems, reduce some forms of bureaucratic slackness, enhance interorganizational communication and justice systems. This should improve inter-agency trust and ease cultural-instrumental tensions typical in collaborative implementation relations common in modern public administration.     

Perception of Pay Equity in Public Universities in Ghana: Effect on Individual Performance and Work Behavior

Equity theory proposes that individuals perceiving inequity seek to restore equity through appropriate behavior. This research aimed to study the relationship between perceived pay equity and individual job performance among lecturers in public universities in Ghana. Using a survey of 313 lecturers, we found that employees’ perception of equity in the pay system is a significant factor in determining their job performance. Therefore, we recommend that managers attend to equity in the design and implementation of pay systems. Moreover, issues relating to the reward system should be carefully communicated to employees in order to prevent unnecessary perceptions of inequity.