The correct choice of the public procurement (PP) method is considered to be the critical success factor in the public-private partnership (PPP) projects and in the PP itself. In the developing countries the rapid economic changes reflect in the relatively high corruption level and bring to life a strong anticorruption policy aimed at the restriction of contracting authority’s discretion. Such policy creates a legislation, which sometimes prescribes to use specific tools or establishes thresholds independent of economic environment. Thus, the regulation jeopardizes effectiveness of PP and PPP, strengthens the risks at post-procurement stages of PPP projects.
According to policy, legislation of the most post-communist countries restricts negotiation procedures and prefers the reverse (price) auctions to scoring auctions and single-source procurement. The latter methods are regulated and monitoring more scrupulously. In the paper the regulatory impact assessment (RIA) of two regulatory tools are examined, from PP and PPP regulation areas.
From different scoring rules the Russian PPP legislation has selected the Highest bid – Lowest bid scoring rule (Rule) to apply it in the tenders. The rule is often applied in the international practice and is considered to be the relevant tool in the competitive procurement environment. The research treats the performance of the Rule in the assumptions of tender’s low competitiveness due to the corruption and attempts of public buyers to neutralize the risks from easy access to PP market.
The Russian PP legislation establishes a threshold for a single-source procurement, and demands that all purchasing above the threshold be done by means the tenders independent of their volume. Thus, there is a problem of applying tenders in the cases of small contracts. The research examines the scale of applying auctions to the small contracts in the purchasing of regional hospitals.
The first research question of the paper is connected with the RIA of applying the Rule in institutional environment, which is typical for countries with emerging economies. The research method is applying the agency model, adjusted for the public sector needs, which has been developed by the author for the modelling of the corrupt behavior under the different regulatory regimes. The model uses regulation rules to describe agent’s preferences and compare it with the “ideal” society’s preferences, which has to be modelled. The paper proves that in general the Rule cannot be used in the absence of competition and identifies the necessary conditions the parameters of tender must satisfy if the rule is nevertheless applied. The second research question is connected with the assessment of scale of applying auctions to the small purchasing and identifying the causes of such contracting authority’s behavior. The results of a regional market study are used to do it, while the sampling of public health institutions’ procurement in St. Petersburg is provided to evaluate a scale of enforced and unenforced bidding. The results of survey’s analysis gives some evidence that a huge number of tenders for small contracts derives more from the current public policy than from the legislation restrictions.
Working with the private sector: externalisation, contracting, public-private partnerships
