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SNS Research Brief | 11/8/12

SNS Research Brief 6. Public procurement from the perspective of the research horizon

11/8/12 - This survey presents some lessons that can be learnt from the large but partly unused economic theory that deals with auctions in general and public procurement and contracts in particular.

THE PUBLIC SECTOR IN SWEDEN has been subject to large changes in the last 30 years or so. One of the most important changes is that private companies do, to an increasing extent, supply services that the public sector did previously produce itself and that the procurement is done through public procurement. This survey presents some lessons that can be learnt from the large but partly unused economic theory that deals with auctions in general and public procurement and contracts in particular.

DUE TO THE FORMALISATION of public procurement, the main focus has been shifted from qualitative and relatively non-structured evaluations towards measurable criteria and evaluation models that have been specified in advance. This might lead to unfavourable bids being accepted, but does, at the same time, reduce the risk for corruption and suboptimisation at the local level.

IT MIGHT NOT BE POSSIBLE TO VERIFY THE QUALITY of a good or a service. There is then a risk that unfavourable bids are accepted. General agreements might be a solution to this problem, as well as formulating long-term contracts where the public procurer might unanimously decide about an extension or relate evaluations of customer satisfaction to bonuses and/or fines.

EVALUATING public procurements is currently unnecessarily difficult. It is not uncommon that shortcomings in the diary registers of government authorities and the financial accounts make it difficult to check whether cost outcomes correspond to agreements. This contributes to insufficient knowledge about cost efficiency and that experience from completed public procurements cannot be used.

AUTHOR Mats Bergman is Professor of Economics at Södertörn University. E-mail: mats.bergman@sh.se.
Jan-Eric Nilsson is Professor of Transport Economics at VTI (The Swedish National Road and Transport Research Institute). E-mail: jan-eric.nilsson@vti.se.

Released 8 november 2012

Subject

Public Finance

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