Law and Economics of Public Procurement Reforms

October 24th, 2017 Posted by No Comment yet

Appropriate laws and regulations are essential tools to direct the action of procurers toward the public good and avoid corruption and misallocation of resources. Common laws and regulations across regions, nations and continents potentially allow for the further opening of markets and ventures to newcomers and new ideas to satisfy public demand.

Law and Economics of Public Procurement Reforms collects the original contributions related to the new European Union Directives approved in 2014 by the EU Parliament. They are of both economists and lawyers, and have been presented in a manner that allows for exchanges of views and “real time” interaction. This book features, for each section, an introductory exchange between two experts of different disciplines, made up of a series of sequential interactions between an economist and a lawyer, which enriches the liveliness of the debate and improve the mutual understanding between the two professions. Four sections characterize this book: Supporting social considerations via public procurement; Green public procurement; Innovation through innovative partnerships; and Lots – The Economic and Legal Challenges of Centralized Procurement. These themes have current relevance of the new European Public Procurement Directives.

Written by an impressive array of experts in their respected fields, this volume is of great importance to practitioners who work in the field of EU public procurement in the Member States of the EU, as well as academics and students who study public finance, public policy and regulation.

Our DIGIWHIST researcher Mihály Fazekas contributed to Chapter 3 of the book. This chapter exposes the enormous opportunities presented by the emergence of Big Data in public procurement and the lack of investment and effort for exploiting these opportunities. Big Data in public procurement holds the promise of fundamentally transforming how procurement performance is understood and it can provide a vastly superior guide to effective policy decisions and implementation compared to our current knowledge. However, Big Data implies large structured and high quality datasets which are typically not available in spite of extensive transparency regulations. Successfully harnessing Big Data also requires valid and easy-to-understand indicators to make sense of the enormous diversity revealed by it. In addition, making Big Data analytics part of daily research and policy making practice requires new skills and a change of culture.

Proxy indicators for the corrupt misuse of corporations – U4 Brief September 2017

October 20th, 2017 Posted by No Comment yet

Winners of the U4 Proxy Challenge 2016

We need more imaginative ways of addressing corruption. It is important to generate indicators that development agencies can use. U4 and DFID developed a proxy challenge competition to inspire the research community to develop reliable, intuitive, accessible and cost-effective assessment methods that are useful across country-contexts.

The abuse of companies for corrupt purposes has reached the forefront of international anti-corruption efforts. However, we lack systematic evidence on which corporate characteristics are likely to signal corruption, and in which contexts. This can bias our understanding of corruption, making it overly focused on the public sector. Monitoring company age is a specific example of how we can validate indicators, tailored to context. We find company corruption risk indicators among three company characteristics: 1. Company registration, such as many companies on the same address 2. Financial information, such as extreme profitability, and 3. Ownership and management structures, such as hidden owners.

This U4 Brief is based on DIGIWHIST research data.

D3.6 Indicators Implemented in Database

September 28th, 2017 Posted by No Comment yet

Deliverable D3.6 builds closely on the indicator definitions reached in WP3 and database created in WP2. Indicator implementation has been done as part of WP2 and the indicators are directly part of the database being submitted in D2.6. Furthermore, the precise technical details of each indicator are incorporated in the methods paper (D2.8). We decided that concentrating all detailed technical discussion in one document (D2.8) maximizes the transparency of our methodology while the database (D2.6) contains all resulting indicators. This deliverable hence only contains the final indicator definitions which were implemented in the database and eventually placed on the portals.”
The final indicator definitions can be accessed at the following link:
https://docs.google.com/spreadsheets/d/1ARtS9tM0jOfjCgvAbHKReV1lrrl7yNHDUoEONyAM7fY/edit?usp=sharing

D2.6 Final Linked Database and related alghorithms

September 28th, 2017 Posted by No Comment yet

The purpose of deliverable D2.6 is to publish source codes of the whole DIGIWHIST data processing system and final DIGIWHIST database which is the result of processing:

● 25 public procurement data sources
○ TED + TED archive
○ Current procurement portal + archive for CZ, UK, HU
○ One source for SK, PL, ES, NL, FR, LV, PT, EE, GE, SI, IE, NO, CH, LT, HR, BG, RO

● 4 public officials data sources
○ http://everypolitician.org/
○ http://www.politicaldatayearbook.com/
○ http://rulers.org/
○ https://www.cia.gov/library/publications/world-leaders-1/index.html

● company database

● 3 budget data sources
○ UK, ES, CZ

The key component of the whole process is public procurement data crawling, structuring, formatting, linking and merging of linked records, covering 35 jurisdictions. It also includes integration with the above mentioned databases like company database, public officials database and budget database. This integration is represented in our final database by several tender related indicators like Tax haven indicator, Political connections indicator or Publication rate indicator.
Methodologically the process is described in other deliverables of WP2 of the DIGIWHIST project.

Attached is the revised version of 26.02.2018.

D3.5 Administrative capacities that matter: organisational drivers of public procurement competitiveness in 32 European countries

September 5th, 2017 Posted by No Comment yet

In spite of the many efforts in the pursuit of a European single market, many barriers
continue to lie ahead, as the field of public procurement illustrates. In 2015, around 40%
of all high-value procurement tenders in a large pool of European countries attracted only 2
bidders or less, and only 3% of all winning companies had their offices outside the procuring
country. This paper explores a rather unaccounted dimension behind the competitiveness
of tenders: the administrative capacities of contracting authorities. For this, we fi rst build
a theoretically-informed multidimensional framework of administrative capacities and subse-
quently test the effect of these capacities on competitiveness, by using a comprehensive and
curated database of more than 120.000 procurement contracts in 32 European countries. The
findings show that most administrative measures robustly explain a portion of competitive-
ness, in particular administrative aspects related to the choice of instruments and procedures
to conduct the bidding calls, such as electronic procurement. Findings also show that the
behaviour of these relationships is counterintiuitive at times, and highly dependent on the
national context, suggesting that organizational path-dependency undermines convergence
under EU regulation.

D3.2 Lights on the Shadows of Public Procurement. Transparency in government contracting as an antidote to corruption?

September 5th, 2017 Posted by No Comment yet

Transparency is widely promoted as an essential condition for good governance, and as an effective tool against public sector corruption more specifically. Although the empirical evidence on the impact of transparency on corruption is growing, empirical evidence remains mixed. Recent critique holds that a main reason for the lack of robust empirical evidence is that both conceptualization and available measures of government transparency are broad and sometimes imprecise, and that the concepts of transparency are often far removed from the type of information that is relevant to assess government performance. This paper seeks to develop a more precise con-ceptualization and measure of transparency that is actionable for the stakeholders of government decisions. The paper uses newly collected data of more than 4 million public procurement contracts between 2006-2015 to investigate the impact of transparency on high-level corruption risks in public procurement across Europe. We find a strong negative impact of overall tender transparency on corruption risks. The results also show that ex-ante transparency, i.e. transparency before the contract is awarded, has a stronger effect on corruption risks than ex-post transparency, i.e. the availability of information after the contract has been awarded to a bidder. This suggest that internal transparency, or transparency first and foremost directed to provide information to the par-ties involved in the bidding process rather than to outside observers, is the main condition for wider public ac-countability to emerge. However, the effectiveness of this type of transparency is strengthened in contexts where there is also a wider societal demand for reduced corruption. In sum, our results suggest that transparency can reduce corruption risks if the information is both relevant to inside observers and actionable.

Uncovering High-Level Corruption: Cross-National Objective Corruption Risk Indicators Using Public Procurement Data

September 4th, 2017 Posted by No Comment yet

Measuring high-level corruption is subject to extensive scholarly and policy interest, which has achieved moderate progress in the last decade. This article develops two objective proxy measures of high-level corruption in public procurement: single bidding in competitive markets and a composite score of tendering ‘red flags’. Using official government data on 2.8 million contracts in twenty-eight European countries in 2009–14, we directly operationalize a common definition of corruption: unjustified restriction of access to public contracts to favour a selected bidder. Corruption indicators are calculated at the contract level, but produce aggregate indices consistent with well-established country-level indicators, and are also validated by micro-level tests. Data are published at http://digiwhist.eu/resources/data/

Red tape, bribery and government favouritism: evidence from Europe

July 13th, 2017 Posted by No Comment yet

Abstract

Red tape has long been identified as a major cause of corruption, hence deregulation was advocated as an effective anticorruption tool, an advice which many country followed. However, we lack robust systematic evidence on whether deregulation actually lowers corruption. This is partially due to the difficulty of defining what is good regulation, but also to the lack of theoretical clarity about which type of corruption regulations impact on and to the deficient measurement of different types of corruption. In order to address the latter two gaps, we differentiate petty corruption from government favouritism and propose novel measurement of the latter by developing two objective proxy measures of favouritism in public procurement: single bidding in competitive markets and a composite score of tendering ‘red flags’. Using publicly available official electronic records of over 2.5 million government contracts in 27 EU member states and two European Economic Area countries in 2009–2014, we directly operationalize a common definition of favouritism: unjustified restriction of access to public contracts to favour a certain bidder. Petty corruption is measured using business surveys while the extent of business regulation is measured by Doing Business expert assessment of precise regulatory costs. Using country-level panel regression analysis, we find that deregulation has a heterogeneous impact on both low and high level corruption. It is largely ineffective in tackling government favouritism, with business start-up deregulation even facilitating such corruption. Whereas deregulating the various channels through which governments and businesses interact (e.g. obtaining construction permits) often decreases the perception of bribery and petty corruption. Policy consequences are profound and point at a more targeted and context-dependent promotion of the deregulation agenda. Full public procurement database is available at http://digiwhist.eu/resources/data/.

Fazekas, M. Crime Law Soc Change (2017). doi:10.1007/s10611-017-9694-2

D2.5 Quantitative Data Collection and Cleaning: Cleaned and Structured Databases

June 12th, 2017 Posted by No Comment yet

The collection of public procurement related raw data is about understanding source systems, what data they offer and how the data can be obtained from a source (more details in our publication on raw data); to create a structured database we need to understand the data itself and store it according to a data template that has been designed to best support analytical work in other deliverables of the DIGIWHIST project.

The system for data collection and transformation has been designed to process data in several stages so that we can go back a step at any time without losing any information. This enables us to identify the exact point in the process where errors appear and fix them without having to repeat full (and costly) data extraction processes. In short, it makes the whole development-validation cycle more efficient.

This publication  describes how we treat data in the second (parsing) and third (cleaning) stages.

 

DIGIWHIST policy recommendations: Towards More Transparent and Efficient Contracting in the European Union

May 3rd, 2017 Posted by No Comment yet

Approximately 15% of the EU’s Gross Domestic Product is spent every year on procuring goods and services, and some estimates indicate that corruption increases the cost of government contracts by 20 – 25%. It is even more worrying that corruption in public procurement compromises widely supported public goals, such as building safe highways, high quality school buildings, or delivering medicine in time. These are a few of the main reasons why more research needs to be done on how to make public procurement more efficient and transparent. Addressing this gap is what the EU-funded, large-scale project DIGIWHIST does. This policy paper presents key data challenges in public procurement and proposes recommendations to improve the state of data and data use for better outcomes.