Factors Affecting the Length of Procedure in Public Procurement: The Case of the Czech Republic

Abstract

The article deals with the issue of the length of procedure in public procurement. Our analysis focuses on construction contracts in 2010-2015. We apply hierarchical linear regressions to these data to identify factors that affect the length of procedure. According to our results, the duration of a public contract does not affect the standard contract price. The nature of the contracting authority, the expected value, the openness of the procurement procedure, and the method of evaluation have a statistically significant impact on the length of the contract. As for other factors regarding the length of awarding time, the use of the subcontractor, the division of a contract into parts, and a review by the Office for the Protection of Competition due extend the time required. By contrast, contracting time can be reduced by the use of outsourcing. In the end of the article, we have put forward recommendations for economic policy and further research.

Transparency Meets Efficiency: The Case of Public Procurement in the Czech Republic

“…For the regressions related to spread , we expected that higher numbers of bids indicate higher competition and are associated with more efficient outcomes (ceteris paribus). Our estimates indicate savings of 1.74 and 2.07% per extra bid; these results are conservative but in line with existing studies from the Czech Republic (Pavel, 2010; Plaček et al, 2016). More restrictive procedures (negotiated procedures with/without prior publication and restricted procedures) result in smaller savings by 9–15% compared with the open procedures that serve as a benchmark.…”

“…More restrictive procedures (negotiated procedures with/without prior publication and restricted procedures) result in smaller savings by 9–15% compared with the open procedures that serve as a benchmark. This is again in line with estimates by Pavel (2010) and Plaček et al (2016) and even with estimates outside the Czech Republic (Ohashi, 2009; Guccio et al, 2014). The contracting authority history variable, which approximates both the size and experience of the contracting authority using its total volume of projects within a moving two-year window is positively correlated, as expected, with savings in projects usingCZ03 forms; specifically each hundred projects concluded in the past two years brings savings of 0.42% on average.…”

“…The former is consistently associated with the latter in all types of forms, both for estimated and final prices. This result is not driven by the other factors we were able to control for (regime, history, region, object of tender) and may at least partly signal a lack of diligence, which has systematically been linked with lower efficiency (see Plaček et al, 2016;Pavel & Sičáková-Beblavá, 2013;Soudek & Skuhrovec, 2016;Plaček, Soukopová et al, 2019, and many more) and even with a higher probability of corruption (Ferwerda et al, 2017;Lisciandra et al, 2022;Tátrai & Németh, 2018).…”

“…The positive effect of the (higher) number of bids on efficiency is well established both in economic theory and empirical literature. Existing empirical studies have practically unanimously confirmed that additional bids are associated with savings in public procurement (for example Plaček et al, 2016; Pavel & Sičáková-Beblavá, 2013; Tas, 2012; Plaček, Soukopová et al, 2019). Moreover, specific situations that lead to single bid outcomes have attracted the attention of researchers and supervisory institutions concerning possible corruption.…”

“…4 However, the Czech legal framework allows many exceptions to this rule, whereby the contracting authority is not obliged to publish the contract proposal, especially for small-scale procurement projects where the contract value does not exceed CZK 2 million (EUR 75,632) when contracting supplies and services, or CZK 6 million (EUR 226,389) when contracting construction works and certain other categories. As a result of these numerous legal exceptions, no more than 61.26% of all procurement projects (by value) were published in the e-information system in 2019; the remaining contracts are not included in the JPP and thus are not publicly available (Plaček et al, 2016; Ministry of Regional Development, 2020).…”