International Workshop on ‘Sustainable Public Procurement: Research Trends and New Challenges’

The Center for Institutional Studies (CInSt), at HSE, is hosting a workshop on 4 - 5 October, 2013 on aspects of sustainable public procurement. How to improve it, reduce corruption and use it as an instrument of economic growth, and how to apply new research results to do so. The international workshop brings together researchers fromThe Economics of Public Private Partnerships Chair (Chaire-EPPP, Paris) and the Department of Economics and Management at the University of Padova (DSEA, Padova) and from the HSE’s CInSt. The HSE news portal asked three of the participants to answer some questions in advance of the workshop.

Paola Valbonesi, Ph.D, Associate Professor at the Department of Economics and Management at the University of Padova will give a talk on Friday 4 October - Court efficiency and procurement performance. Carine Staropoli, Associate Professor at the Centre d'Economie de la Sorbonne - Université Paris I,will chair a discussion on 5 October entitled Capture for the Rich, Extortion for the Poor.And Elena Podkolzina, Deputy Director of the HSE Centre for Institutional Studies, will chair the session on Friday and lead a discussion about Collusion detection in Russian highway construction on Saturday.

We started by asking each of them, why is public procurement important for economic and sustainable growth? 

Carine pointed out that, ‘For OECD countries, Public procurement accounts for on average 19% of GDP. So this is very important for economic growth. Lately Public Procurement regulation has imposed more and more constraints in order to incorporate sustainable dimensions (social and environmental) into public contracts. These new constraints are likely to have a significant impact on sustainable growth.’

While Paola, bearing in mind the current austerity measures imposed on many European countries says cautiously that, ‘In a time of scarce public resources, money spent in public procurement should be spent carefully and with the aim of driving economic growth. The current challenges raise opportunities for a new way of managing public-private contracts. Economic and sustainable growth is the agenda, and public procurement gives resources to address those aims but governments need to adopt new tools and processes. Unfortunately, we know that public administrations - and bureaucracy in general - are less prone than businesses to take up challenges, but this is where research comes in to support institutional change.

Elena is unequivocal. She says, ‘It is extremely important. It determines the ways state agencies spend money.’

As it is an international workshop the question arises, can we compare the efficiency of public procurement in Russia and other countries? If yes, what are we looking for? If no, why involve foreign researchers in a domestic issue?

Carine makes it clear that, ‘The objectives of public procurement should be the same in every country even if procurement policy is embedded in the institutional environment and has to take into account each country's specificities. The main efficiency objective is "value for money" - better services and goods supplied at lower costs. Russia seems to be trying hard to make public procurement more transparent and more efficient by reducing corruption and increasing competition pressure. In Europe too, Public procurement aims to increase competition within the larger internal market to have more market integration, but also more transparency and to reduce corruption and unnecessary expense, especially under growing budget constraints. Europe has conceived new tools and policies and is due to adopt a new directive replacing 2004/17/CE and 2004/18/CE based on the proposition of 2011.’

And in general terms, Paola agrees with Carine, she says that, “Public procurement is a highly regulated process everywhere, which can contain very different features. It is important to compare the effect of the different regulations to choose the most effective rules for specific policy objectives.’

Elena Podkolzina

Elena is very positive, ‘Sure we can and we should compare. It was one of the crucial points in law design in Russia. A new law is due to be implemented next year and it IS worth looking at European experience. It can help us to avoid repeating mistakes. Institutional theory says there are a lot of restrictions about importing laws but this doesn't mean we can’t update our own laws.

Carine told us about trends in the latest research and whether she thinks results can be used in the real economic sector: ‘Green public procurement that aims at "greening" all public investments by giving more weight to environmentally friendly goods and services is clearly a priority. The policy in favor of Small and Medium Enterprise (SME) is another. This passes through new procedures in awarding contracts (using multiple criteria to select the best candidate) and contract design (to reduce enforcement costs and renegotiation). These objectives will certainly have a strong impact on real economic sector activity, increasing sustainable growth’.

And Elena explained why there is a gap between the focus of interest in European and Russian research, ‘Green procurement is one of the hottest topics in Europe. Russian research focuses mainly on the efficiency of public procurement. The reason for this gap is that research reflects the situation in the economy. In Russia we have too much focus on competition mechanism and researchers are arguing that the role of reputation should be expanded. There is no unique answer what is the best way to organize procurement process, how to solve the reputation-corruption dilemma. We should look at these issues from different points and produce policy implications based on theoretical background. These are the kind of issues HSE researchers from CInst and IIMS are investigating.’

Anna Chernyakhovskaya, specially for the HSE news service