Transaction Costs in the Public Procurement in Russia: Macrolevel Assessment Based on Microdata

Abstract

Cost accounting in public procurement is an essential element in optimizing the procurement process for an individual enterprise as well as in evaluating the procurement regulation system at the state level. Today, however, insufficient attention is paid to this issue in Russian and foreign studies. There is limited literature devoted to assessment of costs at the level of individual enterprises or projects. Only several foreign studies estimated the costs of public procurement at the macro level (country or regional). No such macro level assessment has been carried out in Russia so far. This paper, based on a mass-scale online survey of customers and suppliers conducted in 2017, is the first attempt to estimate the average costs of public procurement in Russia, including the average costs for each type of procurement procedure. According to our estimates, the total cost of public procurement in Russia was about 64 billion rubles in 2016, or about 1% of the total contracted amount for that year. Using regression analysis, we also investigated the impact of various factors on the cost value of public procurements – the size of the respondent's organization (number of employees), the scope of activity, the number of staff involved in public procurement, the region, the qualifications/work experience of the employee, gender differences. The most significant factor influencing costs assessment of procurement procedures is the respondent's experience with complex competitive procedures.

Keywords

• public procurement
• transaction costs
• customers
• suppliers