Like any complex bureaucratic process, a public procurement system can be “gamed,” its rules manipulated to defeat the system’s purpose. Procurement systems are particularly susceptible to gaming for they are designed to advance two objectives in conflict. One is to allow governments to buy what they need when they need it quickly and easily. The second is to prevent fraud and corruption from infecting the system by imposing elaborate safeguards at every step in the purchasing process – at the cost of making it slow, cumbersome, and costly. The pressures to privilege the first at the expense of the second are many: the agency needs a replacement part immediately; every day the road is left unrepaired traffic snarls and citizens’ patience tested; overworked staff don’t have time to conduct a full-blown procurement. The result is that procurement officers are always on the lookout for ways to bypass, or “game,” the rules that slow the process down.
One way is to attach an unrealistically low estimate on what the item to be procured will cost. If the estimated price is below a certain amount, procurement officers can avoid conducting a full-fledged, open tender. Below the threshold, in many systems $1 million, procurement officers need not prepare a lengthy, formal tender document, advertise it widely for a several week period, constitute a technical committee to evaluate the bids, and follow the many other rules for open, competitive procurements. They can instead use streamlined procedures — variously termed “shopping” or a “request for” or “invitation to submit” quotes—which allow them to call a few suppliers for a price quotation and take the lowest one offered.
No one with experience in public procurement doubts that threshold gaming sometimes occurs. The questions are how often and why. Do procurement staff regularly underestimate the contract price to push it below the threshold and avoid the panoply of procurement rules that would otherwise have to be applied? Do staff do so to secure desperately needed items faster and cheaper? For other legitimate ends? Or to further corrupt deals?
New research now settles these questions – at least for the Czech Republic. Moreover, in answering them the researchers use techniques that others can employ to analyze the same questions in their countries. Continue reading