Public procurement: new EU data suggest UK public contracts have been particularly hit during COVID-19

Issues with public procurement during the pandemic have brought to the fore the importance of transparency. Calls for greater transparency in the negotiation, award, and renegotiation of public contracts are not new, but how much progress has been made in recent years, and how has the COVID-19 influenced approaches to public contracting? Stéphane Saussier shares some initial findings from research looking into these questions

Putting All One's Eggs in One Basket: Relational Contracts and the Provision of Local Public Services

The provision of local public services is increasingly being contracted out to private companies. We observe that local governments regularly choose the same private operator for a range of different services, and develop a model of relational contracts that shows how this strategy may lead to better performance at lower cost for public authorities. We test the implication of our model using an original database of the contractual choices made by 5000 French local public authorities in the years 1998, 2001 and 2004.bundling; contract; public-private partnerships; local public services

Theories of the firm: How to rule out competing views?

Comment expliquer l’existence de la firme, l’arbitrage entre faire et faire-faire ? À partir d’une comparaison des propositions de la théorie des coûts de transaction et de l’approche en terme de ressources, nous montrons que les travaux empiriques ne permettent pas de les départager. À partir d’une discussion sur la méthodologie empirique, nous avançons que les théories devraient être testées les unes par rapport aux autres au lieu de réaliser des tests qui corroborent les propositions qui leur sont spécifiques.What is a firm? What explains the trade-off between make-or buy decisions? Based on a discussion confronting the Transaction Cost Theory and the Resource-based view, we show that despite many empirical studies, very few are shaped in order to rule out competing views of the firm. The paper raises the question of the methodology of empirical testing: theories should be tested one against the other instead of simply corroborating the propositions specific to each theoretical framework

Strengthening the efficiency of public procurement

Public procurement, the generic term used to refer to procurement contracts (traditional procurement), public service delegations (including concessions) and public private partnerships, currently represents today significant amounts of money as it is believed to account for nearly 15% of the GDP in France. Whilst the public procurement system must strive to achieve the best possible performance in terms of cost and service, its inefficiency is highlighted on a regular basis. In (actual) fact, substantial gains could be achieved through a more efficient management of the system. The present Note examines potential avenues of action, in the framework of the regulatory changes currently under way at European level, with the aim of increasing the efficiency of the public procurement system. The contracts upon which the public procurement system is based are subject to certain asymmetries of information (in that the company is more familiar with its costs and the economic environment than the public party) and contractual incompleteness (since it is impossible to foresee every possible event that might arise during the execution of the contract). This being the case, the economic analysis recommends that competitive forces be used wherever possible when it comes to selecting partners and that incentive mechanisms be put in place to establish a real commitment of the parties concerned. New European Directives regarding procurement contracts and concessions, approved in 2014 and expected to be transposed by 2016, will give public authorities greater flexibility to negotiate with companies at both the selection stage and the execution stage (renegotiation). We believe this change to be a positive and economically justified one. It is, however, crucial that it be supported by specific terms governing its management that are not currently outlined in the Directives. Our recommendations are based on three key avenues, namely transparency, competition and expertise. The negotiation procedure must be supported by transparent information both prior to and following negotiation. During the execution stage, it must be possible for amendments to contracts to be contested without debilitating the process by facilitating an increase in the number of futile appeals. We also put forward a number of recommendations designed to encourage greater transparency where public procurement is concerned. For the purposes of intensifying competition at the tendering stage it would be useful to limit the number of electronic information platforms and to merge them towards a high-performance standardised model. At the same time, it is advisable to simplify procedures, to increase the professionalisation of public buyers and to centralise the most standard of purchases in order to benefit from economies of scale and pool the experience of public buyers. Finally, with regards to large-scale projects, we would recommend that a comparative evaluation be performed beforehand in order to determine the most appropriate public procurement tool to meet the needs of the public authorities concerned. The agency responsible for this prior evaluation would also perform ex post evaluations with a view to drawing lessons regarding the various tools and procedures available

Introduction

En 2011, la commande publique a représenté près de 88 milliards d’euros, soit environ 4,5 % du PIb français (OEAP 2013), en augmentation de 30 % par rapport à 2010. ces dépenses prennent majoritairement la forme de marchés publics. Sont aussi comptabilisés dans les chiffres ci-dessus les contrats de partenariat récemment créés en France en juin 2004. ces derniers prennent une importance de plus en plus grande puisque depuis 2011, la France est au premier rang européen en ce qui concerne le mo..

Introduction. « Partenariats public privé et performances des services publics »

En 2011, la commande publique a représenté près de 88 milliards d’euros, soit environ 4,5 % du PIB français (OEAP 2013), en augmentation de 30 % par rapport à 2010. Ces dépenses prennent majoritairement la forme de marchés publics. Sont aussi comptabilisés dans les chiffres ci-dessus les contrats de partenariat récemment créés en France en juin 2004. Ces derniers prennent une importance de plus en plus grande puisque depuis 2011, la France est au premier rang européen en ce qui concerne le mo..

Introduction

En 2011, la commande publique a représenté près de 88 milliards d’euros, soit environ 4,5 % du PIb français (OEAP 2013), en augmentation de 30 % par rapport à 2010. ces dépenses prennent majoritairement la forme de marchés publics. Sont aussi comptabilisés dans les chiffres ci-dessus les contrats de partenariat récemment créés en France en juin 2004. ces derniers prennent une importance de plus en plus grande puisque depuis 2011, la France est au premier rang européen en ce qui concerne le mo..

Transaction Cost Economics and Contract Duration : An Empirical Analysis of EDF Coal Contracts

This paper studies duration of inter-firm contracts in a transaction cost perspective. The aim of the paper is to test the proposition that can be derived from a transaction-cost framework. We built a non-truncated database representing the entire contractual relationships of Electricité de France (EDF) with its coal carriers and coal unloaders over the period 1977 -1997. Section I explores factors that can explain the choice of contract duration. Section II describes the relationships between EDF and its suppliers. In section III, we test and confirm most propositions derived from transaction-cost theory that relate contract duration to transaction characteristics. We believe this study to be the first attempt (1) to confirm transaction cost economics propositions using French data and (2) to endogenize asset specificity level at stake in transactions.

La délégation de service public, un mode organisationnel efficace ? Le cas de la distribution d’eau en France

Grâce au système de la gestion déléguée s’organise à la frontière du public et du privé, toute une série d’activités marchandes. Il en résulte des questions importantes, en particulier celle de l’étendue pertinente des activités publiques et celle du mode de gestion le plus efficace. Cet article vise à rappeler que toute appréciation de l’efficacité des choix organisationnels effectués passe par une analyse de la logique sous-jacente à ces choix et donc de la relation entre les conditions ex-ante et les résultats ex-post. Pour éclairer cette relation entre choix ex-ante et résultats ex-post, nous revenons dans un premier temps sur les éléments à la base de l’arbitrage entre modes de gestion, en accordant une attention particulière à un facteur qui nous semble essentiel, celui du risque de comportement opportuniste de la part des parties impliquées. À partir de données concernant 73 contrats de délégation de service public de distribution d’eau en France, nous mettons en évidence les évolutions contractuelles récentes, répondant en partie aux évolutions réglementaires, qui visent à limiter les comportements opportunistes des acteurs du secteur. Cette analyse conforte le choix retenu dans cet article d’une approche théorique par les coûts de transaction. Puis, en utilisant des données qui concernent les choix et les performances de plus de 2000 collectivités locales, nous proposons une analyse comparative de l’efficacité des modes de gestion en tenant compte du choix effectué ex ante par les communes. Nous en tirons un certain nombre de conclusions provisoires, appelant à des recherches plus approfondies.In this paper, we use a transaction cost economics framework to address the question of the optimum organizational arrangement of public services and the link to observed performances. Using an original database of more than 2 000 organizational choices made by French public authorities, and another data base of 73 French water supply contracts, we study the case of water supply in France. We defend the idea that the framework put forward by transaction cost economics can help us to understand the role of the chosen governance structures in the efficiency of public services. More precisely, the main message of the theory is that it is more important to take into account the fact that governance structures are not and should not be chosen randomly, than to compare the efficiency of different governance structures

Contractual flexibility or rigidity for public private partnerships? Theory and evidence from infrastructure concession contracts

In this article, we explore the contractual design of toll infrastructure concession contracts. We highlight the fact that the contracting parties try to sign not only complete rigid contracts in order to avoid renegotiations but also flexible contracts in order to adapt contractual framework to unanticipated contingencies and to create incentives for cooperative behavior. This gives rise to multiple toll adjustment provisions and to a tradeoff between rigid and flexible contracts. Such tradeoff is formalized with an incomplete contract framework, including ex post maladaptation and renegotiation costs. Our model highlights the fact that trade-offs are complex and do not correspond to previous propositions coming from a transaction cost framework. More precisely, those previous works argue that a rigid contract is to be preferred as soon as specific assets are high. We highlight the fact that this proposition may be true, but only if other conditions concerning maladaptation costs, renegotiation costs and the probability to see the contract enforced are met. Furthermore, our results stress the fact that the institutional environment in which the contract is embedded matters. Propositions are tested using an original database of 71 concession contracts. Our results suggest an important role for economic efficiency concerns, as well as politics, in designing toll road concession contracts. In this perspective, our work complements other empirical studies on contractual price provisions (Masten-Crocker 1991, Crocker-Reynolds 1993, Bajari-Tadelis 2001, Bajari & al 2006), by considering the case of public-private contracting, as well as other studies on public-private partnerships, by focusing on toll adjustment provisions and documenting the effect of reputation and political ideology