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The Public Procurement System: A Business Sector Perspective

This study empirically evaluates the public procurement system in Croatia, a transition country and a new EU member state. The research is based on empirical evidence collected by surveying a large sample of companies. It investigates how businesses as actors in the public procurement tenders evaluate the system and what their perceived and experienced views are on the various components of public procurement. Are there differences in attitudes between direct suppliers and their subcontractors? Which principles of public procurement are fulfilled and what are the weak points? How national system actually performs compared to the “ideal” EU standards? What are the determinants of attitudes and business behaviour? The baseline model borrows from the literature by including companies’ characteristics in terms of company size and sector of business operations. Furthermore, it assumes that there are significant differences in attitudes and ratings among companies that have participated in public procurement as direct suppliers compared to companies that have been indirectly involved as subcontractors. We use the data collected by the survey conducted in April 2013 on the net sample of 300 Croatian companies. Survey methodology is based on the existing literature and specifically designed to capture the specifics of the public procurement system in Croatia. The structure of the survey enabled us to differentiate experiences of Croatian companies that have participated in the public procurement tenders directly as principal contractor and those who had participated as subcontractors. The business opinion on the public procurement system procedures and regulations has been assessed as well, providing insights into the business perceptions on main public procurement principles: accountability, effectiveness, value for money, integrity and achieving the EU standards. Special attention has been dedicated to the assessment of corruption risks in public procurement. The evidence for young democracy and institutional set up similar to other Western Balkans countries reveals that despite of EU standards introduced there are still, at least from the point of view of companies, irregularities and lack of trust in the Croatian public procurement system. This study provides unique insights into the functionality of the system from the business sector perspective, and the results could be instructive for both public procurement authorities and for policy-makers in the countries with similar business environment in particular in the Western Balkans region.

public procurement; survey; business attitudes; Croatia

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