On competition and transparency in public procurement during the COVID-19 pandemic in the European Union

Abstract

Government expenditures on acquiring services, goods, and work through public procurement represent a substantial proportion of the EU’s GDP. Competitive and transparent tendering procedures are generally believed to promote achieving the primary goals of public procurement: maximising value for money and reducing corruption. However, during the crisis, procurement rules allow a temporary departure from transparency standards toward fast and more discretionary procurement procedures justified by force majeure, possibly restricting competitiveness and information availability in the whole procurement process. The presented paper examines emergency response procurement measures by EU countries in the aftermath of the COVID-19 outbreak in the spring of 2020 and their impact on competition. Using an extensive dataset of contracts for medical supplies and PPE obtained from Tenders Electronic Daily, we document the rapid increase of direct and negotiated contracts in the first two months of the pandemic outbreak. We found that firms, in general, were more likely to participate in procurement procedures with a prior call for tenders, such as open procedure and restricted procedure. On the other hand, the significant share of contracts obtained by small and medium enterprises without competition, hence by single bid procurement, suggests that public authorities tend to use their discretion in favour of SMEs. Moreover, overall emergency procurement setting and its effects on competition vary across countries regardless of how intensely the pandemic hit, indicating an institutional context for the increased discretion effects on procurement outcome.