Another One Bites the Dust: Recurrent Procurement Contracts in the Czech Republic

Abstract

This article deals with the phenomenon of repeated contracts, specifically the effect of trust in public contracts. Our main objective is to identify the factors that influence the concluding of repeated contracts and to verify whether repeated contracts lead to increases in prices. We use a complex dataset of public procurement of municipalities in the Czech Republic for the period of 2014-2017, which covers more than 4,000 public contracts. This range of data allows a larger number of variables to be applied, including specific independent variables concerning municipalities, such as the size of the municipality. The data allow us to study this subject by means of both a general model tested on all public contracts and a partial model applied to public works. The presented results of quantitative econometric models from the data obtained from the awards of public contracts in the municipalities of the Czech Republic show that the fact of whether it was a repeated contract or a contract performed by a new (unknown to a contracting authority) supplier affected the chance of winning a contract.