Competition and Procurement - OECD

1 Competition and Procurement KEY FINDINGS 2011 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 34 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies.

2 The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation s statistics gathering and research on economics, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.

3 This work is issued under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD member countries. OECD 2011 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given.

4 All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Centre (CCC) at or the Centre fran ais d exploitation du droit de copie (CFC) 3 Competition AND Procurement OECD 2011 FOREWORD The OECD Competition Committee, Working Party 3 and the Global Forum on Competition have discussed Competition and Procurement extensively in recent years. Among the participants in these discussions were senior Competition officials, leading academics and representatives of the business community.

5 This publication presents the key findings resulting from the roundtable discussions held on Collusion and Corruption in public Procurement (2010); public Procurement : The Role of Competition Authorities in Promoting Competition (2007); Competition in Bidding Markets (2006); and Competition Policy and Procurement Markets (1998). The key findings from each roundtable have now been organised into a cohesive narrative, putting the Competition Committee s work in this area into perspective and making it useful to a wider audience.

6 The executive summaries on which this document is based, as well as a bibliography, the Guidelines for Fighting bid rigging and the Third report on the implementation of the 1998 recommendation are included in this publication. The full set of materials from each roundtable, including background papers, national contributions and detailed summaries of the discussions, can be found at 5 Competition AND Procurement OECD 2011 TABLE OF CONTENTS Key Findings .. 7 Executive Summaries Collusion and Corruption in public Procurement .

7 29 public Procurement : the role of Competition authorities in promoting Competition .. 39 Competition in Bidding Markets .. 47 Competition Policy and Procurement Markets .. 55 Bibliography .. 59 Related Documentation OECD Council Recommendation on enhancing integrity in public Procurement .. 69 OECD Guidelines for Fighting Bid- rigging in public Procurement .. 77 Hard Core Cartels: Third report on the implementation of the 1998 Council Recommendation .. 99 KEY FINDINGS 7 Competition AND Procurement OECD 2011 KEY FINDINGS *Introduction By the Secretariat (1) public Procurement is the process of purchasing goods or services by the public sector, the aim of which is to secure the best value for public money.

8 public Procurement involves the expenditure of large sums of public money, and given its magnitude, can impact on the structure and functioning of Competition in a market more generally. It is critical, therefore, to protect the integrity of the public Procurement process, so as to maximise the resulting benefits for society and to protect competitive markets. Procurement is the process of purchasing goods or services. The primary objective of an effective Procurement policy is the promotion of efficiency, the selection of the supplier with the lowest price or, more generally, the achievement of the best value for money.

9 Both public and private organizations often rely upon a competitive bidding process to achieve better value for money in their Procurement activities. Low prices and/or better products are desirable because they result in resources either being saved or freed up for use on other goods and services. However, the competitive process can achieve lower prices or better quality and innovation only when companies genuinely compete, that is, they set their terms and conditions honestly and independently. * This section is based on meaningful findings extracted from the executive summaries compiled in this publication.

10 They were reorganised into a cohesive narrative that captures the different aspects covered. 8 KEY FINDINGS Competition AND Procurement OECD 2011 public Procurement comprises government purchasing of goods and services required for State activities which accordingly aims to secure the best value for public money. public Procurement generally accounts for a large share of public expenditure in a domestic economy: in OECD countries, public Procurement accounts for approximately 15% of GDP. In many non-OECD countries that figure is even higher.