Compliance and Strategic Contract Manipulation Around Single Market Regulatory Thresholds – The Case of Poland

Abstract

The functioning of the EU’s single market in government contracts crucially hinges upon compliance with and adequate use of EU-wide rules. However, evidence from a range of countries suggest that these rules are circumvented and manipulated tenders are used to pursue protectionist or favouritistic agendas. In order to test whether such claims also apply to Polish public procurement we investigate the extent of non-compliance and manipulation around the regulatory thresholds defining whether national or EU-rules apply. In addition, we also explore the potential reasons behind observed strategic manipulations. We find that there is a non-negligible amount of potential non-compliance, that is sheer ignorance of the rules, amounting to up to 0.4% of tenders; and there is also strategic contract value manipulation just below EU thresholds. Such malpractices are likely due to both favouritistic and bureaucratic effort minimisation motifs potentially decreasing competitiveness and value for money. EU regulations are associated with better outcomes such as 5-22% higher bidder number.

Keywords: single market, EU, public procurement, regulation

JEL Classification: H57, F13, F14, F15