Ivashuk Yu. Appearance origin and ways to minimize corruption in the public purchasing sector (Ukrainian example)

Abstract

Factors for corruption beginning in the state procurement sector have been studied and institutional disfigurements that cause corruption at various stages of procurement process have been emphasized in this paper. It has been validated that suppliers competition decreases rent that can be pocketed by a supplier of a state contract. Thus, suppliers won’t be ready to provide big bribes that can also contribute to decrease of corruptive practices by a client. On the other hand, the state bodies responsible for controlling state procurement can turn to markets with more suppliers, which can be a sigh for a fair competition in the state procurement sector. That can lead to less intensive monitoring of the procedures and consequently of the corruptive behavior development. Besides, higher competitive market pressure can turn firms to unfair competition and bribing in the competition. Nevertheless, if there is an agreement between a client and an agent or few agents, the result of such distribution can be ineffective. That means that a contract for a benefit supply is usually supported by effective subject, while due to corruptive practice a potential profit of the state is distributed between a winner and an organizer of the procedure. In any of the cases the contract will be overepriced. Necessity to organize state procurement process in a manner that provides maximum of budget efficiency, which guarantees qualitative products, works, and services for the state sector of economy at minimum prices