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Government Favouritism in Europe

A new study of the Center for the Study of Democracy finds that public procurement in Bulgaria remains trapped in the wider governance problems of the country, which still display the main features of a particularistic regime. This research is part of the third volume of the “The Anticorruption Report” policy series: Government Favouritism in Europe, produced in the framework of the EU FP7 ANTICORRP project. The volume reunites the fieldwork of 2014-2015 in the ANTICORRP and is entirely based on objective indicators, offering both quantitative and qualitative assessments of the linkage between political corruption and organised crime using statistics on spending, procurement contract data and judicial data.

CSD’s research shows that declining private sector opportunities in the wake of the Eurozone crisis in 2009 and the rising pressure on the Bulgarian authorities to deliver full EU funds absorption by the end of the EU funding cycle in 2013 have led to concentration of public procurement resources and market leverage in the public administration. Construction works have continuously increased their share in total public procurement of the country, and their importance for construction companies’ turnover further contributing to higher corruption risks. The firm-level analysis of the public procurement contracts awarded to the Top 40 construction companies by turnover included in the paper, confirms the trend of concentration. Using public procurement data on Bulgaria from the EU’s TED database we find that single bidding, the foremost corruption risk red flag in public procurement, is more prevalent in public procurement involving national than EU funds. In addition, linking the database of the Top 40 construction companies to the TED database, we discover that politically connected companies win a higher share of the single bidding public procurement contracts involving national funds than EU funds. And while the data does not conclusively uncover specific types of favouritism, it points to increased corruption risks, especially involving large-scale construction projects in infrastructure and energy.

Furthermore, the implementation of the Bulgarian legal public procurement framework remains haphazard and riddled with corruption risks, while changes in the legislation remain frequent. Limitations exist in terms of capacity and effectiveness of the controlling authorities of the procurement system. Detected violations are also high, hinting at the lack of proper preventive capacity.

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