(DE)CENTRALIZATION OF PUBLIC PROCUREMENT AT THE LOCAL LEVEL IN THE EU.

AuthorBrezovnik, Bostjan
  1. Introduction

    When talking about centralization and decentralization of public procurement, there are several possible approaches; however, in real life, there are no 'pure' models that can be summarized in theoretical statements, trying to construct individual types or models of centralization and decentralization of public procurement. To practically organize public administration (including the field of public procurement) actually means to find the right combination between the idea of centralization and decentralization. Nowadays, the establishment of a reasonable balance between local and central has become one of the most important issues in the functioning and organization of any country, including the field of public procurement.

    In general, it can be concluded that in certain areas of the functioning of a modern state centralism is a necessity (e.g. uninterrupted life and integration of all the parts of a society also conditions the existence of a high degree of uniformity and consistency in the organization of all forms of activities of modern society; each system, hence also the state, requires a specific focus, coherence and coordination of public tasks to ensure its existence). On the other hand, a smooth and normal execution of tasks may, in some areas, be possible only in the context of decentralized administrative systems. In the broadest sense, decentralization means any weakening of the direct impact of the particular center of an organized system on the parts of the system. Thus, in territorial decentralization, a territorial unit to which tasks have been transferred is in a certain sense and scope subject to the influence resulting from the unit, which is therefore different from the central state administration. We can say that decentralization exists whenever a non-central (provincial) authority has the right to adopt individual decisions independently within the framework of the Constitution and laws. Decentralization has, in the sense described above, mainly a political connotation or it reveals itself as a problem of political nature (Grafenauer and Brezovnik, 2006, p. 98).

    Starting from the administrative branch of government and the implementation of public administration tasks, it can be said that by centralism (public procurement) we understand the focus on performing tasks in central authorities and fully dependent on the center's direct 'directives' and under the control of the central government (the highest level administration authorities). We could speak of administrative centralization (or the so-called rigorous centralism) in the purest and strictest form only if one single national office would exist for the whole country, where all public administration (thus also the implementation of public procurement) would be concentrated. This is not possible in practice, therefore in every modern country the idea of decentralization appears to a greater or lesser extent. However, decentralization in the framework of public administration is possible in two ways: (a) administrative decentralization (devolution) and (b) decentralization through (or by means of) self-government or local self-governing units. Decentralization has two different aspects: the administrative-technical and interest-related approach. The aim of the former is to achieve the maximum possible rationality and efficiency of management, while the aim of the second aspect is to increase the opportunities of promoting the interests of their respective (interest) holders. The result of the first approach is the devolved implementation of tasks, and local self-government for the second one. If the administrative decentralization is just a technical and organizational question of delegating tasks, which are otherwise centralized, to regional organizational units or to lower state authorities falling outside the state center, then decentralization by local self-government communities is also (or especially) a political question since it concerns a specific division of administrative functions between the central administration and 'local (self-)governments', which can operate as independent administrative centers. Therefore, only local self-government and the implementation of affairs in the field of public administration in local self-governing communities represents true (real) decentralization.

    Decentralization and devolution have a common element: there is a delegation of tasks from the central authorities to other more narrowly defined 'powers', whereby we can say that devolution represents an intermediate stage and, on the one hand, means a deviation from centralization, while, on the other hand, it is a move towards decentralization. However, for devolution, which no doubt applies to decentralization in self-governing units, a certain distancing from the central core and 'bringing public administration closer to the people' is typical. As such, devolution often represents a transitional stage and a good preparatory stage for decentralization because it is much easier to transfer affairs from local government authorities to self-governing authorities than directly from the central government authorities.

    Therefore, we can conclude that there are no pure models of centralization and decentralization (including in the field of public procurement), but we can rather talk about different degrees of stricter and looser forms of centralization or decentralization. It is a process and a dynamic phenomenon which depends on various elements and conditions. With decentralization, it is thus possible to talk of different series of stages--from a maximum stage of independence and autonomy to a minimum independence in the distribution of tasks. To put it simply, we can say that the following differences exist between individual types (degrees, models) of centralization and decentralization:

    --whether a narrowly defined community (unit) has a status of legal entity or not and what is its specific context;

    --what is the extent of local issues and tasks that are exercised by the local communities (units) and how and to what extent they are provided with financial and other assets;

    --what are the controlling and supervisory authorizations of central (government) authorities in relation to decentralized (local) authorities; and

    --whether the local population alone decides on the selection (by way of election, appointment) or composition of the authorities in local communities (units) and what is the impact of central authorities thereof, etc.

    Tasks in the implementation of 'public' (general social) affairs (including public procurement) are in each country executed by authorities, which may be central (core) or provincial (local). For non-central authorities there is a difference between those which are, in their creation and operation, directly dependent on the central government authorities, and those in whose formation and operation the local population has a decisive influence. The former are established by the central government authority in the local unit, so that we speak of local government authority (we can also term them centralized regional authorities). The latter, however, are local self-governing authorities.

    Local government authorities mainly perform functions related to the direct execution of state regulations, functions that are 'bureaucratic' in character and have also been 'bureaucratically' designed. In contrast, the local self-governing communities also have authorities that are 'representative' in character (municipal councils, etc.) and are elected by the residents, as well as municipal 'bureaucratic' authorities which are responsible for the direct implementation and operationalization of decision-making (Grafenauer and Brezovnik, 2006, pp. 98-99).

  2. Decentralization of public procurement

    The so-called decentralization of public procurement in EU Member States is most often accepted as the most suitable design of the public procurement system, which justify with greater economic efficiency and consequently with the possibility of boosting the development of small and medium-sized enterprises that act on the public procurement market (Vojinovic et al., 2010, p. 317). The following are most often specified as one of the key arguments in support of decentralization of public procurement: reduced incentives for corruption; reduced chances for mistakes affecting large volumes; less bureaucracy because of shorter time frames and fewer forms for both purchasers and suppliers; greater possibilities for small and medium-sized enterprises to compete for contracts; lower prices for local goods; and more scope for employees to take responsibility. The decentralization of public procurement is closely linked to the territorial, administrative as well as fiscal decentralization of individual EU Member States. The number of contracting authorities, which can range in individual states from a few hundred up to several thousand depends on the degree of territorial and administrative decentralization. However, the extent of public financial funds held by contracting authorities and which are available for the procurement of goods, services and works depends mainly on the degree of fiscal decentralization (OECD, 2000, p. 5).

    At this point, it should be noted that, in spite of globalization trends and European integration the local self-government has been developing in a uniform direction in EU Member States, which is actually a result of the ratification of the 'European Charter of Local Self-Government' (1985). This is reflected in the increasing harmonization of local self-government...

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