engleski

Issues in Organizing Local Government at Boundaries

This paper presents results of an empirical research of public procurement procedures from the perspective of local government units in Croatia. Picking up on questionnaire responses from about 200 local government units (LGUs) that reported having held over 350 cases of providing services through contract agreements with “independent” service providers, we tried form an opinion of what could be the consequences of developing more structured public procurement procedures. Local governments, as administrative units, perform a broad range of services that require LGUs to establish relations with “outside” partners, including those belonging to the private sector. Therefore they represent a suitable object of analysis for studying transaction costs. Public procurement is often recognized as a government activity „most vulnerable to waste, fraud and corruption due to the size of the financial flows involved”. (OECD: Public Procurement) Transaction Costs Economics (TCE) represents a theoretical paradigm specially designed to interpret the issue of efficiency in inter-institutional relations. However, even though TCE might be envisaged as a tool for building better systems and institutions, practical experience suggests that efficient organization of complex multi-institutional systems is still a goal to be met. Such position is confirmed by the EU Thematic objective 11 that emphasizes the need for creating stable yet flexible organizational arrangements that deliver public services as one of its future goals (European Commission: Efficient Public Administration). In conformance with transaction costs theory, establishing a system of controls (processes, institutions and standards) over public procurement requires setting up measures and procedures that do cause administrative costs, yet these “investments” can save on the “costs of using the market”. Efficiency is achieved by balancing the two. In addition, there is the presumption that to be efficient, control systems should be based on the specific circumstance under which each institution/relationship operates. Therefore, established measures should be pertinent to the activity being controlled, but also conform to the specific administrative capacity of the government unit applying a specific system of controls. Another pertinent issue, to be kept in mind while developing our research design/arguments, is the ongoing discussion on the adequate size of local government in Croatia that tends to heat up during pre- election times. In consequence, as the public becomes more sensitized to the issue of shaping local government, new facts and data become publicly available and researchers are more likely to get cooperative respondents.

economic efficiency ; local government units (LGU) ; public procurement ; public administration ; transaction costs

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