Administrative burdens on companies in public procurement

Abstract

In recent years, public administration research has focused heavily on administrative burdens in interactions between citizens and the state. This article contributes to the literature on administrative burdens by focusing on companies’ costs in public procurement. The article presents a framework for analyzing companies’ learning and compliance costs in public procurement processes and illustrates the framework’s applicability in two empirical studies of Danish companies’ costs of participating in public procurement. The analyses show that companies’ costs of preparing and submitting bids for public tenders make up a significant portion of the contracts’ value. The analyses further indicate that the burdens vary significantly, primarily depending on the public procurers’ design of the tender processes and to a lesser extent on the companies’ administrative resources. Finally, the article discusses how public procurers can use these insights to reduce companies’ administrative burdens in public procurement processes.