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Public sector procurement research published

30 September 2004

Preliminary OFT research into public sector procurement has identified a number of ways in which competition could be affected and has highlighted nine sectors (see note 1) where it is more likely to impact on competition.

Download 'Assessing the impact of public sector procurement on competition' - summary (pdf 421 kb)

See public sector procurement market study

The OFT commissioned external consultants to review how public sector procurement policy could affect competition, both positively and negatively.

The consultants' initial research identifies a number of ways in which competition might be limited by public sector buyer power - for example if it imposes very long term contracts, overly restricts the number of participants in a tender process or bundles too many contracts into one tender. However, the study also indicated that competition can be promoted, for example in circumstances where the public sector can legitimately group together a number of buyers with similar needs for tendering to mitigate supplier power or encourage new entry.

The OFT will evaluate the research further before reporting on any recommendations or further action early next year.

NOTES

1. Sewage and refuse disposal and sanitation; weapons and ammunition manufacture; human health activities; ship building and repair; manufacture of pharmaceuticals, medicinal chemicals and botanical products; manufacture of cement, lime and plaster; site preparation; construction and civil engineering; and manufacture of office machinery and computers have all been highlighted as areas where public procurement  could have an impact on competition. More work may be done on those markets.

2. The research into the effect of public sector procurement on competition was carried out by DotEcon Ltd. See market study

3. The OFT launched the review in February 2004. See press release 16/04 for further details.

4. The research also draws on the methodology developed as part of a report on 'Empirical indicators for market investigations', conducted by NERA on behalf of the OFT and DTI. See press statement

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