Transaction Costs in the Public Procurement: Selected Findings in Czech and Slovak Conditions

The savings achieved by the public procurement process cannot be assessed only in terms of the difference between estimated and contractual prices. Many other aspects play vital role here, especially transaction costs, which seems to be significantly higher in Czech Republic and Slovakia compare to other EU countries. The goal of this paper is to provide some quantitative and qualitative information on the size of public procurement transaction costs in the Czech Republic and Slovakia. The base is Czech data – estimates of the level of transaction costs of building firms. Because these data are really negative, we investigate their validity and discuss most important factors behind. The very specific issue is high indirect costs of tendering which private firms bear. The data show that one of the causes might be too high percentage of cancelled tenders, as the ultimate result of a non-functional public procurement system. Large construction companies can bear higher procurement transaction costs than previously found by other researchers.