Index of Rationality 3

Printed version of the publication is here: Index of Rationality 3 and 4

The third Index of Rationality is developed for the following five types of products, i.e. services:

- written translation from Macedonian into English language; 
- air-conditioners; 
- private security services; 
- notebook computers;
- GPS vehicle devices.

The selection of Index-targeted products and services was made in compliance with their status of most commonly used products and services by national and local level institutions. However, given the fact that, on one side, the methodology for Index-development implies comparison of prices attained by at least five institutions, and on the other hand, the information requested from institutions is not always disclosed or when disclosed it is not conductive to comparisons, for the purpose of developing the relevant indices of some Index-targeted products and services, apart from those implemented in the course of 2011, we included the public procurements implemented in the previous years as well.

Index of Rationality 1

GENERAL CONCLUSION

This is the first Cost-Effectiveness Index calculated for Macedonia and is designed as an instrument for state institutions to improve cost-effectiveness of public procurements, i.e., public spending.

As part of the first analysis, the Cost-Effectiveness Index was calculated for five types of procurements. The individual indices per procurement type show significant differences in terms of the value, i.e., the price paid by different state institutions for the products and services targeted by the present index. The lowest and highest price ratio for effective hour of winter maintenance is 1:2.5, for 1 ton of industrial salt – 1:5.5, for 1 ream of standard copy paper – 1:2, for discounts of fuel oil EL-1 – 1:4, and for contracts for New Year decorations – 1:30. In that, one should take into account the fact that in most cases analysed lower prices were not attained for procurement of larger quantities, which is contrary to any economic logic. This indicates that state institutions must make serious efforts for cost-effective public spending.

Apart from price differences, the analysis also shows major discrepancies in the terms and conditions under which state institutions implement procurements for same type of products and services.

With this in mind, the state institutions should pursue thorough market research prior to announcing the calls and should pursue the procurement approach that will ensure more frugal public spending.

11 Report on monitoring local level public procurement