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Opinion

Shopping for bureaucrats

By Scott Hards


官僚のお買い物

競争入札はさまざまな問題をはらんでいるのに、 政府機関は取引ごとに入札を繰り返している。 これは時間と金を無駄遣いすることにならないだろうか?

Recently NHK scored an investigative journalism coup when they reported that the Ministry of the Environment had been using spot contracts for 93 percent of their expenditures over ¥5 million, despite laws that require agencies to call for competitive bids for that sort of procurement.

This is seen as problematic, of course, because of the implication that the government could get the same services done for less money if several companies were competing for the work. But the ministry may have had some perfectly good reasons for avoiding the bidding process ...

As a small-business owner, I do some procurement of my own as well. And while I don't have a formal bidding process in place for times when I want to purchase something for my company, I do compare a few different vendors before making a decision.

But the next time I need the same item, I usually don't spend time making comparisons. If I was satisfied with a vendor's service the first time, I'll just call them again. Most private individuals shop the same way: If one is happy with a store's prices and merchandise, one usually goes straight back over and over again without spending time comparing other stores, right?

For some reason, however, bureaucrats don't usually do this. Even if a contractor does a great job, the next purchase for the same thing goes through the same bidding process all over again. Besides helping to keep costs down, the system is also supposed to keep things "fair" for all vendors by giving everybody a chance to win the contract and supply the government.

In practice, however, there are many problems with this kind of competitive bidding: The bidding process itself costs money, and it's relatively slow.And companies can join together to rig their bids, too, as seen so often here in Japan.

While competitive bidding for first-time contracts makes sense, for subsequent procurements in some sectors, wouldn't automatically awarding contracts to vendors with a good track record make sense as an alternative? The work could get done faster, and the contractor would have a powerful incentive to continue to provide good-quality work at a competitive price: the possibility of getting the next contract without having to bid for it. That would help prevent collusion among vendors, too, since a loser could possibly be shut out for years.

The only risk I see in a system like this would be making sure that nobody in the agency involved and the contracting vendor has any ties that could inspire fraud in the initial awarding of contracts. Clearly, laws prohibiting the employment of former government employees with contractors would be needed, but that's not a new problem.

Rewarding a good merchant or vendor with repeat business is common sense for just about any consumer anywhere. Isn't it about time that our government figured out how to shop, too?

(480 words)


Discussion: What are the advantages and disadvantages of the competitive bidding process?



Shukan ST: May 19, 2006

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