Systemic Corruption in Public Procurement: Case of the Czech Republic

Within analysis of corruption in public procurement, economic papers tend to concentrate on the search of quantified relationships between openness, transparency in public procurement and corruption. This examination is appropriate to supplement by qualitative structural and functional analysis that may explain the origin of the "working mechanism" of systemic corruption in public procurement. Based on cases of public procurement in the Czech Republic, the presented paper develops a qualitative explanatory model of systemic corruption in public procurement. Within systemic corruption there emerge parallel informal structures that interfere with the preparation of public contracts even before the public tender is officially announced. They prepare plans of large-scale public investments and still ahead of the official tender announcement decide upon who shall implement the given public contract, which firms will participate with subcontracts and how to "split the prey". Following the official announcement of the tender, rigged formal phases of public procurement (pre-bidding, bidding, post-bidding) only "secure" the already agreed upon outcome of the public tender.