Vol. 15 No.8 (August 2005), pp.641-643

REGULATING PROCUREMENT: UNDERSTANDING THE ENDS AND MEANS OF PUBLIC PROCURMENT REGULATION, by Peter Trepte.  Oxford: Oxford University Press, 2004. 428pp. Hardback.  £65.00 / $135.00.  ISBN: 0-19-826775-4.

Reviewed by Robert M. Howard, Department of Political Science, Georgia State University. Email: polrhh@langate.gsu.edu .

Several years ago I regularly drove back and forth on a certain stretch of a state highway on Long Island, New York. Every June, without fail, a section of road was repaved, regardless of the actual condition of the highway. The construction inevitably resulted in a lot of oaths from the drivers and significant road delays, preventing me and all the other motorists using the road from reaching our destinations in time. While this inconvenienced drivers, the repaving work was undoubtedly a lucrative contract for the company. Each year I wondered what exactly the contractor had done to be rewarded with such a lucrative annual stipend. Stuck in traffic, I assumed there was some order and regulation in the awarding of government contracts, and wondered if the contract was procured according to the correct set of rules.

I thought of this while reading REGULATING PROCUREMENT by Peter Trepte. The book does not purport to tell us how we regulate, or the precise reasons the above mentioned paving company received the contract, but instead seeks to understand why we control government procurement, or purchase. Trepte clarifies the reasons why we regulate “the act of a public body purchasing or acquiring goods, works and services from the marketplace”(p.9).  It is more than just the avoidance of corruption, or the appearance of impropriety.  Ultimately regulation of government contracts serves the goals and objectives of the government. The manuscript serves a dual purpose of providing a theoretical basis for such regulation and a primer on basic terms and ideas of political economy. It is both an empirical examination of the need for regulation, and through the empirical assessment, a normative argument for the use of appropriate parameters by the state.

The book is extremely well organized. It is divided into seven chapters, which are then further subdivided into sections and subsections. This makes the logic of the argument and the subsequent evidence easy to follow. Of course, most governments seek to prevent corruption in the awarding of government contracts, but Trepte argues that there is no single appropriate objective, nor any one appropriate model such as economic efficiency, the realization of socially desirable goals or the achievement of international aims. The appropriate regulation depends on the goals of the state or nation, and the model or models chosen should be those that most likely will lead to these goals.

In the introduction, the author defines his key terms and concerns and lays out the basis of the ensuing chapters. He [*642] defines regulation as the “measures or instruments employed by the state to promote its economic and social policies” (p.45), and then proceeds to review the central concepts of the need for regulation, and procurement regulation, due to various market failures such as the existence of monopolies and information asymmetries. Trepte also outlines the various enforcement mechanisms available to governments, from direct supervision to administrative review, independent agencies and finally judicial review.

The next three chapters are the core of the book. In these chapters the author introduces three different models of procurement regulation: economic, political and international. Each model is not meant to be exclusive. Instead most governments use variations and mixtures of each model to achieve their objectives and goals.  The last two substantive chapters, five and six, illustrate procurement regulation in domestic and international situations. The author assesses variations of these three interacting models through examinations of domestic and international regulatory systems.

Chapter Two, entitled “Government as Purchaser,” outlines the economic model. Government procurement is done within the boundaries of a market economy. Thus, the primary purpose of regulation of government procurement is the same as regulation of other economic activity: to ensure allocative efficiency, which the author defines as a Pareto optimal outcome. Most of the arguments presented in this chapter will be familiar to students of political economy or regulation. That is, procurement regulation is necessary to control wayward agents, prevent interest group capture, solve information problems and reduce transaction costs. In short, the economic model seeks to ensure competitiveness in the bidding and awarding of public procurement contracts.

Although allocative efficiency is the primary reason for regulation, in Chapter Three, “The Government as Body Politic,” the author adds a second model recognizing political matters. Governments have to take into account normative goals and concerns in the regulation of procurement contracts. These considerations, of course, will impact allocative efficiency, in the sense that, the author argues, there are many Pareto efficient outcomes, and it is the role of government, through the regulation of procurement, to decide which Pareto outcome is preferable, or to choose a non Pareto outcome if these other goals and considerations are deemed more important. What are these considerations? Trepte calls them strategic policies, protective policies and proactive policies. In the most general sense they are promoting the economic and social welfare of the citizens. More specifically, they could be such things as promoting racial, ethnic or gender diversity in the workplace, supporting minority economic enterprises, or aiding certain industries or enterprises. The government, as perhaps the dominant purchaser in the state, can use regulation of procurement to support these goals.

The final model, presented in Chapter Four, is entitled “The Government as an International Actor.” Here the author deals with problems presented by a global economy. There is potential conflict and tension between free trade [*643] and national interests. Governments seek a comparative advantage, and national security is always a concern. Thus government procurement will use such things as price preferencing, quantitative restrictions, regional trade groups, technical specifications and standards, subsidies and even dumping to maximize national interests, and gain a comparative advantage.

Chapters Five and Six present extended examples, using domestic and international regulation to demonstrate the use of the models developed in Chapters Two, Three and Four. Trepte does not intend this discussion to mean that there is any one definitive model of procurement regulation, but instead a demonstration of how various considerations can lead to certain types of purchasing regulation. Here he examines such things as the personnel overseeing recruitment, procedures that are used, such as open, competitive or closed bidding, and qualifications needed for the award of contracts. The final substantive chapter examines procurement regulation of the European Community and the World Trade Organization.

So what model, or parts of models were used in the awarding of the paving contract? Was the primary goal allocative efficiency alone, or did it represent a combination with some other goals? Was the process open and competitive, or closed? I do not know, but Trepte’s book provides a way to analyze, examine and understand the process.

Of course examining these questions relate more to issues of politics and economics than to questions of judicial behavior and courts. Thus, the book will be of most interest to political scientists, graduate students and law professors who study and research issues of political economy, public policy and administrative law, and those who study the intersection of law, courts, public policy and political economy.   I suspect that the book will be of little use to those who study more traditional areas of constitutional jurisprudence or various aspects of judicial behavior. That does not detract from its worth or value, but the book will be of much greater use in a graduate class in Political Economy or Regulation than one of Judicial Process or Constitutional theory.

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© Copyright 2005 by the author, Robert M. Howard.