Public procurement is a key economic activity accounting for a significant share of GDP (16% of GDP in Hungary and 12.9% of GDP in 2021 in OECD countries). As public procurement was considered as an administrative task for many years, the need to measure its performance was not a top priority for governments.
However, in the recent years, governments have been increasingly recognising the strategic role of public procurement for public service delivery and for obtaining broader outcomes. In addition, the pressure on public spending, as well as the need for more accountability, for monitoring the achievement of public policies, and for better managing public procurement risks, all make the need for better measurement in this area more urgent.
Performance evaluation is usually conducted by defining key performance indicators (KPIs) that are monitored over time. While the relevance of measuring performance is clearly recognised, practice often lags behind. Considering that “what countries measure is a signal of chat they value”, the OECD has developed in 2023 a comprehensive, ready-to-use performance measurement framework for consistently assessing procurement processes and supporting data-based policy and decision making in the public procurement field launched in 2023.
Several OECD and non-OECD countries are already using the OECD public procurement performance measurement framework to establish their own frameworks. The Hungarian government committed, in its Recovery and Resilience Plan and within the conditionality procedure for European Union funds, to set up a comprehensive measurement framework to regularly assess the performance of the public procurement system and to analyse the reasons behind low levels of competition in certain sectors. While the government developed such a framework, it requested the support of the OECD in two main areas: i) assessing the public procurement measurement framework developed in November 2022 and providing key recommendations for its improvement, and ii) improving the level of competition in the public procurement market. Therefore, this report is one of the outputs of a wider cooperation with the Hungarian government on public procurement.
Assessing a public procurement measurement framework goes beyond simply assessing individual KPIs, it looks at key elements of the governance of a public procurement system from public procurement challenges to the digitalisation of public procurement processes.
The report was approved for publication by the Public Governance Committee on 21 June 2024 and prepared for publication by the Secretariat.