Centralized procurement involves a central unit processing all procurement requests for goods, works, and services for other contracting authorities. It aims to eliminate defects by addressing issues like price variations, mismatched vendor prices, limited participation, and lack of professionalism. Advantages include achieving higher demand, reducing appeals, and increased monitoring. However, disadvantages are that it can restrict small businesses and limit regional development by concentrating the economy and employment in central locations. Kosovo began centralized procurement by designating certain goods and authorities through administrative instructions, with contracted values growing from €3.5 million initially to over €40 million in later years. Analysis shows direct savings of 4-9% with centralized procurement.

1. © OECD
Centralized procurement
Guidelines on centralized procurement
Safet Hoxha
13-14 June 2018
Becici, Montenegro

2. Definition
Centralized Public Procurement is a concept where all
requests for goods, works and services are processed by
a central unit within the country, which also conducts
procurement procedures for other contracting
authorities.
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3. Aim of centralized procurement
Establishment of a functional centralized public procurement
system, where one of the main goals is elimination of a series
of defects and anomalies that partial procurements cannot
eliminate.
• Amongst others, the model of centralized procurement will
address:
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4. Advantages of centralized
demand/needs
• Price variations for the same product procured
during the same fiscal year by various public
institutions;
• Miss-match between prices of similar products
offered by the same vendors;
• Value for money through collection of
demand/needs
• Limited participation of bidders;
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5. Advantages of centralized demand
• Additionally, centralized demand would achieve
higher level of professionalism on both sides that are
parties in the procurement procedure.
• Such situation would reduce the appeals in the
process and consequently increase the trust in
procurement procedures
• In addition, there is a much higher monitoring level
by the public authorities, NGO’s and media.
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6. Disadvantages of centralized
procurement
When addressing the centralized procurement model, it
is necessary to take into account the negative sides of
this system, especially the impact it may have on the
distortion of the public market in the country,
specifically in small countries like Kosovo.
• Negative effects of this system could be the
following:
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7. Disadvantages of centralized
procurement
• Main disadvantage is restriction and exclusion of
SME’s from participation in the procurement activities,
risking to also limit their development.
• Another negative effect that emerges as a
consequence of the development of this model is
concentration of the public economy at the centre, thus
disabling regional development of entrepreneurship.
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8. Disadvantages of centralized
procurement
• Concentration of economy at the centre creates a
disproportion in economic development at national
level (under-developed regions)
• Also, concentration of procurement at the centre
through centralized procurement activities would
influence the dis-balance of employment policies, which
in turn would impact the demographic aspects of the
population by moving from the periphery towards the
centre.
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9. Disadvantages of centralized
procurement
• Concentration of economy at national scale would
result in massive movement of population towards
centres seeking for jobs, and this would leave
peripheral regions without development.
• Villages will migrate towards towns and this will put
the basic sectors of economy at risk, including
agriculture and farming (stockbreeding).
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10. History of centralized procurements
in Kosovo
• This history started with amendments to Law
no.04/L-042, where the Government undertook to
organize centralized procurements, designing the
legal and technical infrastructure.
• Certainly, the technical and legal preparations took
considerable but sufficient time needed for the
successful commencement of this project.
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11. Commencement of centralized
procurements in Kosovo
• Decision to begin with centralized procurements was
taken by the Government, which through an
administrative instruction specified goods that were
to be part of the list for centralized procurements, as
well as the authorities subject to this Administrative
Instruction (AI).
• It is worth noting that in the beginning the process
was associated with difficulties of the market
resistance, which was eventually overcome.
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12. Commencement of centralized
procurements in Kosovo
Despite a silent resistance and hesitation of public authorities and
businesses, the Government managed to issue the AI’s for several
years now:
Administrative Instruction on Centralized Procurement no.02/2015
Administrative Instruction on Centralized Procurement no. 05/2016
Administrative Instruction on Centralized Procurement no. 03/2017
Administrative Instruction on Centralized Procurement no. 06/2018
Based on these decision, the CPA has implemented contracts at
following values:
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Contracted values over the years
• In 2015 – contracted value: 3,500,000.00 EUR
• In 2016 - contracted value: 42,000,000.00 EUR
• In 2017 - contracted value: 22,500,000.00 EUR
• In 2018 - contracted value: 10,000,000.00 EUR, as at
the reporting time.

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Benefits from centralized
procurements
 According to the analysis carried out by the relevant institution, but also of
mechanisms supporting centralized procurements, the value of direct savings
ranges from 4% to 9%.
 In addition, there are indirect savings as well, such as:
 single procurement procedure (instead of 140 procedures/institutions)
 single monitoring by the PPRC, etc. (instead of 140 procedures/institutions)
 single appeal (instead of 140 procedures/institutions)
 single audit (instead of 140 procedures/institutions)
 Other benefits
 Standardization of items
 Identical prices between institutions
 Elimination of conflict of interest (CPA conducts procedures, CA’s implement
them)

15. THANK YOU!
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