THE QUASI-MARKETS OF SOCIAL SERVICES: THE COMPETITIVENESS OF RUSSIAN NONPROFIT

ORGANIZATIONS AGAINST FOR-PROFIT ORGANIZATIONS AND PUBLIC PROVIDERS

Svetlana Suslova

23/09/2014

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Motivation

• Public service delivery via quasi-markets has become one of the main elements of ‘new public management’

• Nonprofits play a growing role in social service delivery because of their specific features

• Less attention has been paid to how nonprofit involvement in government social service develops in transition economies, such as Russia, than in developed countries

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The aim:

to investigate whether nonprofits are successful when they have to compete with other social service providers for government contracts

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Theoretical Background

• The quasi-market implementation as a way to improve the efficiency of government (Le Grand; Kitchen; Domberger & Jensen; Lowery; Dehoog)

• The competition level in social service quasi-markets (Savas; Lamoth) and the factors of contracting out to nonprofits in advanced countries (Lamothe & Lamothe; Feiock & Jang; Hefetz & Warner)

• Nonprofits involvement in social service delivery (Kendall, Knapp & Forder; Feiock & Jang; Frumkin, Francois; Pestoff & Brandsen)

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Data and MethodologyData on social services tendering in eight Russian

regions over the period 2011-2012

Sourse of the data: Official website of Russian Federation on procurement information, http://zakupki.gov.ru

Final data set consists of 786 observations (‘consistent tenders’)

Method: examination of tender bid evaluation records

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Region Number of

Nonprofits

per 10,000

residents

Region Number of

Nonprofits

per 10,000

residents

Perm Region 33.2 Tyumen Region 10.7Sverdlovsk Region 30.3 Tatarstan Republic 23.7Novosibirsk Region 34.8 Lipetsk Region 16.3Primorsky Region 34.5 mean 27.2Kamchatsky Region 48.0 median 25.3

Table 1. Size of nonprofit sector in the Russian regions

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Region Initial

Number of

Tenders

Number of

Consistent

Tenders

Share of

Consistent

Tenders, %

Initial

Number of

Tenders per

100,000

residents

Number of

Consistent

Tenders per

100,000

residents

1 2 3 4 5 6

Perm Region 490 398 81.2 18.62 15.13

Sverdlovsk R. 211 71 33.6 4.90 1.65

Novosibirsk R. 118 88 74.6 4.39 3.28

Primorsky R. 6 1 16.7 0.31 0.05

Kamchatsky R. 43 4 9.3 13.44 1.25

Tyumen Region 338 79 23.4 9.77 2.28

Tatarstan Rep. 222 154 69.4 5.84 4.05

Lipetsk Region 97 66 68.0 8.32 5.66

Table 2. Size of social service quasi-markets in the Russian regions

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Region Number of

Consistent

Tenders

Numbers of

Tenders with

Nonprofit

Bidders

Share of

Tenders with

Nonprofit

Bidders, %

Numbers of

Tenders with

Nonprofit

Bidders per

100,000

residents

1 2 3 4 5

Perm Region 398 101 25.4 3.84

Sverdlovsk Region 71 8 11.3 0.16

Novosibirsk Region 88 54 61.4 2.01

Primorsky Region 1 0 0 0

Kamchatsky Region 4 3 75.0 0.94

Tyumen Region 79 1 1.3 0.03

Tatarstan Republic 154 117 76.0 3.08

Lipetsk Region 66 20 30.3 1.72

Table 3. The numbers of tenders with nonprofit bidders

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No. of Bidders Region

1 2 3 4 5 6 Average

1 2 3 4 5 6 7 8

Perm Region 11 56 19 15 - - 2.38

Sverdlovsk Region 3 3 - 2 - - 1.38

Novosibirsk Region 31 17 5 1 - - 1.57

Primorsky Region - - - - - - -

Kamchatsky Region 3 - - - - - 1.00

Tyumen Region 1 - - - - - 1.00

Tatarstan Republic 34 40 23 10 5 5 2.38

Lipetsk Region 17 3 - - - - 1.15

Table 4. Level of competition in tenders with nonprofit bidders

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Types of Bidders

Region

Nonprofit and Nonprofit

(No. of Tenders)

Nonprofit and For-profit

(No. of Tenders)

Nonprofit and Governmental Organization

(No. of Tenders)

Nonprofit, For-profit and

Governmental Organizations

(No. of Tenders)

1 2 3 4 5

Perm Region 14 59 12 5

Sverdlovsk Region

2 3 1 -

Novosibirsk R.11 7 5 -

Primorsky Region - - - -

Kamchatsky R.- - - -

Tyumen Region - 1 - -

Tatarstan Republic

18 38 23 4

Lipetsk Region 1 2 - -

Table 5. Bidders of the tenders

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Region Perm Region

Sverdlovsk Region

Novosibirs

k Region

Primorsky Region

Kamchats

ky Region

Tyumen

Region

Tatarstan Republic

Lipetsk

Region

No. of Tenders won by a Nonprofit Provider

47 2 8 - - - 25 1

Share of Tenders won by a Nonprofit Provider, %

61.8 50.0 66.7 - - - 38.5 50.0

Table 6. Competitiveness of nonprofit bidders

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Conclusion (1)

• Significant discrepancies in the scope and size of the competitive bidding exist between these eight Russian regions

• The vast differences in the activity of nonprofit organizations as bidders, and in the intensity of competition between them and other providers in the regional social service quasi-markets were found

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Conclusion (2)• The structure of regional quasi-markets is the

essential factor of nonprofit organization involvement

• In many cases, nonprofit organizations can be competitive in terms of competitive bidding in Russia

• Competitive bidding in social service provision in many cases, in the period in question, did not give nonprofit organizations the opportunity to enjoy their advantages as services providers

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Thank you for your attention