Corruption Risks and State Capture in Bulgarian Public Procurement

This paper sets out to measure and analyze corruption risks, patterns of favoritism, and statecapture in public procurement in Bulgaria. It draws on two main types of data: large-scale administrative data onpublic procurement and the list of politically exposed persons. The analysis rests on calculating individualcorruption risk indicators (or red flags), such as single bidding in competitive markets, and creating a compositeCorruption Risk Index based on these indicators. It maps the distribution of these red flags over time, across differentregions and markets. The analysis finds that Bulgaria shows high corruption risk among other examined countries in theEuropean Union, with weak institutions contributing to slow gross domestic product per capita convergence to WesternEuropean countries. The results point out that corruption risks have deteriorated over time. Combining suppliers’political connections information with public procurement corruption risk data shows that connections are associatedwith higher risks, in particular connections to local government members and state-owned enterprises. Thelarge-scale analysis of buyer-supplier contracting networks points at state capture patterns where groups of buyers andsuppliers repeatedly connect in high corruption risk procurement contracts. Such groups have gained more powerand control over a larger share of contracts since 2016. Finally, policy recommendations are provided in three areas:enhancing data scope and quality, introducing a data-drivenapproach to corruption risk assessment, and improving public procurement policy and practices to reduce noncompetitive tenders.