Flexible Procedures in the Danish Procurement Law: The Creation of Efficient Contracts

Abstract

From January 2016 Denmark had their first procurement law. The law is building on the Procurement Directive from 2014 that is a part of EU’s 2020 strategy. The main purposes are to create more simple and flexible procedures by giving the contracting authorities a better opportunity to choose procedures including negotiation and dialogue. This master thesis is analyzing whether or not the increasing flexibility in the procurement law gives higher valuable contracts. To analyze the flexibility in the rules this thesis uses Law & Economics to analyze the purposes of the Danish procurement law with the creation of efficient contracts. This thesis also includes the legal dogmatic analysis to identify and analyze the flexible procedures in the Danish procurement law. Furthermore, the legal dogmatic analysis discusses how it is possible to comply with the fundamental EU law principles. The economic analysis consists of neo classic economics and neoinstitutional economics to assess how the most efficient procurement is created. This includes a micro economic construction of the equilibrium in a perfectly competitive market and an analysis of whether there are transaction costs connected with flexible procurement. The legal analysis shows that it is difficult to be compliant with the fundamental EU law principles when increasing the flexibility in the procurement procedure. The economic analysis shows that to create the most efficient contracts within procurement the possibility of renegotiation is necessary. This concludes that it is difficult to abide the law and still get the most efficient contracts. Furthermore, it is difficult and expensive using flexibility in the procedure when the contracts are too complex and transaction costs are too high. Conversely, if the complexity is too low then flexible procedures are not recommended. The efficient contract is hard to achieve due to the existence of economic and non-economic considerations.