Improving the Methodology for Determining the Initial Price in the Public Procurement System

This article examines, from theoretical, institutional, and comparative perspectives, the impact of determining the initial price of a procurement object on the efficiency of the use of budgetary funds in public procurement. The initial price is assessed not merely as a technical parameter of the procurement process, but as an important economic indicator affecting procurement budget planning, business entities’ decisions to participate in bidding, the degree of competition, the range of bid prices, contract value, the amount of savings, and subsequent contract performance. The study demonstrates that setting the initial price above market levels can generate “illusory savings,” excessive reservation of budgetary funds, artificially inflated contract prices, and heightened corruption risks, whereas setting it unjustifiably below market levels can reduce the number of bidders, cause procurement failure, encourage dumping, lower quality, increase the risk of contract non-performance, and generate re-procurement costs. The author proposes distinguishing nominal from real savings, introducing a multi-source reference-price model, a median-based price-estimation mechanism, an “Initial Price Reliability Index” (BNII), and a differentiated algorithm for determining initial prices by procurement category.