Out of sight, out of mind? Supplier spatial proximity in French public procurement

The purpose of this paper is to study the impact of spatial proximity on supplier selection in the French public sector. While French public procurement legislation forbids consideration of supplier location in the procurement process, public contractors may still rely on spatial proximity for complex transactions necessitating mutual adjustments with suppliers.

Using French Official Journals (BOAMP), the authors compiled 565,557 transactions completed on three public procurement markets between 6,182 contractors and 26,570 suppliers, over a period of six years (between 2006 and 2011). The authors conducted a two-level hierarchical linear auto-regression analysis and a feature evaluation analysis for all transactions.

The paper finds significant variation between the transactions on different markets: a negative effect of spatial proximity on the number of contract notices in the public market and a positive effect of spatial proximity on the number of notices in the services and supplies markets. The difference lies in the levels of mutual adjustment required to optimally manage the relationship between public contractor and supplier.

The research is based on an econometric analysis conducted uniquely in the French context, which calls into question the external validity of the results obtained. The study also rests on segmentation into three aggregate markets, which might be considered too general.

Rather than analyze public contractors’ perceptions of the importance of the criterion of spatial proximity, the paper examines 565,557 actual transactions. The results point to the emergence of a new type of relationship with certain suppliers, which should lead public contractors to integrate relationship management competencies, in addition to legal and economic competencies, in the organization of calls for tenders.