Discretion and Supplier Selection in Public Procurement

Number: 122
Year: 2018
Author(s): Audinga Baltrunaite, Cristina Giorgiantonio, Sauro Mocetti and Tommaso Orlando.
Public procurement outcomes depend on the ability of the procuring agency to select well-performing suppliers. Should public administrations be granted more or less discretion in their decision making? Using Italian data on municipal public works tendered in the period 2009-2013, we study how a reform extending the scope of bureaucrat discretion affects supplier selection. We find that the share of contracts awarded to politically connected firms increases while the (ex-ante) labor productivity of the winning firm decreases, thus suggesting a potential misallocation of the public funds. These effects are concentrated among lower quality procuring agencies.

Audinga Baltrunaite  Bank of Italy

Cristina Giorgiantonio Bank of Italy

Sauro Mocetti Bank of Italy

Tommaso Orlando Bank of Italy

Language: English

The paper may be downloaded here.

Keywords: discretion,supplier selection,public procurement,transparency,corruption.