Discretion and Supplier Selection in Public Procurement

47 Pages Posted: 12 Jul 2018

Date Written: June 15, 2018

Abstract

Public procurement outcomes depend on the ability of the procuring agency to select high-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 firms having a local politician among its administrators or shareholders increases, while the (ex-ante) labor productivity of the winning firms decreases, thus suggesting a potential misallocation of public funds. These effects are concentrated among lower quality procurement agencies.

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

JEL Classification: D72, D73, H57, P16

Suggested Citation

Baltrunaite, Audinga and Giorgiantonio, Cristina and Mocetti, Sauro and Orlando, Tommaso, Discretion and Supplier Selection in Public Procurement (June 15, 2018). Bank of Italy Temi di Discussione (Working Paper) No. 1178, Available at SSRN: https://ssrn.com/abstract=3210748 or http://dx.doi.org/10.2139/ssrn.3210748

Audinga Baltrunaite (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Cristina Giorgiantonio

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Sauro Mocetti

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Tommaso Orlando

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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