The Impact of Open Data on Public Procurement

Abstract

We examine how open procurement data affect the award procedures and execution of government contracts. The European Union recently made its historical procurement notices available for bulk download in a cohesive and user-friendly database. Comparing government contracts above and below EU publication thresholds, we find that, after the open data initiative, procurement officials are more likely to award treated contracts through open bidding. Consistent with open data promoting higher public scrutiny, the effect on open bidding is stronger in countries with larger increases in negative procurement-related media coverage. However, treated contracts are also more likely to experience costly modifications, a result for which we find two separate underlying channels. First, the shift to more rigid open bidding procedures limits officials’ discretion in selecting suppliers based on private information (competitive bidding channel). Second, open data exacerbate voter pressure on officials to award contracts based on the lowest price (price focus channel). Our results replicate in an alternative open data setting, suggesting that our inferences apply more broadly.

Keywords: Public Procurement; Transparency; Data Accessibility; Competition; Allocative Efficiency

JEL Classification: D61; G38; H57; M41