The Impact of Open Data on Public Procurement

Abstract

We examine how open procurement data affect the competitiveness of award procedures and the execution of government contracts. In the European Union, two separate open data initiatives made historical procurement notices available for bulk download as cohesive and user-friendly databases, treating contracts above and below size thresholds at different points in time. Using a difference-in-differences design, we find that, after each open data initiative, procurement officials are more likely to award treated contracts through open bidding. In cross-sectional analyses, we document variation in the open bidding effect consistent with two underlying mechanisms: (i) increased scrutiny by NGOs and investigative journalists, and (ii) learning by national procurement regulators. However, treated contracts are also more likely to experience costly modifications because the shift to open bidding introduces rigidity that limits officials’ discretion in selecting suppliers based on private information. Overall, these results indicate that open procurement data promote competitive bidding but lead to contracts with weaker execution performance.

Keywords: Public Procurement; Open Data; Competition; Contract Modifications; Public Scrutiny; Regulatory Learning

JEL Classification: D61; G38; H57; M41