Procurement with Manipulation

66 Pages Posted: 24 May 2022

See all articles by Giancarlo Spagnolo

Giancarlo Spagnolo

University of Rome Tor Vergata; EIEF; Centre for Economic Policy Research (CEPR); Stockholm School of Economics (SITE)

Decio Coviello

HEC Montreal

Andrea Guglielmo

Analysis Group, Inc.

Clarissa Lotti

University of Tor Vergata

Multiple version iconThere are 3 versions of this paper

Abstract

Using data from Italian public works, we study whether and which procuring administrations manipulate the value of contracts to avoid crossing regulatory thresholds that limit discretion, and how this impacts procurement outcomes. We use bunching estimators to document substantial manipulation just below these thresholds, performed by administrations led by appointed officials but not by elected ones. We estimate the effects of manipulation and find that it increases the use of discretionary procedures (restricted auctions), thereby reducing the number of bidders, works’ length, delays in delivery, and cost overruns, with mixed effects on rebates. Manipulation also increases repeated awards of contracts to less financially risky suppliers. We cross-validate our estimates using a reform that lowered the thresholds and find less use of discretion, lower procurement costs and increased delays and costs overruns, especially for administrations with appointed officials. A simple model where administrations may choose to manipulate the value of contracts provides guidance to our empirical analysis.

Keywords: discretion, bunching, thresholds, electoral accountability, bureaucracy, government performance

Suggested Citation

Spagnolo, Giancarlo and Coviello, Decio and Guglielmo, Andrea and Lotti, Clarissa, Procurement with Manipulation. Available at SSRN: https://ssrn.com/abstract=4118235 or http://dx.doi.org/10.2139/ssrn.4118235

Giancarlo Spagnolo (Contact Author)

University of Rome Tor Vergata ( email )

Faculty of Economics - DEF
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Rome, RM 00133
Italy

EIEF ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stockholm School of Economics (SITE) ( email )

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Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Decio Coviello

HEC Montreal ( email )

3000, chemin de la Cote-Saint-Catherine,
montreal, Quebec H2V3P7
Canada

Andrea Guglielmo

Analysis Group, Inc. ( email )

111 Huntington Avenue
10th floor
Boston, MA 02199
United States

Clarissa Lotti

University of Tor Vergata ( email )

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