Bunching below thresholds to manipulate public procurement
Title: Bunching below thresholds to manipulate public procurement
Author: TAS, Bedri Kamil Onur
Series/Number: EUI RSCAS; 2019/17; Global Governance Programme-338; [Global Economics]
I examine a manipulation scheme that public authorities can use to exercise more discretion in public procurement. I propose that regression discontinuity manipulation tests can be implemented to identify manipulative authorities. I investigate the European Union public procurement data set. I find that 10-13% of examined authorities have high probabilities of bunching estimated costs just below thresholds. Manipulative authorities have significantly lower probabilities of employing competitive procurement procedure. The bunching manipulation scheme significantly diminishes cost-effectiveness of public procurement. On average, prices of below threshold contracts are 18-28% higher when the authority has an elevated probability of bunching.
Subject: Public procurement; Manipulation; Competition; European Union; C31; D44; H57
Type of Access: openAccess