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Empirical Economics

Erschienen in:

20.05.2022

Bunching below thresholds to manipulate public procurement

verfasst von: Bedri Kamil Onur Tas

Erschienen in: Empirical Economics | Ausgabe 1/2023

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Abstract

Manipulative authorities can bunch tenders just below thresholds to implement noncompetitive procurement practices. I use regression discontinuity manipulation tests to identify the bunching manipulation scheme. I investigate the European Union public procurement data set that covers more than two million contracts. The results show that 10–13% of the examined authorities exhibit a high probability of bunching. These authorities are less likely to employ competitive procurement procedures. Local firms are more likely to win contracts from a bunching authority. The probability that the same firm wins contracts repeatedly is high when an authority has high bunching probability. Empirical results suggest that policy makers can effectively employ regression discontinuity manipulation tests to determine manipulative authorities.

Vorheriger Artikel Corruption and partisan polarization: evidence from the European Union

Nächster Artikel Correction to: Bunching below thresholds to manipulate public procurement

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Directive 2014/24/EU states that the thresholds are EUR 5,548,000 for construction and EUR 144,000 for other contracts. In addition, thresholds for all services concerning social and other specific services listed in Annex XIV and all subsidized services are EUR 750,000 and EUR 221,000, respectively, available at https://ec.europa.eu/growth/single-market/public-procurement/rules-implementation/thresholds_en.

Available at: https://ec.europa.eu/growth/single-market/public-procurement/rules-implementation_en.

The report is available at https://www.eca.europa.eu/Lists/News/NEWS1901_10/INSR_FRAUD_RISKS_EN.pdf.

Authorities with sufficient number of observations.

Palguta and Pertold (2017) use the reform of the Czech procurement code in July 2006. Szucs (2017)exploits a PP reform enacted in 2001.

The CSV files for 2018 do not contain information about estimated costs. I use the contract award notices csv files. The files are available at https://data.europa.eu/euodp/data/dataset/ted-csv.

The standard forms of the EU are available at “ http://simap.ted.europa.eu/web/simap/standard-forms-for-public-procurement.

Article 5-1 of the 2014/24/EU describes estimated cost as: “ The calculation of the estimated value of a procurement shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.”

Cattaneo et al. (2018) state that “ ... bandwidths much larger than the MSE-optimal bandwidth will lead to estimated RD effects that have too much bias, and bandwidths much smaller than the MSE-optimal choice will lead to RD effects with too much variance.” (page 106)

10 (15) contracts below and above the threshold.

The Stata rddensity package used for manipulation testing is available at https://rdpackages.github.io/rddensity/. The Stata do file is provided as Supplementary Material. The file uses the contract award notices csv files available online and produces all figures and tables of the paper. The do file employs the rddensity package to calculate manipulation probabilities.

Recent thresholds are EUR 209,000 for goods and services and EUR 5,225,000 for construction.

The excess mass contains 3500 contracts. The difference between the actual number of contracts and the counterfactual distribution at the bracket just below the threshold is 3500.

CJM state that “[s]tandard kernel density estimators are invalid at or near boundary points, while other methods may remain valid but usually require choosing additional tuning parameters, transforming the data, a priori knowledge of the boundary point location, or some other boundary-related specific information or modification.” (page 1)

2044 authorities with more than 20 observations, and 1416 authorities with more than 30 observations in optimal bandwidths.

The TED data contain address information on the winning firm for 394,327 contracts. Accordingly, I can construct the Local Winner dummy variable for 394,327 contracts.

These contacts are won by firms that have sufficient observations. Therefore, I can calculate manipulation test statistics and probabilities for these firms.

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Titel: Bunching below thresholds to manipulate public procurement
verfasst von: Bedri Kamil Onur Tas
Publikationsdatum: 20.05.2022
Verlag: Springer Berlin Heidelberg
Erschienen in: Empirical Economics / Ausgabe 1/2023
Print ISSN: 0377-7332
Elektronische ISSN: 1435-8921
DOI: https://doi.org/10.1007/s00181-022-02250-4

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