When More Discretionary Power Improves Public Procurement Efficiency : an Empirical Analysis of French Negotiated Procedures
Abstract: The new European legislative proposals on public procurement suggest widening the possibility for public buyers to use negotiated procedures with publication, that is multilateral negotiations after an auction phase. Such procedures have been available to French public buyers for contracts up to 5 million euros since 2004. We use an original and comprehensive database from Paris Habitat-OPH, the largest social housing constructor in Europe, to empirically assess the impact of negotiated procedures on price. As offers are evaluated according to price and quality criteria, we use technical rankings created by our public buyer to account for differences in quality across offers. After satisfyingly dealing with the endogeneity issue associated with the use of negotiated procedures, we find that such procedures significantly decreased the received bids by close to 26%. If anything, similar results are found when analysing the amount of the winning bids. Some drivers of the positive effects we observe are highlighted, enabling us to derive practical implications of these results for public policies.
