Public Works Bidding Process (procurement): the Case of Brazilian Court of Audit
Abstract: This paper investigates the coordination of Brazilian infra-structure public work contracts. Those contracts are audited by the Brazilian Court of Audit (TCU), trying to reduce information asymmetry in the bidding and execution process of these works. We analyzed all TCU auditing reports of 228 federal public works related to 728 contracts, surveying the works’ features and their irregularities as identified by TCU and stated on their inspection’s reports. Besides that, we surveyed TCU’s analysts in order to measure the complexity of public works, and the analysts’ perception of the difficulties in the auditing process. Results suggest that the following variables are negatively associated with auditing efficiency: (i) specificity and auditing complexity, as indicated by the attributes’ measurement costs, and (ii) capture probability by the private agent, as indicated by expected sunk costs if the supplier were replaced. In an environment marked by weak enforcement, those factors increase the potential of public value expropriation by the private agent.
