Detecting authorities that manipulate public procurement

Abstract Manipulative authorities can bunch tenders just below thresholds to implement noncompetitive procurement practices in public procurement. Here, I use regression discontinuity manipulation tests to identify this 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 have high probabilities of bunching manipulation. I study the impact of manipulation by authorities on public procurement. I find that manipulative authorities are less likely to employ competitive procurement procedures. Local firms are more likely to win contracts from a manipulative authority. The bunching scheme increases the probability that the same firm wins contracts repeatedly. Empirical results suggest that policy makers can effectively employ regression discontinuity tests to determine manipulative authorities.