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Abstract
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Before
Public procurement of goods and services represents the primary area of government investment, accounting for a large share of the GDP in low-income countries. As a result, its potential as a driver of private sector development is massive. Yet, frictions in the functioning of procurement markets can lead to low competition, potentially resulting in an inefficient allocation of resources. Our project aims to estimate various information-related interventions that have been conducted in collaboration with the Uganda Public Procurement and Disposal of Public Assets Authority (PPDA), i.e. the national public procurement supervisory agency. We test whether the interventions affect competition, firm growth, resource reallocation, and several other economic outcomes.
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After
Public procurement of goods and services represents the primary area of government investment, accounting for a large share of the GDP in low-income countries. As a result, its potential as a driver of private sector development is massive. Yet, frictions in the functioning of procurement markets can lead to low competition, potentially resulting in an inefficient allocation of resources. Our project aims to estimate various information-related interventions that have been conducted in collaboration with the Uganda Public Procurement and Disposal of Public Assets Authority (PPDA), i.e. the national public procurement supervisory agency. Here, we test whether an intervention aiming to increase transparency of public procurement opportunities affects firm-level outcomes.
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Trial End Date
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December 01, 2021
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August 31, 2022
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Last Published
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February 07, 2020 01:52 PM
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November 30, 2021 07:57 PM
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Intervention (Public)
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Before
We conduct two interventions aimed at reducing information-related frictions on both sides of the procurement market. First, on the firm-side, we have two treatment arms aimed at (a) making information about tenders available in a timely and efficient manner, and (b) removing financial constraints and helping firms do business with new public entities. Second, on the government side, our treatment arm provides public entities with access to a large pool of data about potential providers.
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After
We conduct two interventions aimed at reducing information-related frictions on both sides of the procurement market. First, on the firm-side, we study whether making information about tenders available in a timely and efficient manner affects firm-level outcomes. Second, on the government side, our treatment provides public entities with access to a large pool of data about potential providers.
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Intervention End Date
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December 31, 2020
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December 31, 2021
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Primary Outcomes (End Points)
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Before
Our main firm-level outcomes are the bidding and winning behavior in public procurement (overall, as well as split by contract and buyer type), as well as measure of firm performance such as revenues, profits, and employment. Our main PDE-level outcomes are measures of competition (overall and new firms winning and bidding, HHI, share top X firms) and the quality/efficiency of executed contracts (delays, cost over-runs, audit outcomes, our own/expert quality checks, value for money a la Bandier et al (2009)).
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After
See attached pdf. Our main firm-level outcomes are the bidding and winning behavior in public procurement, as well as measure of firm activity. Our main PDE-level outcomes are measures of competition (overall and new firms winning and bidding, HHI, share top X firms) and the quality/efficiency of executed contracts (delays, cost over-runs, audit outcomes, our own/expert quality checks, value for money a la Bandiera et al (2009)).
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Experimental Design (Public)
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Before
We use strata for firm location (Kampala vs other), sector (works, supply, services), and size (above and below sample median). Out of 3,049 firms, 765 are allocated to T1 (tender information), 761 to T2 (financial/information nudge), and 1,523 to the control group. We use strata for public entity type (central, local) and for size based on number of contracts assigned (large, small). Out of 260 public entities, 131 are allocated to treatment (access to database of firms) and 129 to control.
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After
We use strata for firm location (Kampala vs other), sector (works, supply, services), and size (above and below sample median). Out of 3,049 firms, 765 are allocated to T1 (tender information), 761 to T2 (tender information plus nudge), and 1,523 to the control group. We use strata for public entity type (central, local) and for size based on number of contracts assigned (large, small). Out of 260 public entities, 131 are allocated to treatment (access to database of firms) and 129 to control.
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Sample size (or number of clusters) by treatment arms
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Before
Out of 3,049 firms, 765 are allocated to T1 (tender information), 761 to T2 (financial/information nudge), and 1,523 to the control group. Out of 260 public entities, 131 are allocated to treatment (access to database of firms) and 129 to control.
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After
Out of 3,049 firms, 765 are allocated to T1 (tender information), 761 to T2 (tender information plus nudge), and 1,523 to the control group. Out of 260 public entities, 131 are allocated to treatment (access to database of firms) and 129 to control.
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Keyword(s)
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Finance, Firms And Productivity, Governance
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Finance, Firms And Productivity, Governance
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Intervention (Hidden)
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Before
The firm-level intervention is aimed at reducing information frictions for firms interested in doing business with the government. It consists of two treatment arms, T1 and T2. T1 aims at providing information about tender opportunities to a subset of firms, in two ways. First, our research team, for the full duration of the intervention (i.e., approximately October 2019 to October 2020), will manually and daily collect all information about tender opportunities through all newspapers published in Uganda and by going over all sources of online news about tenders (including individual PDE websites). This information will then be shared through email/sms/whatsup to the T1-treated firms twice a week for a full year; importantly, each firm will only receive tenders that are marked as potentially interesting for them, after a selection made by our research team based on the tender description and the sector and economic activity of the firm. In the final phase of the project, we may select only a subset of the eligible tenders to disseminate, so as to have contract-level exogenous variation as well. Second, we collect procurement plans of most PDEs, and we shared these with firms; we do so only in February 2020, so that the staggered implementation allows us to look at its differential impact. T2-treated firms will instead receive the T1 treatment and, in addition to that, a further treatment component. Specifically, T2 firms will also receive a one-time financial reimbursement for the purchase of bidding documents from an entity with which the firm did not do business before and for which the firm was not prequalified for. In the final phase of the project we may allow for a larger financial incentive or more than one reimbursement per firm.
The PDE-level intervention is aimed at reducing information frictions for PDEs, considering that the majority of contracts are based on non- fully competitive methods that rely on an initial shortlisting of a limited numbers of firms by public officials. This intervention has one treatment arm T. T consists of the delivery of physical booklets containing a list of firms that are pre-qualified with any entity in Uganda (or directly in the PPDA Registry of Providers), organized by specific economic activity and location. Each treated PDE receives three booklets, one for each main sector (works, supply, services). Notice that while each PDE has direct access to its own list of pre-qualified firms, and can potentially request access to the Registry of Providers from PPDA, it is practically extremely difficult to access other PDEs’ pre-qualified lists, as these were only available on paper formats which we were the first to ever digitize (specifically for this project). Starting in February 2020, until the end of 2020, both T and control PDEs will receive a monthly email and sms notification by PPDA, with a reminder that they are encouraged to use all available sources of information when pre-selecting potential bidders.
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After
See attached pdf.
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Building on Existing Work
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No
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