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Do procurement rules impact infrastructure investment efficiency ? an empirical analysis of inversao das fases in Sao Paulo state
 
Author:Blancas, Luis; Chioda, Laura; Cordella, Tito; Borges de Oliveira, Alexandre; Vardy, Felix; Collection Title:Policy Research working paper ; no. WPS 5528
Country:Brazil; Date Stored:2011/01/11
Document Date:2011/01/01Document Type:Policy Research Working Paper
SubTopics:Public Sector Corruption & Anticorruption Measures; Government Procurement; E-Business; Investment and Investment Climate; Contract LawLanguage:English
Major Sector:Public Administration, Law, and JusticeRel. Proj ID:BR-Economic Analysis Of The Brazilian Procurement Process -- -- P120916;
Region:Latin America & CaribbeanReport Number:WPS5528
Sub Sectors:General public administration sectorVolume No:1 of 1

Summary: As a means to reduce delays in public works implementation, a number of Brazilian states have recently reformed their procurement rules allowing contractor price proposals to be assessed before the technical evaluation of submitted bids is undertaken (in a procedure known as inversao das fases). In order to evaluate the effects of such reform, this paper adopts a difference-in-differences methodology to compare the procurement performance of Sao Paulo state (a reformer state) and Minas Gerais' (a non-reformer state) largest water and sewage utility along three efficiency dimensions: (i) procurement process duration; (ii) likelihood of complaint resolution litigation; and (iii) prices paid to contractors. The analysis finds that the reform is associated with a 24 day reduction in the duration of procurement processes for large projects and a 7 percentage point drop in the likelihood of court challenges irrespective of project size. Although both effects are economically important, only the latter is statistical significant. Finally, the paper finds no evidence of an effect of the procurement reform on prices paid.

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