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Monitoring Public Procurement in Chile

Location: Chile
Timeline:
2015 to 2016
Research Initiative: Governance Initiative
Outcome of Interest: 
Transparency and accountability
Intervention Type: 
Audits
Behavioral economics
Partners:

Managing public procurement is a big challenge for all governments, particularly in low- and middle-income countries. Since public procurement represents a significant share of GDP, it is of fundamental importance to build procurement processes that ensure efficiency in both the allocation and the execution of such procurement contracts. In Chile, researchers are conducting a pilot study to examine the impact of increasing the audit risk in different stages of the procurement process.

Policy Issue 

Government procurement is the process by which the public sector selects and pays private firms to provide goods and services for public use. From military equipment to street-cleaning, government procurement represents a large share of economic activity. At the same time, ensuring a fair and efficient process of public procurement is a challenge for all governments, particularly in low- and middle-income countries.

Governments often impose regulations on how projects are awarded: the auction process to select the supplier, transparency of the call for proposals, etc. Much progress has been made in this area in many countries in recent years. However, there is often less information available about what happens after a contract is awarded and signed. As a result, problematic behavior may shift from the awarding stage to the execution stage. Despite the economic importance of procurement, there is limited empirical evidence on how efficiently procurement is carried out in practice and how this process can be improved.


Context of the Evaluation 

In Chile, the procurement agency manages the auction and awarding process, and the comptroller conducts audits involving compliance by government agencies in all aspects of the procurement process. Public agencies who would like to make a purchase from the private sector solicit and award public procurement contracts through an online platform, allowing both competitors and monitoring agencies to observe whether rules for a competitive and transparent awarding process are upheld. In 2014, this platform included more than 750 public entities (such as municipalities or hospitals) and 4,000 purchasing units (such as schools or municipal departments) who participated in 4.3 million procurement auctions.

Details of the Intervention 

Researchers are conducting a pilot study to examine the impact of increasing the audit risk in different stages of the procurement process.

Results and Policy Lessons 

Researchers are in the process of analyzing results from this pilot study, which may inform a larger-scale randomized evaluation.