Decentralization and Public Procurement Performance: New Evidence from Italy

We exploit a new dataset based on EU procurement award notices to investigate the relationship between the degree of centralization of public procurement and its performance. We focus on the case of Italy, where all levels of government, along with a number of public institutions, are involved in procurement and are subject to the same EU regulation. We find that i) municipalities and utilities, which currently award the largest shares of contracts, perform worse than all other institutional categories; and ii) decentralization implies lower performance only when it comes with weak competences of procurement officials. The evidence seems to suggests that a re-organization of the procurement system, both in terms of partial centralization and better professionalization of procurement officials, would help improve overall procurement performance.