Judicial delay and relational discretion in public procurement: evidence from Italian data

Alessandro Cavalieri (University of Turin)
Giovanni Ramello (University of Turin)
Alessandro Melcarne (Université Paris Nanterre)

Abstract

Public procurement regulations often limit public officials' discretion concerning the choice of contractors, with the aim of ensuring impartiality and curbing corruption. Although formally denied relational contracting, public contractors can use more discretionary award procedures (negotiated procedures) to partially replicate the mechanism and ensure contractual fulfillment. This paper empirically investigates the effect of judicial effectiveness - in its timing dimension - on the use of discretionary adjudication procedures in public procurement using data from Italian municipalities for the period 2009-2012. It exploits a spatial discontinuity design using contracts issued by municipalities at the borders (following Mattera et al. (2023)), finding a negative causal relationship between judicial delay and the use of discretionary procedures. It is conjectured that the negative effect is a consequence of the legal tools, such as penalties, that regulation allows public contractors to self-enforce a contract. In this case, an ineffective judiciary acts as a further defense from suppliers’ legal challenges.

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