Abstract

In Italy the control of public procurement is performed only by the administrative judge. It is a control on the legitimacy of the adopted procedure and not designed to evaluate outcomes. The judge controls that the procedure is transparent and that there are no artificial advantages being provided to any competitor. In particular the judge checks whether the prerequisites to participate in the bidding process are fair, whether the motivation to exclude firms from the bidding process is a correct one, whether constraints imposed on the winning bidder are appropriate. Sometimes the evaluation extends to more dicretionary issues like product definitions and the incentives of firms to respect the terms of the contract. The extension of the area of control to more substantive issues could be very appropriate, but not if it is only performed according to a fairness standard. The objective of good procedures in public procurement is value for money, which means controlling that there is no waste of public resources, that what is purchased is really needed, that purchases are of the right quality and that the purchase cost is minimized. What is needed is a control also on the substance: on what the Administration purchases and an understanding that, unless suppliers face incentives alligned with those of the Administration, the outcome of public procurement will always be inefficient, characterized by high costs and low quality. Public Administration has a lot of discretion on how to structure a bidding process, on how to reward for quality, how to choose the weights for ranking bidders, how many lots should a given purchase be split into. These are very relevant issues over which the administrative judge has very little to say, and may even get it all wrong by adopting a fairness and not an efficiency standard. A change of perspective would require Public Administration to set up a system of controls on the outcome of public procurement. Furthermore, since mistakes are very easy to make and they are irreversible, complex bidding processes should be limited to the biggest bidding entities, so as to ensure that learning economies are fully exploited.