Administrative Capacity in Public Procurement: Evidence and Mechanisms

This paper investigates the role of administrative capacity in shaping procurement outcomes using rich Italian data on public works. We analyse the duration of the three main phases – planning, awarding, and execution – for observationally equivalent projects. First, we document substantial heterogeneity across contracting authorities: their fixed effects account for a sizeable share of the variation in procurement length, and delays tend to persist across all phases, pointing to structural differences in organizational capacity. These differences are strongly correlated with indicators of administrative quality. Second, we show that the identity of the procurement manager (RUP) matters, even within the same organization. Observable characteristics such as education or tenure explain only a limited fraction of the variation, highlighting the importance of unobservable factors such as tacit knowledge, effort, and managerial skills. Third, in the execution phase, both procuring authorities and firms play a crucial role: execution times are shorter when projects are awarded to more productive firms, and higher-ability managers are more likely to select such firms.