The Value of Revolving Doors in Public Procurement

This paper investigates the link between public officials' experience and career path and public procurement contracts. We use a unique data set covering 10 years of procurement contracts of medical supplies, hospital... [ view full abstract ]

This paper investigates the link between public officials' experience and career path and public procurement contracts. We use a unique data set covering 10 years of procurement contracts of medical supplies, hospital equipments and pharmaceuticals organized by Brazilian public bodies, together with a comprehensive data set tracing individual job experience and characteristics, to identify how career paths of individuals involved as purchase administrators or working for private providers determine procurement outcomes: total amount and number of contacts, transacted volume and acquisition prices. We analyze career changes in two directions. Officials may work first for a public body and then join a private supplier. Alternatively, officials may work first for a private supplier before joining a public body. Interesting, we uncover positive and negative effects of revolving door on the efficiency of procurement, which are consistent with both possible collusion, and reward for high-skill workers stories. In particular, we find that effects of administration-to-supplier connections are beneficial to public bodies, while effects of supplier-to-administration ones are detrimental. These results point to specific policy implications related to the tolerance of revolving door practices.