Séminaire interne du LERN – Jeudi 10 septembre à 12h
Jeudi 10 septembre 2026, nous aurons le plaisir d’écouter Isac Olave-Cruz (LERN, Université de Rouen) qui présentera son papier « Contract Shifting vs Contract Splitting in Public Procurement ».
Abstract:
This paper investigates how public officials manipulate the procurement process to avoid regulatory thresholds, and how this manipulation affects procurement outcomes and welfare. We exploit the unique design of the procurement law in Colombia to document three relevant findings. First, there is substantial manipulation of contracts around the threshold. Second, manipulation takes two distinct forms: contract shifting and contract splitting. Contract shifting involves reducing the value of the contract while contract splitting refers to dividing a contract into multiple smaller parts. We show that contract shifting is the main form of manipulation in this context. Third, we find that the manipulation has no negative effect on almost any procurement outcomes. Specifically, it reduces the final value paid and does not affect the number of bidders, among other outcomes. Furthermore, we propose a model of public procurement that analyzes when a public official chooses each type of manipulation and outlines the associated welfare implications. We show that public officials opt for contract shifting when they face small purchase thresholds and for contract splitting when they face large ones. Conversely, under reasonable assumptions, the model shows that contract splitting enhances welfare for small thresholds while contract shifting is always welfare-enhancing. The model contributes to the policy debate by proposing a design that involves a menu of auction types and threshold values.