Procurement Misallocation and Public Service Delivery: Evidence from Anti-Corruption Audits in Brazil
Job Market Paper
How does anti-corruption enforcement change the way governments buy goods and services? We study Brazil’s municipal audit program, which randomly selected municipalities for audit through public lotteries, and link audit timing to administrative records covering 2,420,972 tenders. Using a staggered difference-in-differences design, we find no detectable change in procurement volume and the broad allocation across direct, restricted, and open procedures. Within direct contracting, the procurement modality that grants officials discretion over firm selection falls below half of its pre-audit mean. Audits also shift firm selection toward younger firms in direct and restricted tenders, but they do not expand firm entry. Overall, audits change how municipalities use discretion and some margins of firm selection, rather than expanding procurement competition.