Should I Share or Should I Not? On the Sharing of Information on Past Performance in Procurement

Gian Luigi Albano (gianluigi.albano@consip.it), Walter Ferrarese (walter.ferrarese@uib.es), Alberto Iozzi (alberto.iozzi@uniroma2.it) and Roberto Pezzuto (roberto.pezzuto@uniroma2.it)
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Gian Luigi Albano: Consip S.p.A. and LUISS Guido Carli University
Walter Ferrarese: Universitat de les Illes Balears
Alberto Iozzi: DEF & CEIS, University of Rome "Tor Vergata", http://www.ceistorvergata.it
Roberto Pezzuto: DEF, University of Rome "Tor Vergata", http://www.ceistorvergata.it

No 598, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: Many real-world public-sector purchases involve a combination of verifiable and non-verifiable dimensions of quality, leading to a classical incomplete-contracting problem. This paper analyses how public buyers may use debarment lists — in essence, blacklists of under-performing contractors — to incentivize quality provision in repeated procurement tenders. A key question is whether debarment lists should be shared among multiple agencies or maintained separately. Sharing multiplies the punishment for bad performance (an under-performing firm loses access to all agencies, not just one), which might strongly deter shirking. However, this paper shows that sharing debarment lists backfires when mistakes may occur in judging quality ex-post: if one agency erroneously penalizes a cooperative contractor, that error propagates to every agency, potentially discouraging contractors from exerting high quality in the first place. By modelling repeated interactions and allowing for observational errors, we show the implicit costs stemming from a shared debarment list, and draw policy lessons for designing blacklists in public procurement.

Keywords: Public procurement; Relational contracts; Unverifiable quality; Debarment (search for similar items in EconPapers)
JEL-codes: H57 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2025-04-29, Revised 2025-04-29
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