Matias Villalba

At the beginning of the COVID-19 pandemic, the Peruvian government facilitated the acquisition of goods and services through direct contracting. This method allows officials to select suppliers without the need for a public auction. However, the impact of this increased discretion in contracting is not certain. On one hand, direct contracting could increase the risk of corruption due to a lack of transparency and reduced oversight in the supplier selection process, fostering an environment for improper practices such as favoritism, nepotism, or even embezzlement of public funds. On the other hand, this method could also lead to greater efficiency in contracting processes, as it allows for faster decision-making and simplifies complicated procedures, which could result in cost reductions. Based on unit prices and the frequency of accurate reporting of unit prices, our findings indicate that the net effect of greater discretion is positive. This leads us to question the necessity of complex regulations that restrict bureaucratic discretion and suggests that, in many cases, the benefits of simplicity in contracting could outweigh its costs.