Do campaign contributions have an influence on the price of public works?

Abstract

The objective of this article is to verify empirically how the campaign contributions have an influence on the price of public works. To achieve this objective, we used panel data of public works contracts bid between the years of 2008 and 2013, besides data from the accountability of the election campaigns occurred in 2008, 2010 and 2012. The results of the econometric models estimation indicated that companies that contributed to campaigns were able to increase the value of their contracts in 8 percentage points through contract amendments, in comparison with the amendments of the companies that did not contribute. They also indicated that bids won by companies that contributed to campaigns presented a discount lower than the bids won by non-contributing companies in 1 percentage point. We can conclude that it is essential to evaluate the legality of the contract amendments in the scope of the public works audits when companies that contract with the public authority contributed to campaigns.