Impact of the Flexibility of Procurement Processes on Public Purchases in the Tackling of the Public Health Emergency Caused by COVID-19: Evidence from Brazil

In order to speed up the purchases of essential products and services required by the public administration to tackle the sanitary crisis caused by COVID-19, the Brazilian federal government enacted laws No. 13,979 and No. 14,035 in 2020, exempting such items from the procurement process. This research aimed to investigate the impact of the flexibility in Brazilian law on government bids. For this purpose, a database composed of items acquired between January 2019 and December 2020 was built, and the empirical strategy was based on Difference-in-Differences models. The results indicate that the effect of this legal provision on the price of potentially affected items was an increase of approximately 5%. Some explanations for this price increase are due to the pressure of demand, changes in the strategic planning of companies and in the way they allocate their workers, which affect the costs of these companies.