Contracting Structures in Public Procurement: Evidence from Donor-Funded Electrification in Kenya

Abstract

We study how contracting and monitoring structures in public procurement affect large-scale infrastructure construction. Starting in 2016, Kenya’s public electric utility ran competitive auctions and then awarded and administered dozens of procurement contracts to connect millions to electricity. The causal analyses leverage natural and experimental variation and granular, independentlycollected construction quality data. Kenya Power contracts funded by the World Bank featured unbundled contract components known as ‘design-bid-build’ and enhanced monitoring compared to African Development Bank-funded contracts. Unbundling contracts delayed construction progress but improved quality. Randomized inspections improved quality without large delays. Bundled contracting with additional independent monitoring could improve outcomes.