Bidding against each other: local procurement of personal protective equipment in the context of decentralization and high socio-economic inequality

Abstract

Under the influence of fiscal federalism and government decentralization theories, a significant part of health systems around the world confronted the COVID-19 pandemic after being shaped or re-shaped by processes of devolution from central to local governments. Procurement of key supplies is one of the components that operate in a decentralized manner, forcing local governments to compete against each other. This was the origin of what has been called the "bidding wars" between subnational governments at the beginning of the pandemic response. These wars led to centralization policies in the United States, the United Kingdom, and the European Union. Yet, less is known about cases from the Global South. By analyzing the procurement of Personal Protective Equipment (PPE) in the 320 Chilean municipalities in charge of primary health, this research provides evidence of the impacts of horizontal government competition on the ability to procure key supplies. In Chile, during the 2020 response to the pandemic, richer municipalities were able to procure more face masks per population, while economies of scale rewarded bigger purchases with lower prices. The authors support the theoretical notion of "concurrency" as a concept that adds nuances to the centralization-decentralization debate. In Chile, for instance, while testing and tracking required decentralization, PPE purchases could have probably benefited from centralization in order to avoid reproducing territorial inequalities.