Private Enforcement of Procurement Rules: The Heterogeneous Effect of the EU Remedies Directive

We examine the impact of the EU Remedies Directive on the use of direct awards. Theoretically, strengthening bid protest mechanisms should reduce the use of direct awards as aggrieved bidders are more likely to challenge such awards. By utilising the staggered implementation of the Remedies Directive across EU countries, we are able to test this hypothesis using a large database of public procurement contracts. While we do not find an effect on average, we observe a systematic effect for public buyers with a high initial propensity to use direct awards. In this group, the estimates suggest a reduction in the use of direct awards of more than 50 percentage points two years after implementation.