Screening for Sovereignty: Optimal Procurement when Compliance is Cheap to Fake and Costly to Verify¶

Stefane Fermigier (Abilian) · sf@abilian.com

Draft working paper v0.16, 2026-09-16. Theory; every closed-form claim carries an appendix proof and an independent numeric cross-check; no identification is claimed for the public-record reading. Section 9 carries the exit-mandate results of the superseded companion note Exit or Own.

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Abstract¶

Public buyers increasingly attach sovereignty requirements to digital-infrastructure procurement: the supplier must be beyond the reach of foreign compulsion. We model such procurement as mechanism design with a hidden compliance action, a cheap cosmetic-compliance technology, and costly imperfect per-attribute audits backed by a bounded one-strike sanction. Because a detected fake forfeits the same stake however many attributes were faked, violations are complements: per-attribute audit thresholds do not implement compliance, audit costs are superadditive across requirements, and the cost-minimizing audit is a cascade in which each attribute is audited against the stake net of its predecessors' temptations. The price both disciplines the incumbent, as a forfeitable bond, and subsidizes mimicry, by enlarging the prize a mimic keeps when verification fails. Requirements targeting attributes on which supplier types' costs do not differ cannot screen at any price or audit intensity; verification of effective control screens once its accuracy clears a characterized threshold; and when the operational audit merely re-reads the evidence the control audit reads, a single audit is optimal. We characterize when sovereignty mandates are not worth their verification cost, and read the European cloud-procurement record through the results.

Keywords: procurement, costly state verification, multidimensional screening, auditing, digital sovereignty, compliance.

JEL: D82, D86, H57, L51.

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Fermigier, S. (2026). Screening for Sovereignty: Optimal Procurement when Compliance is Cheap to Fake and Costly to Verify.
Draft working paper v0.16, Abilian Econ Lab.
https://econ.lab.abilian.com/papers/screening-for-sovereignty/