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Title:Bidding for complex projects: Evidence from the acquisitions of IT services PDF Logo
Authors:Albano, Gian Luigi
Dini, Federico
Zampino, Roberto
Issue Date:2008
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: Institutions and markets 86.2008
Abstract:Competitive bidding (as auctions) is commonly used to procure goods and services. Public buyers are often mandated by law to adopt competitive procedures to ensure transparency and promote full competition. Recent theoretical literature, however, suggests that open competition can perform poorly in allocating complex projects. In exploring the determinants of suppliers' bidding behavior in procurement auctions for complex IT services, we find results that are consistent with theory. We find that price and quality do not exhibit the classical tradeoff one would expect: quite surprisingly, high quality is associated to low prices. Furthermore, while quality is mainly driven by suppliers' experience, price is affected more by the scoring rule and by the level of expected competition. These results might suggest that (scoring) auctions fail to appropriately incorporate buyers' complex price/quality preferences in the tender design.
Subjects:Procurement Auctions
Scoring Rules
IT Contracts
Price/Quality Ratio
JEL:D44
D86
H51
H57
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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