Advertisement

Bidding for Complex Projects: Evidence from Italian Government’s Acquisitions of IT Services

  • Gian Luigi Albano
  • Federico Dini
  • Roberto Zampino
Part of the Lecture Notes in Computer Science book series (LNCS, volume 5693)

Abstract

Public buyers are often mandated by law to adopt competitive procedures to ensure transparency and promote full competition. Recent economic literature, however, suggests that open competition can perform poorly in allocating complex projects. In exploring the determinants of bidding behavior in tenders for complex IT services, we find results that appear consistent with theory. Our analysis shows that price and quality are linked in a puzzling way: high quality is associated with low prices. We also find that quality proposals are mainly explained by suppliers’ experience. Results suggest that scoring rules at the basis of the tendering process might fail to appropriately incorporate buyers’ complex price/quality preferences.

Keywords

procurement tenders scoring rules IT contracts complex projects 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Albano, G.L., Bianchi, M., Spagnolo, G.: Bid Average Methods in Procurement. In: Piga, G., Thai, K. (eds.) The Economics of Public Procurement. Palgrave (2007)Google Scholar
  2. 2.
    Asker, J., Cantillon, E.: Properties of Scoring Auctions. Forthcoming, Rand Journal of Economics (2008)Google Scholar
  3. 3.
    Bajari, P., McMillan, R., Tadelis, S.: Auctions vs. Negotiation in Procurement: An Empirical Analysis. Journal of Law, Economics and Organization (forthcoming, 2008)Google Scholar
  4. 4.
    Bajari, P., Houghton, S., Tadelis, S.: Bidding for Incomplete Contracts: An Empirical Analysis of Adaptation Costs. NBER Working Paper No. 12051 (2007)Google Scholar
  5. 5.
    Bajari, P., Tadelis, S.: Incentives Versus Transaction Costs: A Theory of Procurement Contracts. Rand Journal of Economics 32(3), 287–307 (2001)CrossRefGoogle Scholar
  6. 6.
    Che, Y.-K.: Design Competition through Multidimensional Auctions. Rand Journal of Economics 28, 668–680 (1993)CrossRefGoogle Scholar
  7. 7.
    Dimitri, N., Dini, F., Pacini, R., Valletti, T.: Scoring Rules. In: Dimitri, N., Piga, G., Spagnolo, G. (eds.) Handbook of Procurement. Cambridge University Press, Cambridge (2006)CrossRefGoogle Scholar
  8. 8.
  9. 9.
    Goldberg, V.P.: Competitive Bidding and the Production of Precontract Information. Bell Journal of Economics 8, 250–261 (1977)CrossRefGoogle Scholar
  10. 10.
    Kim, H.I.: A Model of Selective Tendering: Does Bidding Competition Deter Opportunism by Contractors? Quarterly Review of Economics and Finance 3(4), 907–925 (1998)CrossRefGoogle Scholar
  11. 11.
    Lundberg, S.: Auction Formats and Award Rules in Swedish Procurement Auctions. CERUM Working Paper No. 79 (2005)Google Scholar
  12. 12.
    Manelli, A.M., Vincent, D.R.: Optimal Procurement Mechanisms. Econometrica 63(3), 591–620 (1995)CrossRefzbMATHGoogle Scholar
  13. 13.
    Zhong, F.V.: Empirical Analyses of Online Procurement auctions: Business Value, Bidding Behavior, Learning and Incumbent Effect. Ph. D. Dissertation, College of Management. Georgia Institute of Technology (2007)Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2009

Authors and Affiliations

  • Gian Luigi Albano
    • 1
  • Federico Dini
    • 1
  • Roberto Zampino
    • 1
  1. 1.Consip S.p.A., Italian Public Procurement AgencyRomaItaly

Personalised recommendations