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Bidding for Complex Projects: Evidence From the Acquisitions of IT Services SummaryCompetitive 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.
Public-Private Partnerships (PPPs) have been widely advocated as flexible contractual solutions enabling the public sector to profit from private firms’ innovative solutions for providing additional (possibly by increasing the infrastructural stock) and more valuable public services. Recently, however, practitioners and academics alike have cast doubts on a possible opportunistic use of PPPs: instead of an efficient option to fill infrastructural gaps across different social and economic areas, PPPs may be employed as a privileged way to face periods of fiscal consolidation or those on a tight budget. In order to shed some light on this suspicion, we construct an original dataset containing PPPs’ tender notice information, budget results of the Italian Municipalities aggregated at provincial level, per capita wealth, indexes of infrastructural stocks and morpho-demographic information on local areas. Our findings highlights i) a feeble linkage between the decision to deploy a PPP and the existence of an infrastructural gap, and ii) a strong relationship between the number of deployed PPP procedures and the local budgetary results.
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