Auction versus negotiation in public procurement

Determinants of adaptation costs in procurement: an empirical estimation on Italian public works contracts

“…A second relevant issue raised about the relationship between awarding procedures and adaptation costs is that, with incomplete contracts, the winning bidders in auctions may have an incentive to behave opportunistically, during the execution of the contract, and to push for revising the bid that allowed them to win the award of the work (Guasch, 2004). This may be part of a situation of adverse selection, whereas a bidder that is ready to act opportunistically, at the execution stage, will bid a very low price (what is usually referred to as underbidding), so as to secure the win of the bid and, then, to exploit the opportunity of a renegotiation (Bajari et al, 2009;Chong et al 2009, Guccio et al, 2009a 21 .…”

Understanding the procurement performance of local governments: A duration analysis of public works

“…Before proceeding with further details, however, one important issue needs to be pointed out. We know that works can be characterised by different degrees of complexity that result, for example, into different expected durations (Chong et al., 2014). Suppose there are two groups of works: in the first group, work execution is expected to last, say, one month, while in the second group it is expected to last one year.…”

“…A first important variable is the work value. The use of this variable is standard in empirical analyses on public procurement, where it is regarded, similarly to expected duration, as a proxy of work complexity (Chong et al., 2014).…”

The Role Of Reputation In Market Entry: Evidence From French Public Procurement

“…Flexibility in the use of a negotiated procedure would limit the use of calls for tenders to procurement of products, services or standardised work, as opposed to specific projects. As Chong et al (2014) demonstrate, the selection of contracting mode is dictated less by conditions of economic efficiency then by the fear of being accused of favouritism. The use of negotiated procedures that can consider suppliers' reputation is more effective than a call for tenders mainly in complex markets, in which proposals must include innovative conception or solutions (Estache et al, 2009).…”