Procurement contracting strategies

Albano, Gian Luigi; Calzolari, Giacomo; Dini, Federico; Iossa, Elisabetta; Spagnolo, Giancarlo

doi:10.1017/cbo9780511492556.005

Cited by 26 publications

(32 citation statements)

References 17 publications

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“…Thus, barring reputation e¤ects from nonperformance, bidders compete for acquiring a project that includes an option-like component. Speci…cally, since the actual costs are determined by (2), the ability to optimize plans, by choosing the delivery date, is analogous to acquiring a Put Option.…”

Section: Unenforceable Contract Timementioning

confidence: 99%

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Procurement with Unenforceable Contract Time and the Law of Liquidated Damages

Dosi

Moretto

2013

Journal of Law, Economics, and Organization

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Time overruns are common in public works and are not con…ned to inherently complex tasks. One explanation advanced in this paper is that bidders can undergo unpredictable changes in production costs which generate an option value of waiting. By exploiting the real-option approach, we examine how the inability to force sellers to meet the contract time in ‡uences their bidding behaviour, and how this can ultimately a¤ect the parties' expected payo¤s. Further, we examine the outcome of the bidding process when legal rules prevent the promisee from contracting for damage measures which would grant more than her lost expectation. We show that when the pre-agreed compensatory payments prove insu¢ cient to discourage delayed orders, setting a liquidated damages clause would not lead to a Pareto superior outcome with respect to the no-damage-for delay condition. While such a clause would increase the seller's expected payo¤, the buyer's expected payo¤ is lower than when the contract does not provide for any compensation for late-delivery.

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Section: Unenforceable Contract Timementioning

confidence: 99%

“…Moreover, in some countries, public procurement regulations cap the level of the enforceable amount of compensation for late completion. In Italy, for example, the value of penalties cannot exceed 10 per cent of the contract value (Albano et al, 2006).…”

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confidence: 99%

Procurement with Unenforceable Contract Time and the Law of Liquidated Damages

Dosi

Moretto

2013

Journal of Law, Economics, and Organization

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“…For a technical analysis of optimal procurement contracting see, for instance, Laffont and Tirole (1993) and Bolton and Dewatripont (2004). Albano et al (2006b) provide a general, non-technical discussion on procurement contracting strategies. own and competing firms were to submit distinct offers for each procurement process.…”

Section: Streamline Processes Specialization Knowledge and Informatmentioning

confidence: 99%

Flexible Strategies for Centralized Public Procurement

Albano

Sparro²

2010

Review of Economics and Institutions

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When designing a national public procurement system, the degree of centralization (or, equivalently, the degree of demand aggregation) is one of the most crucial as well as puzzling policy choices. Centralized procurement has been traditionally considered as an instrument to reduce public spending. In more recent years, though, and particularly after the 2008 global financial turmoil, a growing interest has arisen among both policy makers and researchers in government procurement as a lever to pursue broader policy goals, such as competitive markets structure, sustainable development and innovation. This paper reviews and discusses several issues related both to the rationales and to the practical implementation of centralized procurement strategies, with a particular focus on the procurement of goods and services.

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“…First, the possibility to renegotiate will weaken a contractor's efficiency incentive (Bajari and Tadelis 2001;Albano et al 2006). Second, renegotiation will lose the main comparative advantages of competitive bidding: fairness, transparency, and invulnerability to corruption.…”

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confidence: 99%