Tendering design when price and quality is uncertain
2017 (English)In: International Journal of Public Sector Management, ISSN 0951-3558, E-ISSN 1758-6666, Vol. 30, no 4Article in journal (Refereed) Epub ahead of print
Abstract Purpose To analyze how local and central authorities choose between lowest price and more complex scoring rules when they design supplier selection mechanisms for public procurements. Five hypotheses are tested: (i) A high level of cost uncertainty and (ii) highly non-verifiable quality makes the use of the lowest-price supplier selection method less likely. (iii) Organizational habits and (iv) transaction-cost considerations influence the choice of mechanism. (v) Strong quality concerns make complex rules more likely. Design/methodology/approach The analysis departures from normative theory (rational choice) and is based on regression analysis and survey data comprising a gross sample of 40 contracting authorities and detailed information about 651 procurements. Findings More complex scoring rules are used more often when the authority is uncertain about costs and about delivered quality. Authority effects are also found to directly and indirectly influence the choice of supplier-selection method, suggesting that tendering design is partly driven by local habits and institutional inertia. Originality/value Although the principles for supplier selection are regulated by law they give the contracting authority substantial freedom in designing the scoring rule and in choosing what quality criteria to use. The tension between different objectives and the more general question whether the choices made by authorities reflect rational decision making or institutional inertia together motivate the current study. While the design of the supplier selection.
Place, publisher, year, edition, pages
2017. Vol. 30, no 4
auctions, organizational-process model, public purchases, scoring rules, supplier selection, bid evaluation.
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-133398DOI: 10.1108/IJPSM-04-2016-0063OAI: oai:DiVA.org:umu-133398DiVA: diva2:1087582
FunderSwedish Competition AuthoritySwedish Research Council