1、 1 外文原文 1： Incentives and Award Procedures: Competitive Tendering vs. Negotiations in Procurement Steven Tadelis Patrick Bajari University of California Berkeley University of Michigan Haas School of Business Department of Economics January, 2006 Abstract Should the buyer of a customized good use co
2、mpetitive bidding or negotiation to select a contractor? To shed light on this question, we a framework that rst describes the buyers choice of contracts, and then links this choice to the selection of competitive tendering or negotiations. The analysis suggests a number of possible limitations to t
3、he use of competitive tendering. These may perform poorly when projects are complex, contractual design is incomplete and there are few available bidders. Furthermore, competitive tendering may stie communication between buyers and sellers, preventing the buyer from utilizing the contractors experti
4、se when designing the project. Implications of these results for procurement in the private and public sector are discussed. 1 Introduction Manufactured goods, such as computers, TVs and automobiles are mass produced, have standardized characteristics and are typically purchased at list price. Other
5、 goods, such as new buildings, fighter jets, custom software or consulting services are tailored tot a procurers specific and often unique needs. To procure these customized goods,the procurer hires a contractor who supplies the good according to a set of desired specifications. We call this the pro
6、curement problem. The procurement problem has attracted much attention both in policy and in academic circles. The main focus of academic economists has been on procurement by the public sector, in part because of its sheer importance to the economy.For 2 example,procurement by federal, state and lo
7、cal government accounts for more than 10 percent of Gross Domestic Product in the United States. Many private sector transactions are also governed by procurement contracts. Prominent examples include electronics components, custom software, automobile production, and building construction. When con
8、sidering the procurement of goods and services, the procurer is faced with many challenges. First, she has to choose what exactly should be procured, and how to transmit her needs to the potential suppliers. Second, a contract must be laid out that includes contractual obligations and methods of com
9、pensation. Third, the procurer needs to decide how to award the procurement contract between the potential suppliers.Finally, the award mechanism should result in the selection of a qualied and desirable supplier and in the implementation of a cost-eective nal product Following up on these last two
10、points, competitive tendering is widely recognized asan attractive procurement mechanism and is commonly advocated for several reasons.Most notably it is viewed as a procedure that stimulates and promotes competition.By its nature, open competitive tendering invites potential suppliers from many ven
11、ues.Furthermore, in the face of competition from many potential suppliers each one has strong incentives not to inate his price. Indeed, fair market price discovery is often touted as a benecial result of such tendering. Open competitive mechanisms are also known for their transparency, making it ea
12、sier to prevent corruption both in the public and private sectors where procurement managers may have incentives to rig the system Interestingly, there is widespread use of both competitive tendering and negotiations in the private sector. For example, from 1995 to 2000, forty-four percent of privat
13、e sector non-residential building construction projects in Northern California were procured using negotiations, while only eighteen percent were procured using open competitive tendering. The use of negotiations with single source suppliers is also common in high tech and software, and used for def
14、ence procurement as well. This Chapter ers a framework to compare competitive tendering with negotiations and relate these award mechanisms to the payment procedures chosen in the contract. In particular, it tries to shed light on when competitive tendering with xed price contracts will be preferred
15、 to negotiating cost plus contracts, and when not. To put this Chapter in perspective it is worth observing that most of the economic analysis describes the procurement problem as follows. The supplier has 3 information about production costs that the procurer does not have. The procurer then has to
16、 consider clever ways to infer the suppliers costs, such as ering the supplier many potential projects to choose from, and having the supplier select the one that will be produced. In contrast, scholars and practitioners of engineering and construction management argue that the central problem in pr
17、ocurement is not that suppliers know so much more than procurers at the onset of the project, but that instead both procurers and suppliers share uncertainty about many important design changes that occur after the contract is signed and production begins. These changes are usually a consequence of
18、design failures, unanticipated conditions, and changes in regulatory requirements. An illustrative example of the signicance of ex post adaptation is the building of the Getty Center Art Museum in Los An geles, which is a 24 acre, $1 billion dollar facility that took over 8 years to construct (see E
19、ngineering New-Record 1994, 1997). The project design had to be changed due to site conditions that were hard to anticipate. The geology of the project included canyons, slide planes and earthquake fault lines, which posed numerous challenges for the team of architects and contractors. For instance,
20、contractors “hit a slide” and unexpectedly moved 75,000 cubic yards of earth. More severely, in 1994 an earthquake struck. Cracks in the steel welds of the buildings frame caused the contractors to reassess the adequacy of the seismic design standards that were used. The project design had to be alt
21、ered also due to the regulatory environment 107 items had to be added to the buildings conditional use permit. These problems were very hard to predict, both for the procurer and the contractor. However, it seems reasonable that once problems arose, the contractor had superior information regarding
22、the costs and methods to implement changes. A more recent and much more contentious example is the “big dig” in Boston, where 12,000 changes to more than 150 design and construction contracts have led to $1.6 billion in cost overruns, much of which can be traced back to unsatisfactory design and sit
23、e conditions that diered from expectations. These observations suggest that the procurement problem may indeed be primarily one of smoothing out or circumventing adaptations after the project begins rather than information revelation by the supplier before the project is selected. In this Chapter we argue that the form of contracts and award mechanisms can be tailored in a way to help mitigate this procurement problem. In particular, a trade between
