Public Procurement of Homogeneous Goods — Public Spend Matters Europe Post

We launched our new website, Public Spend Matters Europe (PSME) last month, and we hope some of our regular readers visit that site and find the material there enjoyable and interesting. Some of the articles we publish on that site would we think be of particular interest to Spend Matters UK/Europe readers, so we are going to start featuring short tasters here with a link to PSME if you want to read the whole piece.

That doesn't mean a reduction in the number of articles here; still three free-to-read posts a day, plus any from our subscription services PRO and Plus, as well as the PSME tasters – and here is one, which although pertaining to the Czech Republic, contains general elements we thought would be of interest to you

Public Procurement of Homogeneous Goods: the Czech Republic Case Study

This paper, presented at the IPPC Conference in Dublin this summer, looks at a range of 250 competitions held in the Czech Republic between 2008 and 2011 in the utilities (gas and electricity) markets, a spend category chosen because the product is relatively homogenous across different procurement exercises, and is heavily commodity in nature. There were 206 tenders for electricity, and 53 for gas. 194 competitions used open procedure and 65 tenders were processed by negotiated procedures (with or without an announcement). Additionally, in 100 cases, e-auctions were used.

The authors wanted to see if the number of firms competing for a particular contract had an impact on the final prices agreed and paid by the contracting authorities. To do this, they carried out a statistical analysis of the data to isolate number of bidders as a factor. The findings confirmed what we might have thought and expected as procurement professionals. The more bidders involved, which increases the competition, the lower the price.

The paper is well-written, interesting and worthwhile to see what procurement people believe subjectively confirmed more scientifically. If you'd like to read about more findings it is here on Public Spend Matters Europe. 

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