Bidding for complex projects: Evidence from Italian government's acquisitions of IT services

Abstract

Public buyers are often mandated by law to adopt competitive procedures to ensure transparency and promote full competition. Recent economic literature, however, suggests that open competition can perform poorly in allocating complex projects. In exploring the determinants of bidding behavior in tenders for complex IT services, we find results that appear consistent with theory. Our analysis shows that price and quality are linked in a puzzling way: high quality is associated with low prices. We also find that quality proposals are mainly explained by suppliers' experience. Results suggest that scoring rules at the basis of the tendering process might fail to appropriately incorporate buyers' complex price/quality preferences. © 2009 Springer Berlin Heidelberg.