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On the Design of Public Infrastructure procurements

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  • Arno Van Der Vlist
  • Sander Hardeman

Abstract

Public procurement of infrastructure has been subject to a long standing debate concerning the procurements' qualification requirements. Basically, it remains unclear what determines public procurement officers to vary procurements' qualification requirements. This research serves to elaborate on public procurements' procedure design. The aim of this paper is to improve our understanding of why contracting authorities choose specific requirements prior to public procurement. What determines variation in public procurements' qualification requirements? For this the procurements' procedure design is modelled as a rational choice among a set of alternatives within a random utility framework. Qualification requirements are chosen as to maximize utility of the procurements' officer. In the empirical part of the paper the procurements' procedure design is modelled as a limited dependent variable model. The data comes from the EIB Monitor Procurements covering public procurements in the Netherlands, and relates to public open procurements of civil work posted by municipalities in the first half of 2009. The model results indicate that requirements do relate to degree of professionalism of the procurement office and to the type of work. These results indicate a rational choice among qualification requirements yet explain about 15 percent of total variation, suggesting other factors at work. Keywords: Construction industry, infrastructure, Bidding, Public Procurement Auctions, municipalities

Suggested Citation

  • Arno Van Der Vlist & Sander Hardeman, 2011. "On the Design of Public Infrastructure procurements," ERSA conference papers ersa10p1060, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa10p1060
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    1. Estache, Antonio & Iimi, Atsushi, 2008. "Procurement efficiency for infrastructure development and financial needs reassessed," Policy Research Working Paper Series 4662, The World Bank.
    2. Dakshina G. De Silva & Timothy Dunne & Georgia Kosmopoulou, 2003. "An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 295-316, September.
    3. Patrick Bajari & Lixin Ye, 2003. "Deciding Between Competition and Collusion," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 971-989, November.
    4. Estache, Antonio & Iimi, Atsushi, 2009. "Auctions with endogenous participation and quality thresholds : evidence from ODA infrastructure procurement," Policy Research Working Paper Series 4853, The World Bank.
    5. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    6. De Silva, Dakshina G. & Dunne, Timothy & Kankanamge, Anuruddha & Kosmopoulou, Georgia, 2008. "The impact of public information on bidding in highway procurement auctions," European Economic Review, Elsevier, vol. 52(1), pages 150-181, January.
    7. Gaver, Kenneth M & Zimmerman, Jerold L, 1977. "An Analysis of Competitive Bidding on BART Contracts," The Journal of Business, University of Chicago Press, vol. 50(3), pages 279-295, July.
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