On the Separation of Award and Contract in Public Procurement

Dieter Bös and Martin Kolmar ()

FinanzArchiv: Public Finance Analysis, 2002, vol. 59, issue 4, 425-442

Abstract: In public procurement, a temporal separation of award and actual contracting can frequently be observed. In this paper, we give an explanation for this institutional setting. For imperfect procurement contracts such a separation may increase efficiency. Efficiency can be increased by postaward, pre-contract negotiations between the award-winning firm and one of the losing firms. Surprisingly, the efficiency gains can be higher if the award is given to a seller with a lower reputation for quality instead of to a seller with higher reputation.

JEL-codes: H57 L51 (search for similar items in EconPapers)
Date: 2002
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