Does the Lowest Bid Price Evaluation Criterion Make for a More Efficient Public Procurement Selection Criterion? (Case of the Czech Republic)

Ochrana František and Hrnčířová Kristýna
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Ochrana František: Center for Social and Economic Studies, Faculty of Social Sciences, Charles University in Prague.
Hrnčířová Kristýna: Center for Social and Economic Studies, Faculty of Social Sciences, Charles University in Prague.

NISPAcee Journal of Public Administration and Policy, 2015, vol. 8, issue 1, 41-59

Abstract: Through the institute of public procurement a considerable volume of financial resources is allocated. It is therefore in the interest of contracting entities to seek ways of how to achieve an efficient allocation of resources. Some public contract-awarding entities, along with some public-administration authorities in the Czech Republic, believe that the use of a single evaluation criterion (the lowest bid price) results in a more efficient tender for a public contract. It was found that contracting entities in the Czech Republic strongly prefer to use the lowest bid price criterion. Within the examined sample, 86.5 % of public procurements were evaluated this way. The analysis of the examined sample of public contracts proved that the choice of an evaluation criterion, even the preference of the lowest bid price criterion, does not have any obvious impact on the final cost of a public contract. The study concludes that it is inappropriate to prefer the criterion of the lowest bid price within the evaluation of public contracts that are characterised by their complexity (including public contracts for construction works and public service contracts). The findings of the Supreme Audit Office related to the inspection of public contracts indicate that when using the lowest bid price as an evaluation criterion, a public contract may indeed be tendered with the lowest bid price, but not necessarily the best offer in terms of supplied quality. It is therefore not appropriate to use the lowest bid price evaluation criterion to such an extent for the purpose of evaluating work and services. Any improvement to this situation requires a corresponding amendment to the Law on Public Contracts and mainly a radical change in the attitude of the Office for the Protection of Competition towards proposed changes, as indicated within the conclusions and recommendations proposed by this study.

Keywords: Public procurement; criteria for evaluation of public contracts; estimated price of a public contract; final price of a public contract; impact of the lowest bid price criterion on the final price of a public contract; the lowest bid price; principle of economy (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:njopap:v:8:y:2015:i:1:p:41-59:n:3

DOI: 10.1515/nispa-2015-0003

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