Impact of competition on prices in public sector procurement

Abstract

Efficient use of public resources should be supported by quality management of the tender procedure to achieve competitive tender prices. This paper examines the issue of competitive environment within public works contracts and explores the influence of the number of bidders on the tender results. A research sample of 256 public tenders was investigated in order to evaluate two research hypotheses. Data evaluation was supported by interval plot, scatter plot and correlation analysis. It has been found that the number of bidders in the tender depends on the type of the subject matter of the tender; however, this difference does not have a significant impact on the level of competition. Another research finding supports the assumption that the number of bidders influences the relative difference between expected price and award price. It was concluded that contracting authorities must not only require a sufficient range of qualifications, but should also take any steps required to motivate a sufficient number of applicants to participate in the tender procedure to achieve competitive prices.Efficient use of public resources should be supported by quality management of the tender procedure to achieve competitive tender prices. This paper examines the issue of competitive environment within public works contracts and explores the influence of the number of bidders on the tender results. A research sample of 256 public tenders was investigated in order to evaluate two research hypotheses. Data evaluation was supported by interval plot, scatter plot and correlation analysis. It has been found that the number of bidders in the tender depends on the type of the subject matter of the tender; however, this difference does not have a significant impact on the level of competition. Another research finding supports the assumption that the number of bidders influences the relative difference between expected price and award price. It was concluded that contracting authorities must not only require a sufficient range of qualifications, but should also take any steps required to motivate a sufficient number of applicants to participate in the tender procedure to achieve competitive prices.