[Tribune] The quality criterion in the awarding of contracts


Tribune by Prof. Othmane Benmoussa from Euromed Polytechnic School published on Medias24


The common procurement practice of awarding contracts to the lowest bidders is not optimal in situations where quality is important but difficult to verify in a contract.

This article shows that the best way to find a suitable supplier when quality problems are encountered is to set a floor price below which offers will not be considered. This prevents higher quality suppliers from being subject to overbidding bias and, therefore, decreases the likelihood that the contract will be awarded to a questionable or underqualified structure. Furthermore, this floor price technique, inspired by lowballing, is not only useful for public procurement, but is also useful in the case of private organizations.

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