An economic approach to public procurement

Award systems play the central role in public procurement, since they determine what is considered by the contracting authority as ‘the most economically advantageous tender.’ Many award systems that are used in practice have serious shortcomings, which are caused by the use of relative scores. In this article, the consequences of those shortcomings are demonstrated, using examples from real procurement procedures and case law. The examples are analyzed with methods from econometrics, social choice theory and game theory.