Cost-Benefit Analysis of Bid Protests: A Representative Bidder Model
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Authors
Melese, Francois
Subjects
Advisors
Date of Issue
2018-04-30
Date
04/30/18
Publisher
Monterey, California. Naval Postgraduate School
Language
Abstract
Most countries allow disappointed bidders1 to protest public procurements. The dual goal is to reduce favoritism, reduce fraud and errors, and increase competition. The legal literature that underpins protest systems for the U.S. Federal Government and European Union generally reflects these two goals. The hypothesis is that allowing disappointed bidders to protest public procurements serves as a decentralized oversight mechanism that increases transparency and accountability, which encourages vendor participation. This study offers a cautionary tale for any government agency, country, or international institution that relies on, and/or promotes, bid protests to improve public procurement outcomes. The goal is to explore costs and benefits of bid protests for governments and taxpayers. As a first step, a probabilistic, micro-economic, partial equilibrium, representative bidder model is developed to help evaluate protest systems. The model reveals multiple unintended consequences of protest systems and suggests alternative approaches to improve public procurement outcomes.2
Type
Report
Description
Series/Report No
Department
Organization
Naval Postgraduate School (U.S.)
Identifiers
NPS Report Number
SYM-AM-18-072
Sponsors
Naval Postgraduate School Acquisition Research Program
Funder
Format
Citation
Distribution Statement
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.