Scholarly record
RELATIONSHIP BETWEEN IMPORTANCE OF PRICE AND NUMBER OF BIDS FOR PUBLIC CONTRACTS. EVIDENCE FROM THE CZECH REPUBLIC
Abstract
Contracting entities choose criteria to evaluate bids for public contracts. The Act on Public Contracts offers two basic ways to evaluate bids for public contracts: the lowest tender price and the economic advantageousness of the tender. The economic advantageousness of the tender consists of the price and other criteria chosen by contracting entities. The importance of the price in case of economic advantageousness is lower than in the case of the lowest tender price. The basic evaluation criteria affect number of bids received and final price of the contract. The paper analyzes the relationship between the assigned importance of the price and number of bids. Contracting entities prefer more bids because it raises the probability of choosing quality suppliers and creates competition among bidders. The question is raised to prove, whether higher importance of the price criterion leads to more bids or vice versa. A large dataset was retrieved to answer the question. Data were collected from the Information System on Public Contracts and consist of the Contract Announcements forms. A standard set of statistical tools is employed including correlation and regression analysis. The research shows differences in average number of bids related to the subject-matter of the contract. Data from the Czech Republic from time period 2011-2013 do not prove significant differences between average numbers of bids according to the basic evaluation criteria. The impact of the paper is the discussion of the relationship between importance of price and number of bids and its possible consequences based on large quantitative research.
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