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Cover of: On the Separation of Award and Contract in Public Procurement
Martin Kolmar, Dieter Bös

On the Separation of Award and Contract in Public Procurement

Section: Articles
Volume 59 (2003) / Issue 4, pp. 425-442 (18)
Published 09.07.2018
DOI 10.1628/0015221032500847
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  • 10.1628/0015221032500847
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Summary
In public procurement, a temporal separation of award and actual contracting can frequently be observed. In this paper, we give an explanation for this institutional setting. For imperfect procurement contracts such a separation may increase efficiency. Efficiency can be increased by postaward, pre-contract negotiations between the award-winning firm and one of the losing firms. Surprisingly, the efficiency gains can be higher if the award is given to a seller with a lower reputation for quality instead of to a seller with higher reputation.