Effects of full transparency in supplier selection on subjectivity and bid quality

Telgen, Jan and Schotanus, Fredo (2010) Effects of full transparency in supplier selection on subjectivity and bid quality. In: 4th International Public Procurement Conference, August 26-28, 2010, Seoul, South Korea.

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Abstract:	In this paper, we highlight a number of problems arising with a commonly used supplier selection method: the weighted factor score method. We discuss the behaviour of this method with respect to weighting, scaling issues, and relative scoring. Assuming that there is no convex dominance, we formally prove that with the same supplier selection method, we can make any supplier win by judiciously choosing the right parameters of the awarding mechanism. This means that any supplier can win if certain parameters are not published in a request for a proposal. This result applies to both absolute and relative scoring methods. Also, we prove that the buyer should fully disclose all details of the awarding mechanism to suppliers in order to receive better bids. The practical implications of our results are far reaching for procurement, both public and otherwise: full transparency and disclosure of all details regarding weights and awarding schemes is not only required to avoid subjectivity in supplier selection, but it also leads to better bids from suppliers.
Item Type:	Conference or Workshop Item
Faculty:	Management and Governance (SMG)
Research Chair:	Operations Management and Logistics (OMPL)
Research Group:	Industrial Engineering & Business Information Systems (IEBIS)
Link to this item:	http://purl.utwente.nl/publications/74072
Conference URL:	http://www.ippa.org/4thConferenceNews.html
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