Establishing a sound framework of competition law does not exhaust the role competition policy can play in increasing welfare. Governments should consider competition, and its potential benefits, across the whole range of their policies. Policy design accounting for competition can promote efficient outcomes in a variety of ways.
Governments resort to auctions and tenders in a variety of settings, namely public procurement, privatisations and in the allocation to a private firm of the right to operate an infrastructure service and collect the resulting revenues. But, the mere use of competitive tendering does not ensure a successful outcome.
The OECD has held two hearings on the topic further to previous work on concessions and procurement. The first one, in December 2014, aimed to provide useful ideas and guidance to competition authorities on how governments can design auctions and tenders appropriately. The discussion benefited from the insights of Prof. Peter Cramton (University of Mariland), Prof. Marcos Ponti (Polytechnic University of Milan), Ms Tracey Weisler, US Federal Communications Commission), Ms Joanna Szychowska (DG Comp) and Ms. Daniela Eleodor (Romanian Competition Council).
In June 2015, the second hearing focused on “Abnormally Low Tenders” and the division of public procurement contracts into lots. Governments have become increasingly worried with the risk of cost overruns, underperformance and default following tenders being awarded to overly optimistic bids. This Hearing discussed these concerns and the different approaches to address them, as well as their impact on tender efficiency. The discussion also addressed the division of contracts into lots, a primary tool to achieve strategic goals such as the promotion of SMEs and competition in the market.
The discussion permitted to reach some guidance on best practices on these two important issues. Speakers included: Gian Luigi Albano (CONSIP, Italy), Graeme Clark (EBRD) and Robert Anderson (WTO).
Read a summary with key findings from both discussions.
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