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Procurement Auctions - Analysis of Competition and Information Disclosed: Preliminary Results

Procurement Auctions - Analysis of Competition and Information Disclosed: Preliminary Results. Larnaca, July 4 th 2005. Matteo Zanza – Consip Research Unit. Index. Questionnaires received General overview of data collected: Fixed-line telephone services Paper for printers Awarding prices

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Procurement Auctions - Analysis of Competition and Information Disclosed: Preliminary Results

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  1. Procurement Auctions - Analysis of Competition and Information Disclosed: Preliminary Results Larnaca, July 4th2005 Matteo Zanza – Consip Research Unit

  2. Index • Questionnaires received • General overview of data collected: • Fixed-line telephone services • Paper for printers • Awarding prices • The objective of the analysis • The correlation index • Results • Information disclosed

  3. Questionnaires received Fixed Line Telephone Services: 7 (ABA, BBG, BESCHA, CONSIP, Irish NPPU,SKI, STATSKONTORET); Paper for Printers: 11(ABA, BBG, BESCHA, CONSIP, HANSEL, Irish NPPU, French MINEFI, PPD of Cyprus, SKI, STATSKONTORET, UMIC); Information Disclosed: 9 (ABA, BBG, BESCHA, CONSIP, Irish NPPU, French MINEFI, PPD of Cyprus, SKI, UMIC).

  4. Fixed-Line Telephone Services – A General Overview • Contract features • Economic value of contracts: it varies from 200.000 € to more than 1 billionof € (Average value excluding the two biggest contracts lies between 1 and 2 millions of €); • Contract time length: average 29 months; • Number of participants: 3.7 (Concentrated markets!). • Auction design • Awarding Procedure: 5 Institutions used an Open Procedure (2 Restricted); • Auction Format: 6 Institutions used the Standard Paper Based Auction (Only 1 performed it online); Particular cases: • BESCHA performed a multi-round auction (2 rounds). • Consip performed a combinatorial auction (Fixed and Mobile Line Services); • Number of lots: 6 institutions auctioned the Fixed-Line services within 1 lot. 1 Institution split the contract into 2 lots.

  5. Paper for Printers – A General Overview • Contract features • Economic value of contracts: from 300.000 € to 12 million of € (Average value excluding the biggest contract lies between 2 and 3 million of €); • Contract time length: average 23 months (It varies from 3 to 36 months); • Number of participants: 5 (It varies from 3 to 10 participants). • Auction Design • Awarding Procedure: 10 Institutions used an Open Procedure (2 Restricted); • Auction Format: all Institutions applied the Sealed Bid Standard Paper Based Auction, only one institution performed an online auction; • Number of lots: Institutions acted differently: • 5 auctioned only 1 lot; • 3 auctioned 2 lots (qualitative and geographical lots); • 1 auctioned 3 lots (qualitative and geographical lots); • 1 auctioned 5 lots (qualitative and geographical lots); • 1 auctioned 12 lots (geographical lots).

  6. Awarding Prices – A Quick View • Fixed-Line Services – Average Awarding Prices • Local price for 3 mins. call (connection fees included): 0.0501 €; Minimum price: 0.0177 €; Maximum price: 0.1 €. • National/Long distance price for 3 mins. call (connection fees included): 0.0659 €; Minimum price: 0,0177 €; Maximum price: 0.15 €. • Mobile price for 3 mins. call (connection fees included): 0.2943 €; Minimum price: 0,0316 €; Maximum price: 0.45 €. • Paper for printers – Average Awarding Prices • A4 rear: 2.15 €; Minimum price: 1.68 €; Maximum price: 3.21 €.

  7. Analysis Objective 1/2 • We just presented some data on our procurement auctions. • But what we can do with them?? • The objective of this study is to analyse the level of competition reached and to point out which parameters can affect the suppliers behaviour. • Our analysis focuses on the following 4 variables: • Awarding prices (Dependent variable); • Number of participant firms; • Economical value of the contract; • Time length of the contract. • Other variables will be considered (Number and type of lots, Quality required, Frequency of auctions, etc.) but up to now we have only few “comparable” data to manage.

  8. Analysis Objective2/2 • We made some analysis using the four parameters listed before, but observing the results obtained we have to keep in mind that: • We need more Questionnaires to make a reliable comparative analysis; • All the parameters took into account have “crossed influence” on the awarding prices; • To influence the results some parameters have to vary consistently (number of participants); • Some variables need to be normalised to be considered (contracts).

  9. Linear Correlation Index The linear correlation coefficient (or Pearson’s r) reflects the degree to which two variables are related. • The value of r lies between −1 and 1, inclusive. • It takes on a value of 1, termed “complete positive correlation,” when the data points lie on a perfect straight line with positive slope, with x and y increasing together. • If the data points lie on a perfect straight line with negative slope, y decreasing as x increases, then r has the value −1; this is called “complete negative correlation”. • A value of r near zero indicates that the variables x and y are uncorrelated.

  10. Fixed Line Services - Some Results Correlation between Prices and the Number of participants r (Plocal, Nparticipants)=-0,396 r (Pnational, Nparticipants)=-0,572 r (Pmobile, Nparticipants)=0,843 Correlation between Prices and Time length of the contract r(Plocal, Length)=-0,422 r (Pnational, Length)=-0,491 r (Pmobile, Length)=0,456 Correlation between Prices and the Economic value of the contract r(Plocal, Economic Value)=-0,256 r(Pnational, Economic Value)=-0,087 r (Pmobile, Economic Value)=-0,866

  11. Fixed Line Services - Some Results r (Plocal, Nparticipants)=-0.396

  12. Fixed Line Services - Some Results r (Plocal, Nparticipants)=0,23

  13. Paper for Printers - Some Results r(Price, Nparticipants)=0,02 r(Price, EconomicValue)=0,26 r(Price, ContractLength)=0,90 r(price, IncomeperCapita)=0,59

  14. Information disclosed 1/2 • Questionnaire on information is divided in two main parts: • Information disclosed before the auction; • Information disclosed after the auction. • 1. Information disclosed before the auction • Most of the questions related to this point have been directly taken from the Annex VII A of the new EU Directive because the Article 36 of the New EU Directive “Form and manner of publication of notices” states that: “Notices shall include the information mentioned in Annex VII A…”. • The objective is to make benchmark analysis. • From the responses collected up to now, we can say that almost all institutions already publish information required by Annex VII. • Only the value of the contract to be awarded is published by the 44% of the Institutions included within our survey. • All institutions dispatch information included in public contract notice in the Official Journal of the European Communities and that the majority of them publish all these useful information directly in their web-site. • No one dispatches, in the notice, the number of expected bidders neither their names.

  15. Information disclosed 2/2 • 2. Information disclosed after the auction • Almost all Institutions publish the name and the price paid by the winner. • There is only one Institution that publish the names and scores obtained by all participants. • Also in this case information are dispatched on theOfficial Journal of the European Communities by the large majority of the Institutions. • Finally, several countries publish also the auction results on a National Official Journal or within their web site.

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