We study procurement procedures that simultaneously determine specification and price of the required good. Two suppliers can each produce the good in any one of two possible specifications, both of which are equally good for the buyer. Production costs are interdependent and unknown at the time of bidding. Each supplier receives two signals about production cost, one per specification. Our model is a special case of the interdependent-value settings with multi-dimentional types in Jehiel and Moldovanu (2001) in which an efficient and incentive compatible mechanism exists. In this setting, we characterize supplier bidding behavior if the winning supplier is selected purely on the basis of price, and irrespective of the specification offered. While there is a strictly positive chance of obtaining an inefficient specification, this procurement mechanism involves lower information rents than efficient mechanisms, suggesting that there is a trade-off between minimizing expected expenditure for the good, and ensuring that the efficient specification is chosen.
