Further Econometric Evidence on the Extent and Sources of Cost Savings in Competitively Tendered Contracts

By estimating a flexible nonlinear regression model of savings on an original data set of service procurements conducted by the Spanish Armed Forces, this paper provides robust and precise novel econometric evidence on the extent and sources of cost savings in public procurement. The net effect on savings of the policy-amenable and economically advantageous variables that we estimate, such as the size of the procured function, the importance of price in the contract award criteria, and the number of bidders who participate in the tender, may help contracting agencies to select management practices and to forecast the price paid out. A comparison with estimates reported in previous studies is also made