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Alternative Award Methods to Lowest Price in Public Procurement and Their Susceptibility to Corruption

Weise, Stella A. (2014) Alternative Award Methods to Lowest Price in Public Procurement and Their Susceptibility to Corruption.

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Abstract:This paper evaluates and compares the two award methods Weighted Factor Score (WFS) and Awarding on Value (AoV) regarding their susceptibility to corruption. When financial aid is issued to a developing country, the donor defines the award method to be used by the purchasing function of the receiving country. Due to its objectivity, lowest price is currently the most popular method, but often results in bids offering inappropriate performance. Award methods, such as the WFS method and AoV, which consider both the price and the performance, are demanded. However, once price is not the only criterion for supplier assessment, susceptibility to corruption of the award method is enhanced. This paper identifies all relevant stakeholders and investigates ways for them to take advantage of steps in AoV and the WFS method. An evaluation on basis of examples finds that AoV is less susceptible to corruption. Therefore, donors of financial aid are recommended to specify the use of AoV in their purchasing guidelines. Moreover, this paper raises awareness on the issue of corruption in public procurement and popularizes the relatively new method AoV in international purchasing literature.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/65258
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