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‘Contestability’ in Competitive Tendering and Contracting: A Critique

Published online by Cambridge University Press:  01 January 2023

Kuru Pancharatnam
Kuru Pancharatnam*
Affiliation:
Social Policy Research Centre, University of NSW
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Abstract

Academic and policy discourse about Competitive Tendering and Contracting (CTC) derives its intellectual legitimacy from the theory of contestable markets. Applying contestability to CTC implies that efficiency gains generated through the initial open tender are repeated at successive stages of tendering. This paper presents a theoretically and pragmatically grounded critique of the application of this theory to CTC by focusing on the Re-Opened Tender (ROT) stage. Working within the neo-classical economic paradigm, contestability will be shown to be constrained at ROT, resulting in the most inefficient and worst possible welfare outcome for the buyer.

Type
Symposium on Outsourcing
Information
The Economic and Labour Relations Review , Volume 10 , Issue 1 , June 1999 , pp. 56 - 72
Copyright
Copyright © The Author(s) 1999

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Footnotes

*

Research was originally undertaken in the School of Social Science and Policy, University of NSW. I thank Peter Kriesler for his comments and suggestions. I also benefited from the suggestions of Tony Eardley, George Matheson and an anonymous referee. The usual disclaimer applies.

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