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Small business participation procurement policy: Subcontracting vs Allotment

Published online by Cambridge University Press:  09 January 2015

François Maréchal  and
Pierre-Henri Morand
François Maréchal
Affiliation:
CRESE, University of Franche-Comté, francois.marechal@univ-fcomte.fr
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Summary

Allotment and subcontracting are the two procedures enabling small businesses to participate in procurement. We compare these two procedures in the context of a procurement contract awarded by a first-price sealed-bid auction. We assume that the public buyer wishes to fulfil two different goals: to minimize expected costs of the contract for the public buyer and to maximize small businesses' profit. We show that, under specific cost-technology conditions we determine, the allotment procedure not only enables extensive participation by small businesses but also can achieve the goal of minimizing expected total costs for the public buyer.

L'acces des PME à la commande publique peut s'effectuer par voie de soustraitance ou par un allotissement des marchés. Cet article propose une comparaison de ces deux procédures dans le cadre d'un marché public attribué par un appel d'offres au premier prix sous plis cachetés. Nous analysons deux objectifs à première vue contradictoires qu'un acheteur public peut poursuivre: la minimisation du coût total espéré du marché et la maximisation des profits des PME. Nous déterminons les conditions sur les fonctions de coûts des firmes selon lesquelles la procédure d'allotissement des marchés permet de satisfaire simultanément les deux objectifs de l'acheteur public.

Keywords

small businessauctionprocurementD44L51PMEenchèresmarchés publicsD44L51
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 78 , Issue 2 , June 2012 , pp. 5 - 23
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2012 

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