Optimal comprehensive tendering models for project procurement

In this paper, we consider a multi-attribute tender for project procurement, where the contractor is selected on the basis of price and quality. We analyze the tendering behavior of potential contractors in multi-attribute tenders and show that social surplus is maximized through competitive bidding with consumer-surplus-based quasi-linear scoring rules. We consider the case in which the aim of the government is to achieve socially efficient levels of quality that maximize social surplus and simultaneously improve the expected utility for the government. In order to achieve this aim, the introduction of the optimal lower limit of the bidding score is important. In addition, we analyze a price-only tender and describe the optimal ceiling price in a price-only tender as a special case of a multi-attribute tender.