The Impact of Tender Procedures and Contract Types on Contract Prices in Public Works Procurement

Abstract

This study investigates the impact of tender procedures and contract types on contract prices in public works procurement in Türkiye. Using data from 350,894 tenders between 2005 and 2023, sourced from statistical reports published by Public Procurement Authority of Türkiye, the analysis focuses on three main procedures - open, restricted, and negotiated - and their effect on contract prices and competition, measured by the contract price/estimated cost ratio. Inflation-adjusted values were calculated using consumer price indices from Turkish Statistical Institute. Non-parametric and parametric statistical tests, including Kruskal-Wallis, Welch, and Mann-Whitney U, were applied based on data distribution characteristics. Results show that tender procedure type significantly affects both contract prices and the contract price/estimeated cost ratio. Negotiated tenders tend to result in higher contract prices and lower competition. Open Tenders demonstrate the highest competition, reflected by lower contract price/estimeated cost ratios. Additionally, contract type significantly influences pricing. Unit price contracts are generally associated with higher prices than turnkey lump sum contracts due to their use in large-scale infrastructure projects. The findings highlight the need to reassess the frequent use of negotiated tender procedures, especially under Article 21(b), to uphold the core principles of transparency and competition in public procurement. This study contributes to the growing literature on procurement efficiency and offers practical recommendations for improving tender processes.

Keywords

• Tender procedures
• Contract types
• Contract prices

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