Improving Bid Efficiency for Humanitarian Food Aid Procurement
Economics, Finance, & Quantitative Analysis
The competitive bid process used by the US Department of Agriculture (USDA) to procure food supplies and transportation services for humanitarian food aid is subject to bidder gaming that can increase prices and deter competition. Additionally, suppliers and carriers are matched after bid submission, preventing synergies from coordinated planning. Given these concerns, we determine the optimal auction mechanism to minimize gaming then justify pre-bid planning between suppliers and carriers using properties of the cost distribution functions. We operationalize these changes with a uniform price auction. The improved mechanism should deter gaming, enhance bid participation, and increase delivered food aid volumes.
Bagchi, Aniruddha, Jomon Aliyas Paul, and Michael Maloni. "Improving Bid Efficiency for Humanitarian Food Aid Procurement." International Journal of Production Economics 134.1 (2011): 238-45. Print.