ABSTRACT
A key tenant of the economics view about the procurement of contracts regards the key role played by the job complexity (Bajari and Tadelis, 2001). For contracts involving easily specified jobs, such as the delivery of a specific type of standardized product or the execution of a routine work (say, paving a road), it is best for the auctioneer to write a detailed contract and to auction it off as a fixed price contract through competitive procedures, such as first price auctions. In this case, renegotiations should be limited to exceptional circumstances. For contracts involving highly complex jobs instead, specifying a very complete contract would likely be very costly and could potentially still fail to anticipate all possible contingencies. In this case, it is thus best to leave some margins for ex post adaptations by awarding the contract as a cost-plus contract although with more flexible procedures, such as negotiations or scoring rule (i.e. multiple criteria) auctions. In this case, renegotiations (broadly defined as any change relative to the original contract) are a natural part of the procurement process and they should only be regulated to limit abuses (for instance, due to corruption risks).
