Showing papers on "Procurement published in 1986"

Using Cost Observation to Regulate Firms

Abstract: The paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier (1) has superior information about the cost of the project and (2) invests in cost reduction. The main result states that, under risk neutrality, the supplier announces an expected cost and is given an incentive contract linear in cost overruns. This (optimal) contract moves toward a fixed-price contract as the announced cost decreases. An investment choice is then introduced and the use of a rate-of-return regulation is studied.

Procurement and renegotiation

Abstract: Parties bound by an incomplete contract have an incentive to renegotiate after acquiring new information. The issue of the parties' investment in the relationship before renegotiation is analyzed in a simple two-period procurement model. The firm invests in the first period. It then learns its production cost, and the sponsor learns its value for the project. Williamson's underinvestment presumption is shown to hold under very general assumptions about bargaining and about the ex post asymmetry of information as long as the firm's investment is not observable by the sponsor. The introduction of a cancellation fee may well lead to even less investment contrary to what is sometimes argued. The role of ex ante price fixing as an alternative way to reintroduce some form of commitment and the problem of cost overruns are discussed. Last, it is shown that if investment is observable by the sponsor andthus may become a joint decision variable, the two parties may choose to under- or overinvest.

Contingent Claims Contracting for Purchasing Decisions in Inventory Management

Abstract: Option pricing is a common and important practice in the financial community, and has become a fundamental theoretical construct in financial economics. The theory is quite rich and has potential uses in many other problem domains. This paper develops a variant of the theory as applied to inventory planning. In particular, we consider a risk management approach that uses negotiated option contracts for hedging against price and quantity uncertainty in inventory procurement. We derive conditions for the inclusion of options in inventory control as a function both of managerial attitudes toward risk and of the correlation between price and demand.

Bidding for contracts

Abstract: In a competitive procurement, a buyer seeks to institute a bidding and contracting procedure which selects the most efficient firm to undertake the contract while offering terms that promote risk sharing between buyer and contractor. This paper develops a model to analyze formally the trade-off between the objectives of risk sharing and efficient contractor selection.

Disaster Analysis: Emergency Management Offices and Arrangements.

Abstract: Part I describes and analyzes the research of the Disaster Research Center (DRC) on the responses of local emergency management systems in six community disasters. Effectiveness of response was assessed in terms of communication which resulted in correct information collection, a fully functioning EOC, appropriate procurement and distribution of human and material resources, proper task delegation and coordination, a legitimated authority structure, integrated and coordinated relationship with outside private, state and federal organizations, cooperative relationships with mass media groups, and response activities based upon real, not mythical needs. We examined how extensiveness of response was influenced by prior disaster experiences, prior planning, and federal aid. We then derived an eight-fold categorization of emergency management systems: traditional offices, by passed agencies, emergent agencies,established agencies, embedded agencies, by-passed community agencies, emergent community agencies, and established community agencies. After a comparative examination of the likelihood of the existence of different types. we point out the policy implications of the findins for response, planning and structure of local emergency management systems. Part II describes the processes and problems in the computerization of the DRC library and data base and projects DRC’s future work.

The Design of Procurement Contracts

Abstract: This paper investigates the interaction between bidding for procurementprograms and fractional buys. This problem is analyzed from the standpoint of a cost-minimizing procuring agent. It is shown that underimperfect competition, a multiple-source purchase is generally preferred to a single-source contract. Similarly, the author demonstrates that a (strictly) intermediate cost sharing arrangement,i.e., an incentive contract, dominates either the cost-plus or the firm-fixed price arrangements. Copyright 1986 by American Economic Association.

An Analysis of Risk and Return in the Defense Market: Its Impact on Weapon System Competition

Abstract: With growing austerity pressures from the Administration, Congress, and the general public, the Government's procurement policy has called for increased use of dual-source competition as a means of reducing acquisition costs. In practice, however, this policy has produced mixed results. The cause seems to be an inadequate understanding of the peculiarities of competition in the Government's market. This paper examines the risk and return available in the defense market, and relates it to the industry's propensity to compete. The results show that intelligent observation of the industry's capacity utilization rate would contribute to the development of a more efficient acquisition policy.

Peasant Grain Marketing and State Procurement: China's Grain Contracting System*

Abstract: Economists have argued that the compulsory procurement policy has been an important cause of China's past agricultural problems. Political scientists have seen administrative evasion, under-reporting, and other forms of “corruption” in villages during the Mao era as the result of state pressures for larger grain sales. The Chinese themselves now openly criticize the system of unified purchase (tonggou) for being coercive and inefficient; for forcing quota sales by administrative fiat, rather than utilizing market demand and incentives. In April 1985 the government abolished the system of unified purchase, the keystone of China's grain control policy since the early 1950s; in its place is a system of contract procurement (hetong dinggou).

Managing the Freedom of Information Act and Federal Information Policy

Abstract: The Department of Defense processed 83,173 FOIA requests in 1985; Health and Human Services had 105,687 requests, with 45,953 to the Food and Drug Administration; Treasury had 23,217 and the Department of Energy, 5,723. An estimated 91 percent of all requests were completely filled. Requests are wideranging. A research assistant at a California college and a newspaper reporter in Oregon asked the Department of Energy for detailed information on the Nuclear Emergency Search Team (NEST). A Maryland-based consulting firm asked the Navy for copies of procurement contracts. A Japanese firm in Kyobashi wanted a copy of an application for a drug dealing with antiarrythmia. An inmate in a mid-western prison asked the Army for instructions on making a bomb and advice on where to place it to blow up Denver. A hospital in Massachusetts requested a Quality Assurance Profile conducted by the FDA.' The management of FOIA and the way we think about information have both changed during the past 20 years. Government information in the 1980s has become a tangible commodity with a dollar value. "Information Management" is being defined as a multi-faceted process involving the collection, processing, storage, transmission, and use of information. Each facet is governed by different regulations. Businesses have become major requesters; submitters of information are seeking new protections for their data; the costs of providing information have been significantly higher than Congress anticipated. The Executive branch and a number of legislators are advocating that requesters pay for the records they receive as well as their value. For example, the proposed Senate bill to amend the FOIA (S.150) would permit agencies to charge a "fair value fee" or royalties for government records containing "commercially valuable technological information." But there is little guidance on how to price the future value of information. Some argue that too much government information is being released harming government decision making and intelligence gathering as well as private sector competition. Others claim that access to government information is being sharply curtailed, damaging scientific exchange, research, and democratic processes. The focus of this discussion is the management of FOIA, but this is inextricably entwined in the larger question of information policy. The historical context out of which FOIA evolved is sketched first. Next, the way in which FOIA has been implemented and managed, is examined, with attention to how selected agencies have balanced the conflicting demands of Congress and the executive branch against their own goals

Estimating and Tendering for Civil Engineering Works

Abstract: Contents: Civil engineering works and estimating The estimating and tendering process within a contractor's organisation The calculations in the estimating process Planning and estimating Examples of the calculations within the direct cost estimate The calculations and decisions in tendering Computer aided estimating Estimating and bills of quantities Installing a computer aided estimating system.

The Effects of Trade on Resource Procurement Behavior:: A Late Prehistoric Example from the Southern Plains

Abstract: Although there are a number of recent studies documenting the trade of resources from one area to another, few of these have addressed the changes which occur in local behavior as a response to the...

Decision-making structures in US and Japanese manufacturing affiliates in the UK : some similarities and contrasts

Abstract: Working paper, comparison of decision making process in foreign enterprise subsidiarys of American and Japanese multinational enterprise located in the UK - contrasts the role of USA management attitudes in the 1950s with role of Japanese industrial management in the 1980s; covers cultural factors, labour relations, production control, procurement policies, subcontracting, marketing methods, and the locus of authority; suggests that perhaps the time dimension explains many of the differences observed.

Impact of Design, Construction and Cost on Project Quality

Abstract: Too frequent reports in the media of engineering and construction failures, the ruinous awards from lawsuits over liability and equally ruinous costs of liability insurance, if obtainable, all make an awareness of the necessity for quality in engineering works a matter of professional survival. Lack of quality in engineering works is not pervasive but it does occur. Some causes of poor quality are presented in this paper. Those causes are numerous, and can run all the way through the engineering process from siting through construction. Trade‐offs between the impacts of investigation, design, contracts, construction and cost on construction quality are complex but some fundamentals seem clear. Five top causes of inferior engineering quality are: (1) Designs which lag construction; (2) designs which lag procurement; (3) inadequate cost control; (4) lack of effective scheduling; and (5) lack of change control. Other causes are presented in the paper.

Guidelines for Evaluating the Management Information Systems of Industrial Enterprises

Abstract: These guidelines are intended to assist in evaluating the adequacy of the management information systems (MIS) of industrial enterprises. The introduction discusses the ojectives of a management information system and suggests how to use the guidelines. The guidelines are divided into five parts corresponding to the five functions of the enterprise: (i) finance and accounting; (ii) human resources; (iii) marketing, distribution and transportation; (iv) operations, including production, materials management and maintenance; and (v) new investments and procurement. For each of these functions, the guidelines will help evaluate the impact on the company's MIS of the business environment and management framework, as well as the adequacy of the company's systems for strategic planning, tactical planning, management control and transaction recording processes. In addition, a section is provided to help quantify the evaluation of the MIS. Furthermore, the guidelines are meant to assist in evaluating the MIS systems of its potential borrowers, but not intended to establish the Bank's requirements regarding MIS under its loans and credits. They may, however, prove of use to some enterprise managers in their own internal evaluation processes.

Public Policy and Wheat Market in Pakistan

Abstract: Drawing upon a series of country-wide surveys undertaken in 1986, the study addresses the micro and macro policy issues related to the operations of the wheat market in Pakistan. It focuses on the relative roles of the private traders and the government in determining the prices received by the primary producers and the final consumers of wheat. It finds that the government occupies the "commanding heights" in the wheat market. To regulate the market it employs, as policy instruments, voluntary procurement, storage and transportation of wheat, milling of, wheat into flour, and supplying wheat and flour to the consumers through both ration shops and the open market. The study recommends that while the scope of private traders' activities needs to be widened, the government must continue to operate effectively and more selectively. In particular, the present policy of the voluntary procurement of wheat should be used, though at a reduced level, to stabilize farmers' income, and a (restructured) rationing system must function to subsidize the consumption of wheat and wheat flour by the poorer section of the society.

The Indo-Pakistani Military Balance

Abstract: Indian publicists suggest that the introduction of sophisticated weaponry, such as the F-16, into the Pakistani inventory has served to (1) precipitate a bilateral arms race and (2) upset existing power relationships in the subcontinent.1 This article will demonstrate the invalidity of these assertions. While mutual threat perceptions clearly have generated much procurement activity, broader security concerns play an increasingly significant role in arms acquisition decisions. For example, New Delhi regularly adduces the threat presented by Pakistan in justifying its arms purchases. However, an expanded arsenal also facilitates achievement of more sweeping policy objectives, such as gaining an ascendant power position in the Indian Ocean and, ultimately, attaining major power status. As regards the second assertion, Islamabad's receipt of U.S. military equipment has done little to alter marked asymmetries in Indo-Pakistani strength levels. India continues to enjoy an overwhelming numerical and qualitative advantage in most weapon categories, and a like superiority in command, control, and communications (C3), logistics, and the indigenous manufacture of armaments. Over the past 25 years New Delhi's annual defense expenditures have exceeded Islamabad's by a significant degree. New Delhi's military predominance will be reinforced by advanced Soviet weapon systems soon to be delivered or currently being assimilated by its armed services. These systems include T-72 tanks; BMP infantry combat

Costs‐in‐use

Abstract: This paper from the Head of the Costs‐in‐use Section at the UK Building Research Establishment suggests that constraints on the wide application of the concept in the UK derive partly from existing practices and procedures and partly from a misunderstanding of the concept's relevance. The term ‘costs‐in‐use’ would be better defined as ‘costs‐of‐defined‐performance'; and because of the fragmentary nature of the industry and unsatisfactory existing procedures, independent research is needed to clarify the true scope of this appraisal technique in the context of building procurement.