Common Contracts

Abstract

December 21st, 2022

• Filed
  December 21st, 2022

Framework agreements (FAs) are procurement mechanisms used in private and public organizations by which a central procurement agency selects an assortment of products, typically through auctions, and then affiliated organizations can purchase from the selected assortment as needs arise. During 2018 and 2019, the Chilean government central procure- ment agency (ChileCompra) purchased an average of US$2.8 billion worth of products and services per year (23% of its total budget) using FAs. Analyzing the data from the 2014 Food FA, used between 2014 and 2017 to purchase US$200 million worth of products annu- ally, we observed that ChileCompra FAs exhibited low levels of competition in the auctions used to select the assortment, which could potentially result in larger government expendi- tures. With this motivation, we collaborated with ChileCompra to redesign FAs to enhance competition. We used the 2017 Food FA as a pilot study. Our main changes were twofold. First, using NLP algorithms,