Public procurement: the role of cognitive heuristics

Abstract

Public procurement processes have been extensively studied, but previous research has not sought to explain public procurement in terms of cognitive heuristics. This paper examines the award of a large public sector contract and outlines how the decisions were made. Heuristics were used throughout the process. Three heuristics—EBA, conjunctive, and WADD—were used in combination to reduce the number of bidders for the contract from a somewhat unmanageable 63 down to four. This paper allows the underlying stages to be viewed from this perspective and therefore it explores procurement in a way that sheds new light on the processes involved.

Keywords:

• Conjunctive
• decision-making
• EBA
• heuristic
• WADD

Conclusions

This paper has examined public procurement at a high level. It has not explored the detail of how the various stages were undertaken, nor has it sought to comment on the degree of ‘correctness’ (or otherwise) of decisions. Instead, it has shown that procurement decisions can be explained in terms of cognitive heuristics. The EBA heuristic makes a decision on the basis of a single aspect; the conjunctive heuristic makes a decision on the basis that a number of requirements are all met; and the WADD heuristic makes a decision by weighing up various factors and offsetting the good against the bad. This was reflected in the procurement under study, where the number of bidders under consideration was reduced in precisely this way.

Although this paper focuses on a single procurement, the example chosen is illustrative of many. The findings will apply more widely because the use of heuristics complies with legal and regulatory requirements. The author therefore seeks further research in two main areas. First, further study will determine the extent to which the three heuristics identified herein are used in other organizations. Second, these heuristics are but three of many. Other heuristics may be involved in public procurement and further study is needed to identify whether this is the case. This possibility is enhanced by the findings of the literature review, which indicate that the past behaviour heuristic and the equal weight heuristic have also been identified in previous research. Consequently, this paper has opened up a new field of study with great potential for discovery. Interesting times lay ahead, and it will be interesting to watch the journey unfold.