A Causal Model of Dwindling Bidder Size in Government Procurement Auctions – A Case Study

Assigning the work contract to the bidders in government procurement auction is influenced by many factors directly and indirectly. Therefore, there is a need to study the cause and effect relationships among the processes in government procurement auction. This paper attempts to develop a dynamic model of factors and their relationships in order to explain the phenomena of dwindling bidder size. We have considered factors like number of bidders, bid price qualification level, bid period, work content, and collusion among the bidders to develop a system dynamics model. We suggest that allowable profit margin and work content should be properly designed to get a reasonable number of bidders