Economic competition and its determinants in medical equipment public procurement

Abstract

Organisational competitive procurement environment positively impacts prices while supply side factors also determine participation in bidding. With strong competition costs come down. Instances of low competition in equipment purchase in the apex tertiary care hospital led to this study aimed at determining procurement practices, competition in procurement and its determinants. Review of tender records for three financial years (2011–2014) was conducted to ascertain procurement practices and resulting competition. Sellers’ perspective on factors determining participation was captured through a questionnaire. Although four bids per tender were received only two qualified technically emphasising need for broad based specifications. Both sellers and peer staff also feel that specifications are not broad based. Regression analysis showed that one unit increase in bid led to six per cent price reduction. Increase in number of equipment led to an increase in the number of bids received but no price decrease. Pre-bid meetings have no effect on the price offered. Quality of tender document and feasible demonstration are modifiable bidding factors. Procuring agencies need to be transparent to reflect an organisationally supported competitive environment. The future research directions are interventional studies on specifications, pre-bid meetings and increasing transparency.