Preferential Procurement Research Articles

The Efficiency of Applying Preferential Regimes for Small-Sized Businesses in Public Procurement

This study examines the efficiency of preferential procurement regimes for small-sized businesses (SBs) in Russia, using the example of assessing the results of increased procurement standards. The results of statistical and econometric analysis show a rather moderate increase in SB participation in procurement after increasing the standard. At the same time, the overall volume of purchases from SBs remains significantly lower than the standard. It also turns out that savings on purchases from SBs are greater than on other purchases, and this effect persists after increasing the standard, benefiting the state. In this context, it is necessary to strengthen control over the implementation of procurement standards for SBs and to expand the use of best practices in procurement procedures.

Helping hampered bidders—Do subsidy auctions work as intended?

AbstractThe use of preference or discriminatory auctions, where one class of bidders is offered favored treatment over another class, has received mixed attention in the literature. Research has shown there is often an economic benefit of such policies in procurement auctions thanks to lower costs for buyers as incentives are offered to disadvantaged sellers. In this paper, we study one type of preferential procurement auction: the subsidy. Using a set of controlled experiments, we compare actual bidder behavior to what is predicted in equilibrium and find consistent (but overly aggressive) patterns overall. By testing a common bid strategy assumption, we also identify a behavioral framing bias that may trap sellers in these suboptimal strategies. Finally, we compare subsidies to another common discriminatory mechanism—the price preference—and find evidence that buyers interested in increasing the welfare of disadvantaged sellers should use subsidies instead of price preference auctions, thanks to a surprising difference in outcomes between preference types. Due to the wide use of bid preference auctions to support both policy and social aims, our findings have both financial and societal implications.

Brexit 이후의 영국 공공조달법제 연구

Korea's public procurement legal system is composed of various laws, including 「Act on Contracts in which the State is a Party」, 「Act on Contracts in which the Local Government is a Party」, 「Act on the Government Procurement Program」, 「Act on the Management of Public Institutions」, 「Act on Facilitation of Purchase of Small and Medium Enterprise-manufactured Products and Support for Development of Their Markets」, 「Defense Acquisition Program Act」, and the relationship among them is not systematically established. In order to address this issue, the enactment of the 「Act on Public Procurement (Draft)」 is being discussed. This article examines the 「Procurement Act of 2023」 in the United Kingdom, which enacted a single statute by integrating various regulations related to public procurement in each field after Brexit, in order to find implications for reforming Korea's public procurement law system. The 「Procurement Act of 2023」 in the UK presents Value For Money as the most important principle of public procurement, and to materialize it, it introduces ‘flexible competitive procedure’ as a new contracting method and ‘most advantageous tender (MAT)’ as a new award criteria. In addition, in order to ensure the effective operation of this flexible contracting system, there are regulations on securing transparency throughout the entire life cycle of the procurement, including the sharing of contract information. The 「Procurement Act of 2023」 in the UK provides the following implications for the reform of Korea's public procurement legal system. First, it is necessary to find the common principles in each sector procurement, and to legislate it into an Act. Second, it is necessary to establish the principles of public procurement, including value for money and the principle of proportionality. Third, it is necessary to prioritize and implement public procurement across government through a comprehensive public procurement plan, and in particular, to systematize the existing preferential procurement system. Fourth, it is necessary to improve contracting methods and award criteria that can realize value for money, and the collection and utilization of contract-related information is important for the proper operation of these new system.

Inhibiting Factors to the Implementation of Preferential Procurement Policy in the South African Construction Industry

Inhibiting Factors to the Implementation of Preferential Procurement Policy in the South African Construction Industry

Strategic Preferential Procurement Policy for Localisation and Inclusive Growth for Micro Small Medium Enterprises (MSMEs) in Gauteng Province

The study aims to develop interventions to address the low productive capacity and competitiveness levels of township Micro Small Medium Enterprises (MSMEs) to enable meaningful participation in the mainstream economy. Most township firms continue to be informal and underdeveloped. Despite countless interventions by the development finance institutions, most township enterprises remain perpetual survivalists. The study is anchored upon the neoliberal theory, which emphasizes value for money and market efficiencies in procurement, as well as interventionist theories promoting the inclusion and participation of MSMEs in business, and advocating for the localization of products through various policy interventions. The researcher adopted a mixed-method approach to gather primary and secondary data. Secondary data was used for analysis and supported by the primary information or empirical evidence. The secondary data enriched the research content and complemented the primary data. Databases and reports on township suppliers from the Gauteng Provincial Treasury (Procurement Division) and Gauteng Department of Economic Development helped determine the extent of MSMEs' access to development and financial support opportunities. The study found that the high informality level of township businesses, low level of development, poor economic infrastructure, and lack of access to finance hinder MSMEs' participation in public procurement. Programs and products offered by government agencies do not adequately respond to public procurement challenges facing MSMEs, e.g. product testing and accreditation. The high barriers to entry due to complicated administrative processes and procedures continue to deter MSMEs from participating in the mainstream economy. The Development Finance Institutions (DFIs) were found to be a challenge due to a mismatch between the resource structure to drive economic development and the products offered. The study recommends that to increase the participation of MSMEs in public procurement, there needs to be a targeted growth continuum strategy that tracks interventions from the beginning to the end. Additionally, there needs to be a shift from a quantitative approach with minimal impact to a customised one with qualitative, tangible and tradable products and skills aimed at increasing participation of MSMEs. Furthermore, the political will is required to address the resource mismatch, repurpose resources, or develop specific products by the well-resourced Development Finance Institutions to suit the material conditions of township MSMEs with lesser stringent measures.

중증장애인생산품 우선구매제도의 사회적 가치 규명

The purpose of this study is to measure the social value of the preferential procurement of products manufactured by persons with severe disabilities. To this end, domestic and foreign preceding studies were reviewed, and based on this, stakeholder interviews were conducted. Looking at the results of the study, first of all, from the perspective of disabled workers, the preferential purchase system for products produced by the severely disabled contributed a lot to the increase in income, Employment through the preferential purchase system was found to have a positive effect on improving social ties and psychological stability. Next, in terms of families with disabilities, it was found to be helpful to household income, and it was said that it had a positive effect on family relationships. From the perspective of business owners, all participants said that preferential purchase had a positive effect on job creation for the disabled, securing stable sales channels, and increasing sales. Finally, in terms of government (social public interest), all interviewees said that priority purchase has a positive effect on raising awareness of products produced by the severely disabled, creating jobs for the disabled, reducing social security costs, and increasing tax revenue. As such, it was confirmed that the preferential procurement of products manufactured by persons with severe disabilities has social value that positively affects not only disabled workers in vocational rehabilitation facilities but also various stakeholders.

ILLICIT BUSINESS FORUMS IN SOUTH AFRICA: A SURVEY

Extortion is understood as one party taking from another a patrimonial or non-patrimonial advantage by intentionally and unlawfully subjecting them to pressure which forces them to submit to a bribe. Extortion is not an unfamiliar concept in South Africa. In this article it is contended that extortion has become a major concern in the construction industry. Sites where the installation of critical infrastructure occur and construction sites throughout South Africa are being invaded by what some may call the ‘construction mafia’.1 The South African Forum of Civil Engineering Contractors reports that in 2019 alone over 180 infrastructure and construction projects were affected by acts such as extortion perpetrated by groups who call themselves ‘local business forums’. The business forums often mislead construction companies by demanding 30% of the value of the contract awarded to such companies. They refer to the stipulations in the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and subsequent Preferential Procurement Regulation, 2017 (PPR) to create the perception that they have a rightful claim to 30 percent of the contract value. If their demands are not met the business forums resort to violence which halts construction site activities. The business forums justify their actions as ‘radical transformation’. This view is supported by some local politicians who actively encourage the activities by the forums or are involved for financial or political gain.

The Black Industrialist Programme’s prospects to the advancement of developmental state in South Africa

Background: South Africa has made considerable progress in terms of economic development since the dawn of democracy in 1994. However, the pace and distribution of that progress have not been equitably reflected across all demographics, especially between black and white people. With a decline of manufacturing, the ‘developmental state’ has featured as a strong theme to try and reignite industrialisation in the country. Under this framework, one of the policies driven by the South African government is the Black Industrialist Programme, which aims to increase the manufacturing output while empowering black people.Aim: To investigate the appropriateness of the Black Industrialist Programme as a policy to advance the developmental state framework in South Africa.Setting: Experience in East Asia regarding developmental states led countries like South Africa to believe that they can also implement such policies to enable the country to industrialise.Methods: The study employed qualitative research methods using open-ended interviews for primary data and documents collected from various sources for secondary data. The study’s qualitative description of the findings derives from the themes that emerged from the research and which employed open-ended questions and research techniques in line with such research techniques.Results: Findings show that the Black Industrialist Programme policy will have an impact, as its funding model is a significant shift from past practices by assisting aspiring industrialists through grants and preferential procurement measures. However, the study argues that the shift from focusing on general industrialisation to narrowing it to black industrialisation brings with it new constraints in advancing a developmental state.Conclusions: The research concludes that the programme will contribute to the developmental state concept’s progress but will be limited in praxis because the state does not possess a holistic overarching economic developmental plan.Contribution: The study contributes to the analytical discourse of developmental states by offering context-specific analysis of industrialisation paths for societies addressing racial and economic inequality.

An examination of the barriers to gender-responsive public procurement in South Africa

Women-owned businesses (“WOBs”) obtain less than 6% of public procurement contracts, despite accounting for close to 30% of registered businesses in South Africa. This contribution examines the reasons for the limited participation of WOBs in the public procurement system and finds that there are policy, legal, institutional and cultural barriers to the participation of WOBs in public procurement in South Africa. Policy barriers arise out of the misalignment between economic, gender and procurement policies and legal barriers arise from the previous limited and currently uncertain approach to preferential procurement legislation. However, the contribution finds that institutional, cultural and structural barriers pose even more of a risk to women’s participation in public procurement in South Africa. These institutional barriers include a reticence to prioritise WOBs by public agencies in the absence of an explicit mandate to do so, the reluctance to favour new market entrants to avoid contract failures and a culturally biased approach to WOBs by public agencies. Other barriers include the gendered impact of procurement corruption; the gendered impact of Covid-19, which terminated public contracts in sectors serviced by WOBs; and the complexity and opacity of the procurement process. The contribution finds that the historical lack of attention to women’s participation in procurement, and the lack of disaggregated data on preferential and gendered contracts, have made it difficult to understand the extent of women’s participation and the nature of required legal and policy interventions. This contribution assesses the barriers to the participation of WOBs in public procurement and makes recommendations aimed at addressing some of these barriers.

The Black Industrialist Programme’s prospects to the advancement of developmental state in South Africa

Background: South Africa has made considerable progress in terms of economic development since the dawn of democracy in 1994. However, the pace and distribution of that progress have not been equitably reflected across all demographics, especially between black and white people. With a decline of manufacturing, the ‘developmental state’ has featured as a strong theme to try and reignite industrialisation in the country. Under this framework, one of the policies driven by the South African government is the Black Industrialist Programme, which aims to increase the manufacturing output while empowering black people. Aim: To investigate the appropriateness of the Black Industrialist Programme as a policy to advance the developmental state framework in South Africa. Setting: Experience in East Asia regarding developmental states led countries like South Africa to believe that they can also implement such policies to enable the country to industrialise. Methods: The study employed qualitative research methods using open-ended interviews for primary data and documents collected from various sources for secondary data. The study’s qualitative description of the findings derives from the themes that emerged from the research and which employed open-ended questions and research techniques in line with such research techniques. Results: Findings show that the Black Industrialist Programme policy will have an impact, as its funding model is a significant shift from past practices by assisting aspiring industrialists through grants and preferential procurement measures. However, the study argues that the shift from focusing on general industrialisation to narrowing it to black industrialisation brings with it new constraints in advancing a developmental state. Conclusions: The research concludes that the programme will contribute to the developmental state concept’s progress but will be limited in praxis because the state does not possess a holistic overarching economic developmental plan. Contribution: The study contributes to the analytical discourse of developmental states by offering context-specific analysis of industrialisation paths for societies addressing racial and economic inequality.

THE DETERMINATION OF BLACK OWNERSHIP IN COMPANIES FOR THE PURPOSE OF BLACK ECONOMIC EMPOWERMENT (PART 1)

In Part I of this two-part article the primary statutes regulating black economic empowerment are considered. The Preferential Procurement Policy Framework Act 5 of 2000 with its regulations determines the parameters within which organs of state may give preferential treatment to historically disadvantaged suppliers when making procurement decisions. The Broad-Based Black Economic Empowerment Act 53 of 2003 creates a legislative and bureaucratic framework for the realisation of black economic empowerment, that includes codes of good practice that seek to introduce an empowerment agenda to a variety of administrative decisions, including state procurement. This overlap in application leads to conflicts between the duties placed on the state by the two Acts, and it is submitted that the Procurement Act and its regulations require amendment that will have to coincide with the coming into effectof the codes of good practice under the BEE Act. Part II of the article will analyse the recognition of black ownership in companies arising from the sale of equity instruments.

An Evaluation of the “Designation” of Products, Sectors and Industry for Local Production and Content under the Preferential Procurement Policy Framework Act 5 of 2000

This paper explores the designation framework in South Africa within the confines of the Preferential Procurement Policy Framework Act 5 of 2000 (the PPPFA). The PPPFA is substantiated by the Preferential Procurement Regulations, 2017. This discussion is pertinent in light of the proposed Public Procurement Act, which seeks to consolidate all legislation on public procurement in South Africa and, in particular, to provide for the designation of products, sectors, and industries for local production and content. It is thus prudent to assess the problems with the current designation framework that is plagued by secrecy and non-compliance to avoid replicating the same problems in the proposed Public Procurement Act.

Supply chain performance and preferential procurement in Gauteng government departments

Background: In the previous two decades, preferential procurement and supply chain performance have gained popularity within academics following the introduction of the Preferential Procurement Policy Framework Act No 05 of 2000 (PPPFA) which was aimed at providing opportunities in government supply chain contracts to previously disadvantaged groups. Despite PPPFA being a corrective measure, research has brought to light the abuse and manipulation in the implementation of this Act by government officials trusted with this function. The study aims to determine how supply chain performance is affected by preferential procurement within selected Gauteng government departments.Objectives: The objectives of the study were twofold: First to determine how supply chain performance is influenced by preferential procurement and the effect of management levels on the implementation of PPPFA, and secondly to determine the effect of the implementation of preferential procurement on supply chain performance within selected government departments.Method: Through a quantitative research approach, data were collected using close-ended questionnaires in the form of a five-point Likert scale and a stratified random sampling technique. The Statistical Package for the Social Sciences (SPSS) software was used to analyse data through descriptive and inferential statistics.Results and conclusion: The study revealed that preferential procurement had an impact on supply chain performance in the selected departments which could be pinned mainly to the gap between policies and implementation. Although preferential procurement was generally applied across the departments, it was noted that some officials within supply chain management had not fully understood the implementation requirements of the PPPFA.

ILLICIT BUSINESS FORUMS IN SOUTH AFRICA: A SURVEY

Extortion is understood as one party taking from another a patrimonial or non-patrimonial advantage by intentionally and unlawfully subjecting them to pressure which forces them to submit to a bribe. Extortion is not an unfamiliar concept in South Africa. In this article it is contended that extortion has become a major concern in the construction industry. Sites where the installation of critical infrastructure occur and construction sites throughout South Africa are being invaded by what some may call the ‘construction mafia’.1 The South African Forum of Civil Engineering Contractors reports that in 2019 alone over 180 infrastructure and construction projects were affected by acts such as extortion perpetrated by groups who call themselves ‘local business forums’. The business forums often mislead construction companies by demanding 30% of the value of the contract awarded to such companies. They refer to the stipulations in the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and subsequent Preferential Procurement Regulation, 2017 (PPR) to create the perception that they have a rightful claim to 30 percent of the contract value. If their demands are not met the business forums resort to violence which halts construction site activities. The business forums justify their actions as ‘radical transformation’. This view is supported by some local politicians who actively encourage the activities by the forums or are involved for financial or political gain.

The Impact of Corporate Social Investment on Customer Loyalty in the Gaming Industry

Sports betting has become a very profitable business of late. For instance, in 2020, it contributed 48% of Africa’s Gross Gaming Revenue (GGR), and the South African Bookmaking business was ranked ninth in the world for web traffic. The relevance of this scientific problem decision is that the industry is saturated with many betting companies. Companies that conduct business in the gambling industry in South Africa are obliged to provide a charitable contribution equal to a certain percentage of either their annual revenue or, more specifically, their after-tax net profit to be eligible for a gaming license. Before the company can be granted the license, it is necessary for them to make this contribution first. Under this legislation, operators are evaluated based on a variety of criteria, including ownership, management control, employment equity, skills development, preferential procurement, enterprise development, and socio-economic development. The B-BB-EE Act compels operators to be evaluated in line with these factors. Therefore, this study analyzed the impact of Corporate Social Investment on Customer loyalty in the Gaming Industry. This study adopted a descriptive, quantitative and cross-sectional approach. A nonprobability sampling technique known as convenience sampling was used to collect data from 150 customers who made sports bets. The Statistical Package for the Social Sciences (SPSS) was used to analyse the primary data, which included descriptive and inferential statistics, as well as correlation and regression analyses. The study’s findings show that Corporate Social Investment has a positive (= 0.746) and statistically significant (p. value<0.05) impact on customer loyalty. This study has contributed to the literature on Corporate Social Investment and customer loyalty in the Gaming industry, with specific reference to a developing country, South Africa. The recommendations provided as a result of the conducted research can be useful for managers of bookmaking companies to ensure the long-lasting impact of various initiatives in the field of corporate social investment on society, thereby creating goodwill that, in the long-run, contributes to customer loyalty.

The Impact of Corporate Social Investment on Customer Loyalty in the Gaming Industry

Sports betting has become a very profitable business of late. For instance, in 2020, it contributed 48% of Africa’s Gross Gaming Revenue (GGR), and the South African Bookmaking business was ranked ninth in the world for web traffic. The relevance of this scientific problem decision is that the industry is saturated with many betting companies. Companies that conduct business in the gambling industry in South Africa are obliged to provide a charitable contribution equal to a certain percentage of either their annual revenue or, more specifically, their after-tax net profit to be eligible for a gaming license. Before the company can be granted the license, it is necessary for them to make this contribution first. Under this legislation, operators are evaluated based on a variety of criteria, including ownership, management control, employment equity, skills development, preferential procurement, enterprise development, and socio-economic development. The B-BB-EE Act compels operators to be evaluated in line with these factors. Therefore, this study analyzed the impact of Corporate Social Investment on Customer loyalty in the Gaming Industry. This study adopted a descriptive, quantitative and cross-sectional approach. A nonprobability sampling technique known as convenience sampling was used to collect data from 150 customers who made sports bets. The Statistical Package for the Social Sciences (SPSS) was used to analyse the primary data, which included descriptive and inferential statistics, as well as correlation and regression analyses. The study’s findings show that Corporate Social Investment has a positive (= 0.746) and statistically significant (p. value<0.05) impact on customer loyalty. This study has contributed to the literature on Corporate Social Investment and customer loyalty in the Gaming industry, with specific reference to a developing country, South Africa. The recommendations provided as a result of the conducted research can be useful for managers of bookmaking companies to ensure the long-lasting impact of various initiatives in the field of corporate social investment on society, thereby creating goodwill that, in the long-run, contributes to customer loyalty.

Party-state Collapse and Trajectory of Factionalism in the ANC Post-apartheid: Reflections from Buffalo City, 2005–2015

Party – state collapse is whereby the functions of the party and state are largely combined into one body, with a dominant role for the party. This paper traces the collapse of the party and state during the African National Congress’s (ANC) political dominance post-apartheid and traces how this process shaped factional politics within the party between 2005- 2015. The gradual conflation of the party and state occurred partly through two processes related to the party’s imperatives of pursuing a transformative agenda. Firstly, the state itself had to be transformed in the way it operated and to reflect the demographic composition of the country. This presented an opportunity for the ANC to deploy its cadres into the state. Secondly, the party relied on the state as an economic actor to be a vehicle for redistribution and the transformation of the broader society for equity and growth. Hence, black economic empowerment, state preferential procurement and other policies to uplift previously disadvantaged social groups became one of the stepping-stones for the emergent African middle and upper class. Whilst these two processes transformed the state, the paper argues that they also fundamentally transformed the party itself, as it became a site of accumulation and intense intra-party contestation. Patronage networks emerged to secure and defend political power and the material benefits it came with. The paper draws on primary research in the ANCs Buffalo City region in the Eastern Cape Province at the peak of factional battles between Mbeki and Zuma aligned officials.

BACK TO THE DRAWING BOARD?: AFRIBUSINESS NPC V MINISTER OF FINANCE [2020] ZASCA 140 AND THE POTENTIAL FOR RECONSIDERATION OF PREFERENTIAL PROCUREMENT LAW & POLICY IN SOUTH AFRICA

A 2020 judgment of South Africa’s second-highest court is the most significant in the field of public procurement law and policy since the landmark series of AllPay cases concerning the outsourcing of social grant payments. In the field of black economic empowerment more generally, where multiple and conflicting goals have been pursued, Afribusiness constitutes a distinct judicial intervention into disciplining the quite wide discretion that public bodies possess and have exercised across government since 1994 to adopt such policies in the pursuit of substantive equality and affirmative action. The decision is best understood as part of the ongoing process of reform of South Africa’s public procurement system that began around 2012. The Supreme Court of Appeal’s order that the procurement regulations providing for race and gender preferences are invalid has sparked interest in the upcoming hearing at the Constitutional Court both among regulatory bodies (including the broad-based black economic empowerment (BBBEE) body) and within business sectors.The court was specifically critical of the prequalification criteria mechanism but also struck down the 30% quota (mandatory sub-contracting) mechanism in the 2017 Preferential Procurement Regulations. The judgment has some ambiguity as to whether it is based on statutory, constitutional, or a combination of statutory and constitutional grounds. The case raises an important regulatory question: Does Parliament or the Minister of Finance and National Treasury have authority to issue a constitutionally compliant framework for the regulation of preferential procurement policy? Further, some components of the public procurement legislative framework are likely to be sent back to the drawing, hastening but also complicating government efforts already underway. And state owned enterprises and other public bodies aiming to achieve competitiveness, fairness, equity, transparency, and cost-effectiveness in public procurement will need to manage the legal risks posed by the judicial remedy, finding the regulations invalid but suspending that invalidity.

DISCUSSION OF THE RECENT RULING OF THE SOUTH AFRICAN SUPREME COURT OF APPEAL IN AFRIBUSINESS NPC V MINISTER OF FINANCE

The recent ruling by the South African Supreme Court of Appeal (SCA) in Afribusiness NPC v Minister of Finance raises questions about the lawfulness and fairness of the use of prequalification criteria in public procurement. In this case note we argue that the legality of regulation 4 of the Preferential Procurement Policy Framework Act of 2000 (PPPFA) and the principle of using prequalification criteria in public procurement are discrete issues. The SCA’s finding on the legality issue – that regulation 4 is ultra vires the PPPFA – is unsurprising. Indeed, it is difficult to reconcile the use of prequalification criteria for “designated groups” as set out in reg 4 with the preference-point system prescribed by the PPPFA. However, we question the correctness of the court’s view that prequalification criteria do not satisfy the objectives of section 217(1) of the Constitution, such as fairness, transparency etc. In our view, there is nothing constitutionally suspect about the use of prequalification criteria as a tool to promote socio-economic objectives, provided they are designed and implemented within the discipline required by the Constitution. Properly-designed prequalification criteria serve as important tools for the protection and advancement of persons disadvantaged by unfair discrimination, as envisaged in section 217(2)(b). Furthermore, we recommend that the drafters of the regulations take the opportunity created by the SCA’s ruling to revise the regulations as a whole. In our view, the problems with the regulations are not confined to the impugned regulations 3(b), 4 and 9, but extend to other regulations as well – most notably, regulations 5 and 6 dealing with the preference point system and regulation 8 dealing with local content and production. We argue that these regulations do not award preference points for “specific goals” in the manner contemplated by the PPPFA, and are thus susceptible to challenge. Ultimately, the problems with the regulations are traceable to design defects in the PPPFA itself. The PPPFA cannot be “fixed”. It has run its course and must be replaced with a new legislative framework as a matter of urgency.

How Subsidies Affect Asymmetric Procurement Auctions: Comparing Experimental Results to Theory

The use of bid preference auctions, where one class of bidders is offered favored treatment over another class, has received mixed attention in the literature. Research has shown there is an economic benefit of such policies thanks to lower costs for procurement auction buyers as incentives are offered to disadvantaged sellers. In this paper, we study one type of preferential procurement auction: the subsidy. Using a set of controlled experiments, we compare actual bidder behavior to what is predicted in equilibrium. We find that sellers suffer from overly aggressive bidding (but do learn over time). More importantly, we explore the behaviors that may explain any deviations from theory – focusing on best response bidding and what directional learning theory would predict based on prior round outcomes. We find evidence of myopic behaviors among bidders. One intriguing take-away is that cost-advantaged bidders may be more responsive to opponents’ bids. Due to the wide use of bid preference auctions to support both policy and social aims, our findings have both financial and societal implications.