Procurement Contracting Stategies

Quality and suppliers performance are essential for procurement. This Paper analyses these important issues from two perspectives. The first part deals with the topic of contracting. It describes the features of some common types of contracts that the buyer may choose according to the circumstances of the procurement. The central issue is how the procurer should choose and then design the contract to optimally balance the trade-off between incentives to limit the contractor's supply cost and the flexibility to ex-post adaptation to potential unforeseen events.When important characteristics of the supply cannot be easily described in - and enforced within - the contract, the procurer must use other tools to ensure successful procurement. The second part of the Paper deals with this important problem, also known as non-contractible quality.The part provides indications about the methods the procurer may use to obtain adequate quality and customer satisfaction and illustrates which method seems to fit better in the specific procurement context