A classification framework of multidimensional, multi-unit procurement negotiations

Procurement auctions usually require the bid to specify several characteristics of the contract to be fulfilled. Previous models of procurement auctions have generally assumed that the qualitative attributes are fixed prior to competitive source selection (W. Vickrey, 1961; S. Dasgupta and D.F. Spulber, 1989); hence bidding competition is restricted to the price dimension. While such an approach may be appropriate for auctions of homogeneous goods, this assumption is not necessarily given in most procurement situations. The advances in information technology allow the use of different and more complex auction mechanisms. The article analyzes and classifies multi-attribute auctions, where firms bid on a number of attributes, and bids are evaluated by a scoring rule designed by a buyer. While previous work in this field analyzed multi-attribute auction mechanisms in specific application domains (M. Bichler and M. Kaukal, 1999; M. Bichler and R. Klimesch, 2000), the paper tries to broaden the theory and define a general framework for the applicability in both single-unit and multi-unit negotiation situations.