How does performance history impact supplier selection in public sector?

Pages107-128
DOIhttps://doi.org/10.1108/IMDS-07-2014-0222
Publication Date02 Feb 2015
AuthorOlivier Mamavi,Haithem Nagati,Gilles Pache,Frederick T. Wehrle
SubjectInformation & knowledge management,Information systems,Data management systems
How does performance history
impact supplier selection in
public sector?
Olivier Mamavi and Haithem Nagati
ICD Paris, Laboratoire de Recherche Appliquée (LARA), Groupe IGS,
Paris, France
Gilles Pache
Centre de Recherche sur le Transport et la Logistique (CRET-LOG),
Aix-Marseille University, Aix-en-Provence, France, and
Frederick T. Wehrle
Laboratoire de Recherche Appliquée, ICD Business School, Paris,
France and Pôle de Recherche Interdisciplinaire en Sciences du Management,
Paris Sorbonne University, Paris, France
Abstract
Purpose The purpose of this paper is to study if the performance history impacts supplier selection
in the French public sector context. While French public procurement legislation forbids consideration
of the past contract wins in supplier selection, public contractors may still rely on contract win history
for highly complex transactions.
Design/methodology/approach Using French Official Journals (BOAMP), the authors collected all
public procurement transactions of 976 suppliers that had at least one transaction per year, over a
period of six years (between 2006 and 2011). The authors conducted a two-level hierarchical linear
auto-regression analysis and a feature evaluation analysis for all transactions.
Findings The paper finds significant variation between the transactions of different markets, as
well as in the overall positive impact of past wins and in the detailed impact patterns and thresholds of
each market. The findings may allow refinement of existing contract awarding strategies and
of current legislation.
Originality/value The paper aims at empirically testing whether a suppliers degree of success
in any given year, measured by the number of public contracts won, may have an impact on the
likelihood that the same supplier is awarded a public contract the following year. The authors conclude
that suppliers retained for public contracts could benefit from building public buyersloyalty using a
key account selling approach rather than systematically seeking to acquire new contracts.
Keywords Public procurement, France, Supplier selection, Performance history
Paper type Research paper
1. Introduction
Supplier selection is an important dimension of procurement management (Cebi and
Bayraktar, 2003; Huang and Keskar, 2007; Gosling et al., 2010; Khorramshahgol, 2012).
In a context that is prompting manufacturing and retailing firms to increasingly
concentrate on a few key competencies (new product design, marketing and communication
policies, etc.), the use of external resources owned by effective suppliers directly influences
the likelihood of gaining a sustainable competitive advantage. Although some may Industrial Management & Data
Systems
Vol. 115 No. 1, 2015
pp. 107-128
©Emerald Group Publis hing Limited
0263-5577
DOI 10.1108/IMDS-07-2014-0222
Received 28 July 2014
Revised 20 October 2014
Accepted 29 October 2014
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
The authors would like to thank Marko Robnik-Sikonja, Alexander Ellinger and two anonymous
reviewers of Industrial Management & Data Systems for their comments and advice on previous
drafts of this paper.
107
Performance
history impact
supplier
selection
consider this question to pertain uniquely to private companies operating in sectors
sensitive to outsourcing strategies, such as automotive, microcomputers or aeronautics
construction, there is strong evidence to the contrary.
The profitability and efficiency imperatives that increasingly surface in the public
sector also intensify the need to select the best suppliers. In a context of deep
public spending cuts and efforts to improve services for taxpayers, specifically
regarding hospitals, public education and aid for people in difficulty, the importance
of choosing the best suppliers can no longer be ignored. Suppliers are actively
participating in applying the lean approach, for instance at British hospitals (Radnor
et al., 2012). Hawkins et al. (2011) argue that the difference in procurement strategy
(how suppliers are treated) between private and public sectors is not great. A number
of works explicitly assert that strategies for managing supplier relationships can be
borrowed from the private sector to enhance the performance of public sector
procurement (Boyne, 2002; Loader, 2010).
Numerous examples illustrate how the supplier selection process has become an
essential element of the governance of many components of the public sector, one
which fuels the dissemination of many innovations (Hommen and Rolfstam, 2009;
Rolfstam et al., 2011). For several years, the French Air Force has outsourced security
control at the entry to its bases, for several years. The choice of companies providing
this control has clearly generated a long and costly process to choose the company that
is best qualified to protect the bases from terrorist attacks; as Glas et al. (2013)
underline, supply selection needs to satisfy military demand in terms of required
effectiveness (robustness) and efficiency (supply risk).
Supplier selection is a crucial element of supplier relationship management. The
more rigorous and structured the selection phase, the stronger the suppliers
performance. Company profitability and competitiveness depend on effective supplier
selection. To help companies make decisions, the literature has proposed several
supplier selection criteria and evaluation methods. Within the literature, consensus
has emerged regarding four classic criteria: price, quality, lead times and service.
Research has also identified criteria that can affect supplier performance throughout
the contractual relationship. Notably, past performance is instrumental to sele cting a
supplier; it indicates the suppliers ability to meet the contractual requirements (Sarkar
and Mohapatra, 2006; Watt et al., 2010).
In this context, our research question is:
RQ1. How does performance history impact supplier selection in the public sector?
Specifically, we want to determine whether the public buyer considers past
performance when selecting the best supplier. If the literature considers that a
suppliers past performance impacts the choice of a public buyer, to our
knowledge no econometric studies have rigorously measured this phenomenon
on a large sample of publicprocurement transactions.This gap is notably linked
to the difficulty of compiling exhaustive information on public procurement
transactionsover several years. This paperattempts to partly fill this gap based
on an analysis of the French context.
In this paper, we analyze the supplier selection process in French public markets. The
case of France is particularly interesting because for decades the public sector has been
a central player in the organization of inter-company exchanges. This is evidently the
historical result of the famous Colbert doctrine, which asserted that state intervention
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