The “1 Yen Bid” issue in public procurement highlights a breakdown in the expected relationship between price and quality of services delivered. Although it appears to save costs initially, this bidding strategy can compromise service quality, leading to inadequate performance and increased hidden costs over time. For instance, companies may win contracts at these low prices by cutting corners or engaging in practices that ensure long-term dependence on their services. Consequently, public agencies can find themselves trapped in unfavorable conditions where they pay significantly higher total costs when accounting for future service needs. Moreover, this practice can distorts the competitive landscape, pushing out smaller businesses that cannot afford to underbid and risking the overall health of the market.
👉 Pročitaj original: CIO Magazine
