Transformations  in
Business & Economics

PUBLIC SERVICE PROCUREMENT CONSIDERING RISK AND COGNITIVE COMPLEX INFORMATION USING A NOVEL MULTI-ATTRIBUTE AUCTION
Abouzar Gholamalizadeh, Hannan Amoozad Mahdiraji, Ghahreman Abdoli, Edmundas Kazimieras Zavadskas, Zenonas Turskis

ABSTRACT: In many actual cases of outsourcing through service procurement in the public sector, the scope of service demand is not deterministic. This risk may mislead the service providers in bidding and cause the winner's improper selection. This study aims to reduce the cost resulting from price and non-price parameters of winner selection in this situation by proposing a multi-attribute auction model to induce the providers to reveal their trust information. Moreover, a multiple criteria decision-making method that maintains consistency between the evaluation values has been designed for complex cognitive information expressed in hesitant fuzzy linguistic term sets. The scoring system of the proposed model initiates with the weighing process where the information of the parameters is evaluated using the Hesitant Fuzzy Linguistic-Best Worst Method (HFL-BWM).Next, the proposed model's winner determination rules and ex-post payment rules were explained. A case study inspired by the service provider selection process in the Administrative and Recruitment Organization (ARO) of Iran is used to illustrate the validation of the proposed model. Eventually, the results were compared with a common practice which is called Price-only Vickrey-Clarke-Grove (P-VCG) mechanism where the thresholds of non-price attributes were set first. Because of implementing the proposed model, the cost comprising the procurement cost and the cost incurred from low service qualities and the delivery delay was minimized. Moreover, the effectiveness of the proposed model was obtained using the investigation of the incentive compatibility and individual rationality of the auction. The results from the case study indicated that the scheduled approach is applicable in similar circumstances, especially in which public organizations have an agency role between the service applicants and the service providers. The proposed auction model, which is more practical in public service procurement, considers providers' risk regarding the uncertainty about the number of service applicants interpreted in this paper as the demand of service and should pay the service fee. Moreover, this paper proposes an ex-post payment approach by combining reverse game theory and an uncertain decision-making approach regarding evaluating the parameters.

KEYWORDS:  The Multi-Attribute Decision-Making, Auction, Public Service, Risk, HFL-BWM.

JEL classification:  M10, M11, M19, M21, C02, C15, C35, C61.