【正文】 sheer importance to the 2 example,procurement by federal, state and local government accounts for more than 10 percent of Gross Domestic Product in the United States. Many private sector transactions are also governed by procurement contracts. Prominent examples include electronics ponents, custom software, automobile production, and building construction. When considering the procurement of goods and services, the procurer is faced with many challenges. First, she has to choose what exactly should be procured, and how to transmit her needs to the potential suppliers. Second, a contract must be laid out that includes contractual obligations and methods of pensation. Third, the procurer needs to decide how to award the procurement contract between the potential , the award mechanism should result in the selection of a quali?ed and desirable supplier and in the implementation of a costeective ?nal product Following up on these last two points, petitive tendering is widely recognized asan attractive procurement mechanism and is monly advocated for several notably it is viewed as a procedure that stimulates and promotes its nature, open petitive tendering invites potential suppliers from many , in the face of petition from many potential suppliers each one has strong incentives not to in?ate his price. Indeed, fair market price discovery is often touted as a bene?cial result of such tendering. Open petitive mechanisms are also known for their transparency, making it easier to prevent corruption both in the public and private sectors where procurement managers may have incentives to rig the system Interestingly, there is widespread use of both petitive tendering and negotiations in the private sector. For example, from 1995 to 2020, fortyfour percent of private sector nonresidential building construction projects in Northern California were procured using negotiations, while only eighteen percent were procured using open petitive tendering. The use of negotiations with single source suppliers is also mon in high tech and software, and used for defence procurement as well. This Chapter ers a framework to pare petitive tendering with negotiations and relate these award mechanisms to the payment procedures chosen in the contract. In particular, it tries to shed light on when petitive tendering with ?xed price contracts will be preferred to negotiating cost plus contracts, and when not. To put this Chapter in perspective it is worth observing that most of the economic analysis describes the procurement problem as follows. The supplier has 3 information about production costs that the procurer does not have. The procurer then has to consider clever ways to infer the suppliers costs, such as ering the supplier many potential projects to choose from, and having the supplier select the one that will be produced. In contrast, scholars and practitioners of engineering and construction management argue that the central problem in procurement is not that suppliers know so much more than procurers at the onset of the project, but that instead both procurers and suppliers share uncertainty about many important design changes that occur after the contract is signed and production begins. These changes are usually a consequence of design failures, unanticipated conditions, and changes in regulatory requirements. An illustrative example of the signi?cance of ex post adaptation is the building of the Getty Center Art Museum in Los An geles, which is a 24 acre, $1 billion dollar facility that took over 8 years to construct (see Engineering NewRecord 1994, 1997). The project design had to be changed due to site conditions that were hard to anticipate. The geology of the project included canyons, slide planes and earthquake fault lines, which posed numerous challenges for the team of architects and contractors. For instance,contractors “hit a slide” and unexpectedly moved 75,000 cubic yards of earth. More severely, in 1994 an earthquake struck. Cracks in the steel welds of the building’s frame caused the contractors to reassess the adequacy of the seismic design standards that were used. The project design had to be altered also due to the regulatory environment— 107 items had to be added to the building’s conditional use permit. These problems were very hard to predict, both for the procurer and the contractor. However, it seems reasonable that once problems arose, the contractor had superior information regarding the costs and methods to implement changes. A more recent and much more contentious example is the “big dig” in Boston, where 12,000 changes to more than 150 design and construction contracts have led to $ billion in cost overruns, much of which can be traced back to unsatisfactory design and site conditions that diered from expectations. These observations suggest that the procurement problem may indeed be primarily one of smoothing out or circumventing adaptations after the project begins rather than information revelation by the supplier before the project is selected. In this Chapter we argue that the form of contracts and award mechanisms can be tailored in a way to help mitigate this procurement problem. In particular, a trade between 4 incentives to reduce cost and incentives to facilitate changes and share information will be the key force in our arguments of contractual choice. We argue that simple projects, which we de?ne as easy to design with little uncertainty about what needs to be produced, ought to be procured using