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w 11. h 1 n t. h e nnntrjifits 1 n a t. e a d of h e i n g ha.sed , aa it. i a preafint.ly, on average prine indexes, shou.ld ho haaed on t.he apenlfIn pricea involved and allowed only for t.he innreaaea In pricea of t.he spenifin go od a and aervines whioh are hought hy t.he firma or pool of firma In    order to produce what. la

a 1.1 p ii 1 a t. e d In t.he o on t rac t. At. t.he aame t.ime, In order to encouragft t.he non t. rac tor t.o make poait.1ve effort. s t.o m i n i tn i z e increaaes in t.he pricea of what. 1s purchaaed, it. a ho u ld he at. ipnlat.ed 1n advanne t.hąt. in any caae t.he nompensat. ion for input.a prir.ea Innreaaea wonld not he Immediate or noraplet.e. 0hv1o tlały,    t.hia    wonld    reflent.    it.aelf on    t.he 1 n 11. lal

nondit.iona    of    t.he    nontract, sińce    t.he value of    t.he nontract.

will ant. 1 c 1 p a t. e for thia fant.. Thia nonld apparent. ly produce a high er expend1t. ure hut. r.ould alao na ii a a a larger aav1ng in t.erma of t.he effent.a of prlr.e rev1aiona. Therefore it. i s difficult. t.o aay whet.her t.he overall expenditure wonld he larger or smaller; however, t.he most. important. point. 1 a t.hat., once t.he nontract. haa been at.1piilat.ed, t.he nontract ora will develop t.he max 1 mum effort.a t.o foreat.all t.he innreaae in t.he pricea of    t.helr input.a.    Tn ot.her    worda, t.he    at.at.e paya

aomet.hing morę at. t.he heglnnlng, hut from t.hat. moment, onwarda it. can rely upon a diffnaed effort t.o keep pricea as Iow aa poaaihle, and    aave    money    t.hanks t.o    t.he smal ler    effent.a of

indexat. łon.

Aa we sald , t.he non t. rant. a ahonld a1m at. deflning nlearly t.he thinga t.o he done and t.he relat. ive deadlinea for t.helr exer.nt.1on. Thia 1 mp 1 1 ea , on one aide, t.hat. t.he project.a have t.o he very well deflned and al Iow for aharp non t. rola of t.he q u a 1 11. a 1.1 v e and 1.1 m e feat.nrea of t.he implement.at.1on proce a a; on t.he ot.her aide firma r.ould not specu lute hy att.empt.1ng t.o e x p 1 o i t. delays in e x e n u 1.1 o n t.o oht.ain pri ne reviaiona. Apart. from t.he effent.a in terma of st.abilization of expeot.at. łona, t.hia will contr Ihut.e alao t.o innreaae t.he ef f inienny and effent.iveneaa of p u blin an tlona.

There are, however, ot.her prohlems t.o he faced. First, of all t.here ex1 at.s t.he danger t.hat. t.he fi ras dlrect.ly involved in t.he expanaive    pronesa    (t.he anppliera    t.o    t.he    puhlin

a en t. ora) are, t.o    a    large    ext.ent., firma whinh    t.radit. ionally

have relat. łona wit.h t.he puhlin aen.tor and are not. neneasarily t.he most. e f f 1 c 1 e n t.. These firma nould have heen selen t. e ri heca u ae of st.rong presaurea noming from int.erest. gro u pa, lohbiea, nlient.eles,    etc.    Senondly 1 t nould    be    argued    t.hat. a

Rignificant. flow    of    demand st.emming from    t.he    puhlin    aector

t.oward privat.e firma negat.iyely affent.a t.heir effinienny and pr odunt. 1 v 1 t.y. The exiat.enne of a reliahle and at.ahle demand mlght. indune these firma to relax t.heir effort.a t.o improve prodnnt. 1 v 1 t.y , whereaa t.he compet. 11.1 ve market. environment. wonld produce oppoaite, and posit.1ve, outnomea.

The government. might. deal wit.h t.heae d i f f 1 nu 11.1 ea -whinh are real- hy aelent.ing, for Inst.anne, only firma whinh, up to t.hat. moment., have been mainly operat.ing in t.he privat.e market, and have demona t.rat.ed t.o be ahle t.o anore aat.iafact.ory result.a