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The encyclopedia · Strategy & Leadership · Operational decision · 2000–2006

Chile's school-meals auction awarded contracts as packages, feeding 300,000 more children

JUNAEB used an integer-programming combinatorial auction to award meal contracts, saving the equivalent of feeding 300,000 extra children.

Junta Nacional de Auxilio Escolar y Becas (JUNAEB) · Chilean school-meal caterers

the move

Chile's Junta Nacional de Auxilio Escolar y Becas (JUNAEB) feeds around 1.3 million low-income schoolchildren, leasing meal service to private caterers across thousands of schools.

Working with operations-research academics, JUNAEB moved from ad-hoc contracting to a combinatorial auction: caterers bid on packages of meal contracts, and an integer programming model selected the winning combination, balancing price, quality and coverage while evaluating several scenarios to find robust solutions.

The redesign produced savings equivalent to the cost of feeding an additional 300,000 children per year, alongside measurable gains in quality and coverage, and made the award process transparent enough to survive public scrutiny. The model was refined over six years of real-world use.

why it works

  • Package bids let caterers exploit economies of scale, lowering the government's total cost.
  • Global optimization beats sequential awards when contracts are interdependent.
  • Scenario analysis made the chosen solution robust to uncertainty, not just cheap on paper.
  • Transparent, rule-based awards survived scrutiny that discretionary contracting would not.
the payoffOptimize the whole meal-contract assignment, not each tenderinspired

what transfers

When many contracts interlock, auction them as packages and solve the assignment globally; isolated tenders leave value on the table that one optimization can capture.

what came after

The approach became a flagship example of operations research in developing countries and directly inspired similar combinatorial tenders, including the Buenos Aires school Internet auction, and is still cited as a model for public procurement of interdependent services.

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