Laffont and Tirole (1987) analyzed the problem of a regulator that wan
ts to select one of n firms to carry out a single indivisible project
when the firms have private and independent costs and have the possibi
lity of an ex-post investment in (non-observable) effort to reduce the
(observable) cost. This paper generalizes the analysis to a model of
common costs, unknown at the bidding stage, while keeping the assumpti
on of independent types. I show that the main characteristics of the p
rivate costs model are kept in a common cost framework. I provide two
mechanisms that may be used to implement the optimal contract.