Evaluating Discretion in Government Procurement
نویسندگان
چکیده
Government procurement contracts generally garner a small number of bids, and it is not uncommon for only one bid to be considered. This paper quantifies multiple factors determining the extent of competition observed in the United States federal procurement data for commercially unavailable IT and telecommunications service contracts. We develop, identify, and estimate a principal-agent model of procurement where a buyer exerts costly effort to attract a more competitive field of sellers, after which she negotiates contract terms and selects a winner. We investigate and evaluate alternative policies to mandate greater competition, and find that stripping procurement agencies of their discretion and project-specific knowledge would not necessarily decrease procurement costs, even if their preferences are not fully aligned to those of taxpayers.
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