Contracting Officer Workload, Incomplete Contracting, and Contractual Terms

This paper examines the effects of an exogenous shift in the cost of contractual completeness induced by workload spikes on the endogenous selection of procurement terms. I conduct an instrumental-variable estimation of the causal effect of workload on contracting. In a sample of 150−thousand contracts from 85 civilian procurement offices over 11 years, increases in contracting officer workload induced by retirements lead to decreased reliance on competitive acquisition procedures, decreased reliance on firmfixed-price contracts, increased risk of renegotiation, and higher total costs of procurement. These estimates are extremely policy-relevant, since the U.S. federal government has experienced exceptional growth in the level of acquisitions contracting over the past decade, but relatively limited growth in acquisitions manpower. The economic consequences of this state of affairs are not well understood, and this paper provides some of the facts necessary to evaluate them. JEL Classification: D23, D86, H11, H57