Proprietary Information Cost of Contracting with the Government

Abstract

We argue that contracting with the federal government involves significant proprietary information cost due to regulations requiring contractors to provide proprietary information, which may become available to outsiders via Freedom of Information Act (FOIA) requests. We provide evidence by showing that firms become more willing to bid for government contracts after a recent Supreme Court ruling on FOIA (Food Marketing Institute v. Argus Leader Media) that improved information protection for contractors and that this effect strengthens when the contracts entail higher proprietary information cost for contractors.

Keywords: Freedom of Information Act; Government Contractors; Proprietary Information Cost; Food Marketing Institute v. Argus Leader Media

JEL Classification: K4, M4