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A Versatile Prism: Assessing Procurement Law Through the Principal-Agent Model

Public Contract Law Journal, Vol. 40, No. 1, p. 63, Fall 2010

GWU Legal Studies Research Paper No. 533

GWU Law School Public Law Research Paper No. 533

25 Pages Posted: 6 Mar 2011  

Christopher R. Yukins

George Washington University - Law School

Date Written: 2010

Abstract

Over the past several decades, the federal procurement system in the United States has grown remarkably, and now totals over $500 billion annually.

Over that same period, the rules governing federal procurement have been buffeted by broad efforts at reform. At no point, however, have we ever had an overarching theory - a model or prism - through which to assess the procurement system or its reform. Agency theory provides one such theoretical model. Long established in economics and the other social sciences, the principal-agent model (agency theory) provides a model to explain successes (and failures) in organizational structures, and also to understand the procurement system and its rules. The theory builds upon the classic principal-agent model. A principal enlists an agent to carry out the principal’s goals, presumably because the agent enjoys some comparative advantage in performing the goals. Inevitably, however, the agent’s interests diverge from the principal’s; if the agent’s goals diverge sufficiently, the agent may be said to have a conflict of interest. This article employs agency theory to assess classic constructs of procurement law, such as Steven Schooner's desiderata, and argues that the theory can be used to solve future puzzles in procurement policy, and to predict where procurement policies are likely to fail - and to succeed.

Keywords: government contracts, public procurement, public policy, principal-agent theory, conflicts of interest

JEL Classification: D21, D23, H42, H57

Suggested Citation

Yukins, Christopher R., A Versatile Prism: Assessing Procurement Law Through the Principal-Agent Model (2010). Public Contract Law Journal, Vol. 40, No. 1, p. 63, Fall 2010; GWU Legal Studies Research Paper No. 533; GWU Law School Public Law Research Paper No. 533. Available at SSRN: https://ssrn.com/abstract=1776295

Christopher R. Yukins (Contact Author)

George Washington University - Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States
202-994-9992 (Phone)

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