Good Enough for Government Work: When Should Government Hire Nonprofits
48 Pages Posted: 29 Oct 2015
Date Written: October 29, 2015
Annually, United States federal agencies issue procurement contracts worth five hundred billion dollars. Less than four percent of these were awarded to nonprofit organizations. This paper advances our understanding federal procurement practices by analyzing data from the Federal Procurement Data System. We isolate federal programs that choose between nonprofit and for-profit contractors. We find that the use of nonprofit organizations increases with contract complexity, but far less than theory would predict. We find that agencies may use the cost plus style contract as a substitute for nonprofits. We also identify anomalies where federal agencies may not be using optimal contracting tools.
Keywords: Nonprofit, FAADS, Contract, Complexity, Cost-plus
JEL Classification: D8, L3, H57
Suggested Citation: Suggested Citation