Good Enough for Government Work: When Should Government Hire Nonprofits

48 Pages Posted: 29 Oct 2015

See all articles by Jeremy P. Thornton

Jeremy P. Thornton

Samford University - Brock School of Business

Jesse D. Lecy

Arizona State University (ASU) - School of Public Affairs; Maxwell School of Syracuse University; Georgia State University - Andrew Young School of Policy Studies

Date Written: October 29, 2015

Abstract

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

Thornton, Jeremy P. and Lecy, Jesse D., Good Enough for Government Work: When Should Government Hire Nonprofits (October 29, 2015). Available at SSRN: https://ssrn.com/abstract=2683429 or http://dx.doi.org/10.2139/ssrn.2683429

Jeremy P. Thornton (Contact Author)

Samford University - Brock School of Business ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States
2057262128 (Phone)

HOME PAGE: http://https://www.samford.edu/business/directory/Thornton-Jeremy

Jesse D. Lecy

Arizona State University (ASU) - School of Public Affairs ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ
United States

Maxwell School of Syracuse University ( email )

400 Eggers Hall
Syracuse, NY 13244
United States

Georgia State University - Andrew Young School of Policy Studies ( email )

Public Management and Policy
35 Broad Street, 6th Floor
Atlanta, GA 30303-3083
United States

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