Bureaucratic Discretion and Contracting Outcomes
58 Pages Posted: 14 Oct 2020
Date Written: July 16, 2020
We find that federal bureaucrats award more, larger, and less risky contracts to politically connected firms when they have greater discretion over contracting outcomes. Using a sample of 4.3 million federal government contract actions obligating $2.47 trillion between 2000 and 2015, we show that this result varies predictably across contract and agency characteristics, over time, and in placebo tests, and is robust to a comprehensive fixed effect structure and seven alternate measures of political connectedness. Our evidence illustrates the overlooked role of the bureaucrat in facilitating political bias in federal contracting outcomes.
Keywords: government spending, monitoring and control, corporate political activity, procurement contracts
JEL Classification: D72, D73, G38, H5, M48
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