Agency Design, Favoritism and Procurement in the United States

Dahlström, C., Fazekas, M., & Lewis, D. E. (2019). Agency Design, Favoritism and Procurement in the United States. QoG Working Paper Series 2019:4, ISSN 1653-8919.

The U.S. federal government spends huge sums buying goods and services from outside of the public sector. Given the sums involved, strategic government purchasing can have electoral consequences. In this paper, we suggest that more politicized agencies show favoritism to entrepreneurs in key electoral constituencies and to firms connected to political parties. We evaluate these claims using new data on United States government contracts between 2003 and 2015. We find that executive departments, particularly more politicized department-wide offices, are the most likely to have contracts characterized by non-competitive procedures and outcomes, indicating favoritism. Politically responsive agencies – but only those – give out more non- competitive contracts in battleground states. We also observe greater turnover in firms receiving government contracts after party change in the White House, but only in the more politicized agencies. We conclude that agency designs that limit appointee representation in procurement decisions reduce political favoritism.

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