Can the Private Sector Ensure the Public Interest? Evidence from Federal Procurement
Leonardo M. Giuffrida () and
Gabriele Rovigatti ()
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Leonardo M. Giuffrida: Department of Economics and Finance, University of Rome "Tor Vergata", http://www.ceistorvergata.it
Authors registered in the RePEc Author Service: Leonardo M. Giuffrida () and
Leonardo Maria Giuffrida ()
No 411, CEIS Research Paper from Tor Vergata University, CEIS
We empirically investigate the effect of oversight on contract outcomes in public procurement. In particular, we stress a distinction between public and private oversight: the former is a set of bureaucratic checks enacted by contracting offices, while the latter is carried out by private insurance companies whose money is at stake through so-called surety bonding. We analyze the universe of U.S. federal contracts in the period 2005-2015 and exploit an exogenous variation in the threshold for both sources of oversight, estimating their causal effects on costs and execution time. We find that: (i) public oversight negatively affects outcomes, in particular for less competent buyers; (ii) private oversight has a positive effect on outcomes by affecting both the ex-ante screening of bidders - altering the pool of winning firms - and the ex-post behavior of contractors.
Keywords: oversight; procurement; screening; red tape; moral hazard. (search for similar items in EconPapers)
JEL-codes: D21 D44 D82 H57 L74 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta
Date: 2017-07-20, Revised 2017-07-20
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Working Paper: Can the private sector ensure the public interest? Evidence from federal procurement (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:rtv:ceisrp:411
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