Selling Out? Understanding How Agency Politicization Shapes Contracting Risk in U.S. Federal Procurements, 2001−2016

Abstract

This study analyzes how agency politicization shapes contracting risk in the design of U.S. federal procurements. Presidents have incentives for the government to incur greater contracting risk to ensure the flow of executive policymaking benefits to core partisan constituent groups (distributive motive), and the removal of administrative authority from less responsive agencies (substitution motive). Stronger empirical support is obtained for the distributive motive compared to the substitution motive. Agency politicization lowers the likelihood of favorable government contract structures made at the executive level of both presidential-aligned and presidential-opposed agencies, and the field offices of presidential-aligned agencies. Agency politicization is also associated with lengthier procurement time commitments under the most unfavorable contract terms, and that this problem is more pervasive for presidential-aligned agencies than presidential-opposed agencies. These procurement time commitments are most suboptimal for governments when contracting decisions are made at either the executive or managerial levels of presidential-aligned agencies.