Subcontracting requirements and the cost of government procurement

• 成果类型: Article
• 署名作者: Rosa, Benjamin, V
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12456
• 发表日期: 2024
• 页码: 3-32
• 关键词: AFFIRMATIVE-ACTION; public procurement; bid preferences; auctions; equilibria; EXISTENCE; models; entry

摘要

Government procurement contracts are frequently subject to policies that specify a subcontracting requirement for the utilization of historically disadvantaged firms. I study how such subcontracting policies affect procurement auctions using data from New Mexico's Disadvantaged Business Enterprise Program. Theoretically, subcontracting requirements reduce prime contractors' private information on their costs by requiring them to select their subcontractors from a common pool of disadvantaged firms. This feature mitigates cost increases from using more costly subcontractors by causing prime contractors to strategically lower their markups. My estimated model reveals that New Mexico's past subcontracting requirements led to minor increases in procurement costs.