Show Your Hand: The Impacts of Fair Pricing Requirements in Procurement Contracting

• 成果类型: Article
• 署名作者: Nathan, Brad
• 署名单位: Rutgers University System; Rutgers University New Brunswick
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12561
• 发表日期: 2024
• 页码: 1405-1448
• 关键词: agency costs; disclosure; firm; PROPRIETARY; BEHAVIOR; cournot; POLICY

摘要

This paper studies how a federal procurement regulation, known as the Truth in Negotiations Act (TINA), affects the competitiveness and execution of government contracts. TINA stipulates how contracting officials (COs) can ensure reasonable prices. Following TINA, for contracts above a certain size threshold, COs can no longer rely solely on their own judgment that a price is reasonable. Instead, they must either require suppliers to provide accounting data supporting their proposed prices or expect multiple bids. Using a regression discontinuity design, I find that above-threshold contracts experience greater competition (i.e., more bids), improved performance (i.e., less frequent renegotiations and cost overruns), and reduced use of the harder-to-monitor cost-plus pricing, compared to below-threshold contracts. These findings suggest that TINA's requirements enhance competition and oversight for above-threshold contracts.