Competition and Federal Contractor Performance

Contracts are increasingly used in government as a way to insert competition into public agencies and policy implementation. Competition among contractors is theorized to drive down costs, encourage innovation, and boost accountability. However, there have been few studies on whether competition actually leads to improved performance among contractors. This analysis examines nearly 25,000 federal contracts to determine how competition is related to performance. Findings indicate that competitively sourced contracts are more likely to suffer from performance problems. However, relationships between contractor and agency correlate with fewer performance problems. This suggests that competition may not be leading to the benefits that many might expect. Instead, relationships and shared experiences, along with other factors, may matter more when seeking to improve contractor performance.