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Bureaucratic Competence and Procurement Outcomes

To what extent does a more competent public bureaucracy contribute to better economic outcomes? We address this question in the context of the US federal procurement of services and works, by combining contract-level data on procurement performance and bureau-level data on competence and workforce characteristics. We use the death occurrences of specific types of employees as instruments and find that an increase in bureau competence causes a significant and economically important reduction in (a) time delays, (b) cost overruns, and (c) number of renegotiations. Cooperation within the office appears to be a key driver of the findings.

Decarolis, F., Giuffrida, L.M., Iossa, E., Mollisi, V. and Spagnolo, G., 2018. Bureaucratic competence and procurement outcomes (No. w24201). National Bureau of Economic Research.