This dissertation consists of three essays that examine how institutional and market factors affect the efficiency of public procurement systems. In the first chapter, I study the trade-off between rules and discretion in public procurement. Should a central government give broad authority to local agencies in the way they award public contracts? Or should it subject them to a strict set of uniform regulations? I study this question in the context of US federal procurement. I find that, at current levels, the benefits from waste prevention are modest relative to the size of compliance costs introduced by regulation. In the second chapter, co-authored with Mark Duggan (Stanford), we study the relationship between market structure and public procurement outcomes. In particular, we ask whether and to what extent consolidation-driven increases in industry concentration affect the way in which the government procures its goods and services. We focus on the defense industry, by far the largest contributor to federal procurement spending in the U.S. We find that increased market concentration caused the procurement process to become less competitive, induced a shift from the use of fixed-price contracts towards cost-plus contracts, but find no evidence that consolidation led to a significant increase in acquisition costs. In the third chapter, joint with Andres Gonzalez-Lira (UC Berkeley) and Michael S. Walker (US Department of Defense), we study the effects of increasing competition for public contracts through advertising. Publicizing contract opportunities promotes bidder participation, potentially leading to lower acquisition costs. Yet extensive advertising could also exacerbate the adverse selection of bidders on non-contractible quality dimensions. We study this trade-off in the context of procurement contracts for the U.S. Department of Defense. We find that publicized contracts opportunities increases competition and leads to a different pool of vendors, which on average offer lower prices. However, we also find that the post-award performance of publicized contracts worsens, resulting in more post-award cost overruns and delays. The latter effect is driven by goods and services that are relatively more complex, highlighting the role of contract incompleteness.

United States federal procurement constitutes 25% of government spending and 6% of Gross Domestic Product. This dissertation addresses three questions in public economics: Are there economically relevant spillovers from federal procurement spending into local labor markets (Chapter 1)? Can legislators influence the spatial distribution of federal procurement spending (Chapter 2)? Do voters respond to changes in federal procurement spending in their districts (Chapter 3)?

My dissertation contributes to auction studies. It analyzes the bidding behavior in multi-round auctions. It is motivated by an interesting multi-round feature observed in the procurement auctions held by the Indiana Department of Transportation (INDOT hereafter), which adopts secret reserve prices. Prior research has indicated that auctions with reserve prices usually lead to no trade. However, prior research has not paid much attention to the possibility that the seller can auction unsold objects from previous rounds and a trade is therefore still likely to occur. My dissertation provides new theoretical and empirical analyses of auctions with multiple rounds. It first develops a game-theoretic bidding model for the multi-round auctions with non-forward looking bidders. It then establishes a structural econometric model in order to conduct a structural analysis of the INDOT data. Lastly it introduces dynamic features into the model by assuming that bidders are forward looking and uses a dynamic control approach to analyze the bidding behavior and policy issues. The main findings are: (1) rational bidders reduce their markup across periods in multi-round auctions; (2) simulations show that using secret reserve price is sometimes better than public reserve price for the procurement auctioneer; (3) counterfactual analyses indicate that on one hand, when bidders are not forward looking, it is better for the INDOT to use a secret reserve price; on the other hand, when bidders are forward looking, it is better for the INDOT to use a secret reserve price when the discount factor is low and to use a public reserve price when the discount factor is sufficiently high.

Legal Aspects of Public Procurement, Third Edition provides a glimpse into the relationships between the legal, ethical, and professional standards of public procurement, outlining not only the interconnections of federal, state, and local law but also best practice under comprehensive judicial standards. The book addresses the ever-changing legal structures that work in conjunction and define the public procurement profession, providing recommended guidance for how practitioners can engage in the function while staying ethically aligned. Instead of trying to address every issue at the heart of public procurement, however, the book seeks to establish the history and spirit of the law, outlining how practitioners can engage proactively and willingly to not only perform their function, but to also become advocates for procurement law modernization. This third edition features new chapters on competitive sealed proposals and contract administration, as well as a thoroughly revised and updated chapter on procurement of information technology to better relate to an increasingly digital world. Promoting a start-to-finish guidance of the procurement process, Legal Aspects of Public Procurement explores the relationships between solicitation, proposals, contract administration, and the cutting-edge aspects of technology procurements, providing a theoretical and case-study driven foundation for novice and veteran practitioners alike.