Association for Public Policy Analysis & Management

Panel: Competition in Markets for Government Contracts and Grants

(Public and Non-Profit Management and Finance)

The use of competition in allocating contracts and grants for public services is a well-established government practice. The government has long recognized that competition can be a useful tool in allocating resources efficiently. However, competition is only effective and efficient under certain conditions. Namely, competition is most effect when there are competitors, meaning that there should be low barriers to entry or many competitors already in the market. This is often not the case in government contracting due to the government’s regulations and requirements of contractors or grantees. This panel will describe the nature of competition in different contexts and for different types of service provision and the challenges the government faces in using competition to allocate government contracts and grants. This panel will describe the level and nature of competition in four very different contexts spanning federal, state and local governments: small business set asides, head start grants, state corrections contracts, and municipal contracts. Each of these presentations will explore how the market varies in different settings. In addition, this panel will explore various consequences of this competitive process including the quality of service provision, the consequences for the firms who compete and the cost to the government of managing this competitive process.