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Bidding behavior in the department of defense's commercial activities competitions

Author

Listed:
  • Christopher M Snyder

    (Department of Economics, George Washington University, Washington DC)

  • Robert P Trost

    (Department of Economics, George Washington University, Washington DC)

  • R. Derek Trunkey

    (The CNA Corporation)

Abstract

From 1978 to 1994, the Department of Defense conducted more than 2,000 competitions in which private contractors and the government's in-house team bid to provide a service performed in-house before the competition. A three-equation model is constructed, which is used to estimate the in-house bid, the minimum contractor bid, and the in-house team's baseline cost. The model accounts for the fact that the in-house bid is constrained not to exceed its baseline cost. The estimates are used in simulations of the savings from the completed competitions ($1.55 billion annually, 35 percent of the baseline cost) as well as the savings from various alternative policies, including competitively tendering all the functions on the Department of Defense's list of potential candidates ($7.58 billion annually). © 2001 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • Christopher M Snyder & Robert P Trost & R. Derek Trunkey, 2001. "Bidding behavior in the department of defense's commercial activities competitions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(1), pages 21-42.
    • Handle: RePEc:wly:jpamgt:v:20:y:2001:i:1:p:21-42
    DOI: 10.1002/1520-6688(200124)20:1<21::AID-PAM1002>3.0.CO;2-F
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    References listed on IDEAS

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