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Abstract
This dissertation assesses how public contract managers can design contracts to influence contractor performance. Public officials control whether contracts are competitively sourced, the financial structures used on contracts, and occasionally wield even greater discretion over contract design. These steps occur early in the contracting cycle, when public officials develop work requirements and the overall plan for implementing the contract. Using data on complex definitive contracts from the Federal Procurement Data System Next Generation, this research assesses how contract design elements are used and how these design elements affect performance. The dissertation introduces a new measure of contractor performance based on the way contracts end. Findings indicate that competitively sourced contracts are more likely to terminate early, suggesting that competition is not the silver bullet that many believe it to be. Experienced contractors are much less likely to have their contracts terminated, implying that relationships between government and contractor are important. Findings also show that contracting officials select financial structures based on the presence of transaction costs, indicating an understanding and application of economic theory in practice. Cost-reimbursement contracts, which provide little financial incentive for good performance, are much more likely to terminate early than other types of contracts. Contracts completed using simplified acquisition procedures, which grant public managers wide discretion over contract design, are less likely to terminate early than other contracts, providing evidence that managers are able to use their expertise to design better performing contracts. However, these contracts may not be meeting equity goals as expressed in the Federal Acquisition Regulation, perhaps showing a preference for efficient performance over other objectives. Taken together, this research indicates that steps taken early in the contracting cycle can influence contractor performance. As in other areas of public administration, these findings are further evidence that managerial actions are important for the outputs and outcomes of governance initiatives.