Journal of Accounting Research Vol. 62 No. 4 2024
Show Your Hand: The Impacts of Fair Pricing Requirements in Procurement Contracting
Abstract
This paper studies how a federal procurement regulation, known as the Truth in Negotiations Act (TINA), affects the competitiveness and execution of government contracts. TINA stipulates how contracting officials (COs) can ensure reasonable prices. Following TINA, for contracts above a certain size threshold, COs can no longer rely solely on their own judgment that a price is reasonable. Instead, they must either require suppliers to provide accounting data supporting their proposed prices or expect multiple bids. Using a regression discontinuity design, I find that above‐threshold contracts experience greater competition (i.e., more bids), improved performance (i.e., less frequent renegotiations and cost overruns), and reduced use of the harder‐to‐monitor cost‐plus pricing, compared to below‐threshold contracts. These findings suggest that TINA's requirements enhance competition and oversight for above‐threshold contracts.
- DOI
- 10.1111/1475-679x.12561
- Volume
- 62
- Issue
- 4
- Pages
- 1405-1448
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref