
14:15 - 15:45
The Role of Social Value in Contracting
Using over 1.39 million public procurement contracts valued at over $311 billion, we provide the first comprehensive evidence on how contractors’ environmental and social (E&S) performance shapes procurement contracting.
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Using over 1.39 million public procurement contracts valued at over $311 billion, we provide the first comprehensive evidence on how contractors’ environmental and social (E&S) performance shapes procurement contracting. E&S incidents lead to 12-13% smaller contract amounts and 11-13% shorter contract durations, with stronger effects in less competitive markets and for differentiated products. Additionally, poor E&S performers face 24% lower likelihood of contract renegotiation and less favorable renegotiation terms. Exploiting a landmark legal ruling on procurement discretion over non-price terms, we establish that agencies with greater monitoring capacity impose stronger discipline on poor E&S performers. These contractual consequences translate to significant declines in contractors’ sales and employment, revealing procurement as an important mechanism for enforcing corporate E&S responsibility.
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Economist
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