Government Waste or Win? Rethinking Year-End Spending Spikes as Investment in Underrepresented Contractors

• In Event: Institutions and Procurement Policy

Abstract

Because spending at the fiscal year’s end by government agencies have been linked to higher costs, lower market competition, and rushed decision-making, many consider these year-end spending spikes (YESSs) a representation of government inefficiency and waste. However, in the vein of rethinking government, this research studies the utility of YESS for historically underrepresented contractors. This research questions: does year-end spending by government agencies stimulate investments in small, minority business? Leveraging public values theory and resource-dependency, we suggest that government investment in these agencies at the year’s end may significantly stimulate administrative budgets during a critical operative time where fiscal budgets are significantly constrained. Utilizing data on the State Small Business Credit Initiative (SSBCI), a policy designed to facilitate job creation and retention among women-owned and minority-owned businesses, we use panel regression to explore the link between fourth-quarter investment and small business performance. Preliminary findings show that government disbursements were highest in the fourth quarter, but not necessarily by spend, evidencing the existence of year-end dominant behavior by government authorities in potentially efficient ways. More importantly, these investments – while comparatively smaller – nevertheless stimulated greater job creation and retention in business operations relative to other investments made to businesses in prior quarters. Together, these findings suggest YESSs optimized government policy intentions while minimizing cost. Implications for assessing government efficiency and effectiveness in contracting are discussed through a social equity lens, providing discussions relevant to both practitioners and academicians at the intersection of government contracting, financial management, and social equity policymaking.

Authors

• Emily Boykin, Augusta University
  Presenting Author

• Jaeyeong Nam, Kyung Hee University
  Non-Presenting Co-Author