(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)
Source: Giuffrida, Leonardo & Raiteri, Emilio, “Buyers’ workload and R&D procurement outcomes: Evidence from the US Air Force Research Lab,” Leibniz Centre for European Economic Research, July 2021.
Commentary: Public procurement accounts for roughly a third of all federally funded R&D in America, and the job of procuring R&D from businesses and universities falls mainly to contract officers (COs), who lead contract planning, solicitation, and awarding. This role retains significant discretion, and when it is performed effectively it supports the development of essential innovations in computers, robotics, the Internet, and other fields.
Recent research from the Leibniz Centre for European Economic Research analyzes this role in econometric detail, using data on the US Air Force Research Lab (AFRL) as a case study to understand how COs spur innovations. Examining a combination of patent databases alongside the Federal Procurement Data System and the Federal Business Opportunities website on AFRL contracts, their research finds that having an additional CO in the office—corresponding to a 3 percent increase in average CO employment—leads to a 2 percentage point increase in the probability of generating patents.
While marginal diminishing returns undoubtedly affect CO employment, as in any workplace, the research identifies a general trend of value-added from more COs. Further, the workforce for COs in AFRL and other agencies is by no means overcrowded, as indicated by Cos’ increasing workloads stemming from growing national demands for new technology. When an agency’s staff is fixed or even hemorrhaging talent, COs become capacity-constrained and their backlogged workload produces less effective R&D investments. Therefore, government agencies must concurrently invest in their CO workforces for their contracted investments to yield the most innovative outcomes.