You are hereSunlight Foundation: Campaign contributions help companies get more federal contracts, study finds
Sunlight Foundation: Campaign contributions help companies get more federal contracts, study finds
-by Lee Drutman
June 21, 2012- In 2011, the U.S. federal government awarded $537 billion in private contracts. If U.S. federal contracts were their own national economy, they would be the 21st largest in the world, just behind Sweden ($538 billion). In other words, this is a lot of money.
Much of this money goes to large corporations, and many of these large corporations are also major campaign contributors. Which begs the obvious question: is there any connection between contract awards and contributions?
According to a recent study by St. Louis University political scientist Christopher Witko, the answer is that indeed there is. The more companies give in campaign contributions, the more they get in contracts, on average.
Looking at campaign contributions and contracts from 1979 to 2006, Witko found “a significant relationship between contributions and the receipt of future contracts,” in a paper entitled “Campaign Contributions, Access, and Government Contracting,” published in the Journal of Public Administration Research and Theory.
He estimates that for each additional $201,220 in campaign contributions (one standard deviation of the contributions variable), a company can expect to add 107 additional government contracts over what we would otherwise expect them to obtain, given their history and reputation. Since the average government contract in 2006 (the last year Witko looked at the data) was $49,800, 107 contracts would mean an additional $5.3 million in revenue.
Some quick back-of-the-envelope math: if we assume contractors make 10 percent profit on an average contract, $5.3 million in contracts would be worth $530,000 in profits. That would mean campaign contributions pay back more than double their initial investment.