Political Contestability and Contract Rigidity: An Analysis of Procurement Contracts∗

We compare procurement contracts where the procurer is either a public agent or a private corporation. Using algorithmic data reading and textual analysis on a rich dataset of contracts for a standardized product and service from a single provider, we find that public contracts feature more rigidity clauses than private-to-private contracts and their renegotiation is formalized more frequently in amendments. We further com-pare in-sample public contracts and find similar patterns rising in political contestability using several measures. We argue that a significant part of the contractual rigidity dif-ference between purely private and public contracts is a political risk adaptation of the public agent to curtail plausible challenges from political contesters and interest groups