Searching Hidden Links: Inferring Undisclosed Subcontractors From Public Contract Records and Employment Data

Abstract

Many prime contractors use subcontractors to meet the DoD requirements for Small Business Utilization, to incorporate specialized skills and to perform tasks that are not the prime contractors' core business. Some of these subcontractors are not explicitly made public for a variety of reasons, including security or competitive advantage. In such cases, because the involvement of these subcontractors in certain aspects of acquisition is not known, they can pose the risk of becoming a weak, stress point despite careful planning by the DoD. This paper examines whether such undisclosed contractors can be inferred through a combined analysis of both the published purchasing data (Federal Procurement Data Systems Next Gen) and of additional pieces of information freely available on the web. In particular, this paper investigates employment data in an attempt to correlate changes in employment with negative modifications to contracts. It is possible that, when a contract is cut, the prime contractor may terminate a subcontract, resulting in layoffs of the subcontractor's employees. Employment numbers are published regularly and broken down to county and industry codes. This paper provides a preliminary analysis showing that drops in employment occur when small contractors have relatively large reductions in DoD contracts.