Determinants of Service Contract Outcomes

Abstract

The need for reform in the Department of Defense's (DoD) acquisition and management of services acquisitions was recently highlighted by the Government Accountability Office and by the DoD's top leaders in acquisition. The for-profit sector also struggles with the effective acquisition of services in which the complexities and unique nature of services render the definition of requirements and the specification and measurement of contractor performance problematic. Despite these difficulties, little research has been conducted to examine the determinants of sourcing performance in services acquisitions. This study examines the relationships between service quality and its antecedents through the use of structural equation modeling. Data were collected from 240 U.S. Air Force contract administrators. Results suggest that requirement definition sufficiency and communication strongly affect service quality and regulatory and statutory compliance. A negative relationship is found between the extent of compliance with regulations and statutes and service quality. Other results include a significant relationship between the level of commitment by the internal customer and the sufficiency of the requirement definition, as well as the deleterious effects of personnel turnover on compliance with regulations and statutes. The paper concludes with several managerial implications, limitations to the study, and directions for future research.