Wholly employee-owned firms outperform competitors in federal contracting

Purpose This study aims to determine whether 100% employee-owned firms perform better than other firms for federal customers in public procurement. Design/methodology/approach The study utilized a large, comprehensive, but rarely leveraged data set: the ratings of contractor performance by federal procurement officials in the Contractor Performance Assessment Reporting System (CPARS). Findings Statistical analysis of CPARS scores indicates that 100% employee stock ownership plan (ESOP) firms achieve higher ratings than all other firms and at a significance level well beyond 99%. In particular, they more frequently achieve ratings in CPARS of excellent or very good than other firms. Practical implications The findings suggest that federal contracting officials can confidently develop business relationships with many 100% ESOP firms. Originality/value Very few studies of public procurement in the United States have leveraged the data of the federal Contractor Performance Assessment Report Systems (CPARS).