The Contract State

Government has become the economy’s largest buyer and consumer. The government contract, improvised, ad hoc, and largely unexamined, has become an increasingly important device for intervention in public affairs, not only to procure goods and services but also to achieve a variety of explicit or inadvertent policy-ends. The government contract allocates national resources, organizes human efforts, stimulates economic activity, and distributes status and power. The government contract has risen to its present prominence as a social management tool since World War II, achieving in two decades a scope and magnitude which now rivals simple subsidies, tariffs, taxes, direct regulation, and positive action programs in impact upon the nature and quality of American life. Yet there is precious little consciousness of the trend; political leaders tend to see each contract as an isolated procurement action, overlooking the general pattern. Just as federal grants-in-aid to state and local governments have (since 1933) become a principal means for national integration of divided local jurisdictions, so federal contracting with private corporations is creating a new kind of economic federalism.

The implications of grants-in-aid...