Renegotiation of Defense Procurement Contracts

Ex ante contract terms are not always enforced ex post. Through the analysis of enforcement conditions of outsourcing contracts in the French defense procurement sector, I identify the determinants of renegotiations. I demonstrate that analyzing formal arrangements is not enough to account for renegotiations. Informal decision-making plays a major role in that perspective. Determinants of renegotiations are focused on uncertainty associated to implicit decision rules prevailing in this sector. Besides, I show that probity transactions can be regarded as a transactional environment that favors renegotiations.