The Impact of Cognitive Biases on Ethical Decision-Making in Government Procurement

Abstract

This report examines how cognitive biases, emotional influences, and systemic corruption undermine ethical decision-making in defense contract management. Through a qualitative analysis of the Fat Leonard scandal and The Pentagon Wars, the study shows how biases such as conformity bias, sunk cost fallacy, and overconfidence interact with permissive organizational cultures to distort judgment and weaken accountability. Although frameworks such as the Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement, and Joint Ethics Regulation provide necessary safeguards, findings indicate that regulations alone cannot prevent unethical outcomes when leadership norms discourage dissent or normalize incremental misconduct. Drawing on Government Accountability Office reports, behavioral-ethics research, and documentary evidence, the study proposes an ethical risk-management approach emphasizing independent reviews, structured decision processes, and enhanced ethical training to mitigate bias-driven errors. The results highlight the need for cultural reform and improved behavioral awareness to strengthen procurement integrity, safeguard taxpayer resources, and support more effective and ethical acquisition outcomes.