Contrary to the extant literature, we show that higher prices and inefficiencies in the implementation of public contracts compared to pure private contracts result from their specificity and rigidity, which is how public agents limit hazards from interested groups. The main thrust of our research is that, in politically contestable markets, the lack of flexibility in public procurement design and implementation reflects public agents’ political risk adaptation to limit hazards from opportunistic third parties---political opponents, competitors, interest groups---while externalizing the associated adaptation costs to the public at large. Reduced flexibility limits the likelihood of opportunistic challenge lowering third parties’ expected gains and increasing litigation costs. We provide a comprehensible theoretical framework with empirically testable predictions. Further, we apply algorithmic data reading and textual analysis to compare the complexity of public contracts in regulated industries subject to public scrutiny with relational private contracts. Using an original and comprehensive database, we prove that public contracts are larger, feature more arbitration, evaluation, litigation, and termination clauses, and their renegotiation is formalized in amendments with more arbitration clauses. We hypothesize that the higher rigidity of public contracts is a political risk adaptation of public agents by which they lower the likelihood of success of third-party opportunistic challenges. This cutting-edge methodology and proprietary datasets have been conducive to novel empirical results that are extensible to other areas of research.