A replication of “Contracting out: For What? With Whom?”
| Published date | 01 September 2023 |
| Author | Lachezar G. Anguelov,Benjamin M. Brunjes |
| Date | 01 September 2023 |
| DOI | http://doi.org/10.1111/padm.12921 |
REPLICATION
A replication of “Contracting out: For What?
With Whom?”
Lachezar G. Anguelov
1
| Benjamin M. Brunjes
2
1
The Evergreen State College, Olympia,
Washington, USA
2
Daniel J. Evans School of Public Policy and
Governance, University of Washington,
Seattle, Washington, USA
Correspondence
Benjamin M. Brunjes, Daniel J. Evans School
of Public Policy and Governance University of
Washington, 4105 George Washington Lane
Northeast, Seattle, WA 98105, USA.
Email: brunjes@uw.edu
Abstract
In the 1980s, governments around the world adopted New
Public Management ideas about inserting competition into
government as a way to improve the performance of public
organizations. In many nations, contracting out was one
method of making governments more businesslike. Yet,
there have been few studies of how government contract-
ing behaviors have changed since the early 1980s. We repli-
cate Ferris and Graddy's classic 1986 study of local
government production and sector choice to assess how
public procurement has changed over the past 35 years.
Our findings show that today, contracting out is more com-
monly used across 25 local government service areas. In
contrast to the original study, much of the growth has been
in government-to-government contracts. For profit firms
are also winning more contracts for high transaction cost
work, while nonprofits are receiving fewer government con-
tracts in nearly every service area. Our analysis suggests
that contracting out remains of the highest importance in
21st-century governance and that additional research is
needed on how to manage contracts to achieve the best
value.
Резюме
През80-тегодини на миналиявекмногоправителствапо
целиясвятвъзприеха идеитена новиятпубличен
мениджмънт (NPM) изапочнаха да използват конкуренцияв
управлениеиизпълнителни длъжности на обществени орга-
низации катоначин за подобряване.Ивсепак досега има
We attest that we adhere to Public Administration's ethical and integrity policies. No external funds were used on this project.
Received: 21 October 2022 Revised: 1 February 2023 Accepted: 15 February 2023
DOI: 10.1111/padm.12921
Public Admin. 2023;101:1163–1197. wileyonlinelibrary.com/journal/padm © 2023 John Wiley & Sons Ltd. 1163
малкопроучванияна как употребата на правителствани
договорисфирми сеепроменило.В тази статия,
възпроизвеждамекласическотопроучванена Ferris и
Graddy (1986) за производствотоиизборанасектор на
местнотоправителство в различни области на обслужване.
Нашата целеда оценим как тези изборисасепроменили
презпоследните35 години.Ресултатитени показват чеднес
договоризауслугисеизползват по-честов25 области на
обслужванеотместнитеправителства.За разлика от
първоначалнотопроучване,голямачаст отрастежа евдого-
воритемежду правителстваанес частни фирми.Тези фирми
коитоприоритизират печалба същопечелятповечедого-
воризаработа с високи транзакционни характеристики.
Докатоорганизациитеснестопанскацелполучават по-малко
държавни договоривпочти всяка сферанаобслужване.
Нашиятанализпредполага,чевъзлаганетона договориот
местни правителствасвъншничастнифирми и изпълнители
еотголямозначениеза публичноуправлениепрез21-ви
век.Необходими са допълнителни изследванияна как да се
изпълняттези договори,за да сепостигненай-добра
стойност.
1|INTRODUCTION
For the past 40 years, public administration scholars have investigated the role of contractors in the delivery of gov-
ernment services. Inspired by the ideas of public choice economics, political leaders of the late 1970s and 1980s ini-
tiated the push to find ways to use market competition and business-like processes to improve government
efficiency. While many European nations chose complete privatization of various parts of government, public agen-
cies in the United States largely opted to contract out with third-party vendors. Contracting allows governments to
access market forces to lower service delivery costs while retaining control over the design and management of
many implementation details (Ferris & Graddy, 1986; Savas, 1977). In response to the increasing use of contracts for
a range of goods and services, scholars began to investigate when contracting out was appropriate and how it might
affect the delivery of public services. Many of the early studies were descriptive, trying to understand patterns in
contracting behavior while building evidence for inductive theory development.
Elegant in their relative simplicity, many early descriptive studies on contracting have formed the basis for ongo-
ing lines of inquiry. In a series of studies about municipal refuse collection, Savas demonstrated that contracting has
the potential to lower costs associated with the delivery of public services (Savas, 1977; Savas, 1979; Savas, 2002).
Building on Savas' work, other scholars began to wonder about the nuances of contracting out for different types of
goods and services, noting that refuse collection is relatively simple and easy to quantify. Using ideas from the
emerging field of transaction cost economics, these scholars began to analyze what we now think of as the make or
buy decision, assessing how the presence of different kinds of more obscure costs might affect a contract's potential
for efficiency gains (Dehoog, 1990; Walker & Weber, 1987; Williamson, 2002).
1164 ANGUELOV AND BRUNJES
In their 1986 study of local government contracting, Ferris and Graddy were some of the first scholars to refine
the idea of the make or buy decision, describing both a production choice where government officials must balance
“demand for contracting out and the available supply of external producers”(p. 332) and a sector choice, where con-
tract managers pick between for profit firms, nonprofit organizations, and other governments as potential contrac-
tors. As a result, their analysis includes an initial consideration of many ideas that have been central to the study of
contracting out in public administration, including market competition and efficiency (Brunjes, 2020; Johnston &
Girth, 2012), cost savings (Bel et al., 2018; Savas, 2002), loss of control (Box, 1999; Moe, 1987; Rosenbloom &
Piotrowski, 2005), service quality (O'Toole & Meier, 2004), relational contracting and the importance of shared goals
(Anguelov, 2020; Bertelli & Smith, 2010; Witesman & Fernandez, 2013), oversight and ease of measurement (Brown
et al., 2006; Brown & Potoski, 2003), task complexity (Kim et al., 2016), and community-building (Lecy & Van Slyke,
2013; Park & Brunjes, 2022; Van Slyke, 2007). Consequently, Ferris and Graddy's (1986) descriptive analysis intro-
duced public administration scholars to many of the theoretical and empirical underpinnings for decades of related
research.
Subsequent research has applied Ferris and Graddy's model through lenses of transaction cost economics,
agency theory, stewardship theory, and collaborative governance (Trammell et al., 2020). Production choice studies,
a central feature of the literature, have largely relied on ideas from transaction cost economics, such as asset speci-
ficity and ease of measurement, to make sense of how contractors and governments should and do balance potential
risks (Brown et al., 2006; Brown & Potoski, 2003). In general, contracting may be most beneficial when transaction
costs are relatively low: markets are competitive, project requirements are easily specified, and oversight is straight-
forward. In some instances where these conditions are not met, governments have reduced their contract spending
or even brought formerly contracted work back in house (Warner & Aldag, 2021; Warner & Hefetz, 2012). However,
governments regularly contract out in less-than-ideal conditions (Brunjes, 2020). As a result, agency theory has been
used to make sense of how to select and manage vendors given that conditions may not be optimal (Girth, 2017;
Romzek & Johnston, 2005). The conventional wisdom from this line of scholarship holds that contracting involves
probity risks, as vendors may shirk and quality shade (Kivleniece & Quelin, 2012). More recent studies suggest that
other factors, such as goal congruence and relationships, key considerations in sector choice, can limit probity risks
and may positively influence vendor performance (Brunjes, 2020; Witesman & Fernandez, 2013). Building on ideas
from collaborative governance, these studies characterize complex contracts as partnerships that require developing
trust, mutuality, and norms of reciprocity (Anguelov, 2020; Brown et al., 2006). In this context, contracts with non-
profits and other governments may have benefits over contracts with for profit firms, particularly with regard to
motivation and capacity.
However, despite the continued study of production and sector choice, few studies have attempted to describe
how government contracting decisions have changed over time. For example, while we now know that ex ante trans-
action costs should influence the decision to make or buy (Petersen et al., 2019), there are no studies that assess
whether academic recommendations have influenced or changed the decision to make or buy. Political preferences
for contracting out, path dependence, and relational power imbalances may outweigh scholarly recommendations
(Lonsdale, 2005; Bertelli & Smith, 2010, Anguelov, 2020;, Brunjes, 2020). How have the production and sector
choice decisions in government contracting changed over time?
To answer this question, we replicate Ferris & Graddy's, 1986 study, “Contracting Out: For What?
With Whom?”Replication is a critical element of scientific inquiry, ensuring that academic fields are producing verifi-
able findings and serving to promote rigor and integrity. In the social sciences, there is evidence that many studies
are not replicable, despite being highly influential and widely cited (Freese & Peterson, 2017; Walker et al., 2019). As
a result, more replication in fields like public administration is needed, both to ensure the validity of previous studies
and to promote critical analysis of long-held empirical results (Pedersen & Stritch, 2018; Walker et al., 2017).
After developing a process to replicate Ferris and Graddy's study, we conduct a wide replication, applying their
approach to more recent data. Our study offers insight into how local government contracting out has changed over
time. This approach ensures methodological rigor and provides a needed update into how governments have
ANGUELOV AND BRUNJES 1165
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