What brings contracting back in-house? A synthesis of international evidence
| DOI | http://doi.org/10.1177/00208523211046330 |
| Published date | 01 June 2023 |
| Date | 01 June 2023 |
| Subject Matter | Articles |
What brings contracting
back in-house? A synthesis
of international evidence
Jiahuan Lu
Rutgers University—Newark, USA
Wan-Ju Hung
Rutgers University—Newark, USA
Abstract
Contracting back-in has received growing scholarly attention, but there is little empiri cal
consensus in the literature as to what drives governments to bring previously contracted
work back in-house and to what extent. This study performs a meta-analysis to synthe-
size 332 effect sizes from 16 existing studies concerning the antecedents of contracting
back-in across different countries. The analysis indicates that contracting back-in is a
market management strategy driven by low levels of market competition, high propor-
tions of for-profit contractors, insufficient cost savings, and inadequate contract manage-
ment. Meanwhile, contracting back-in is a political move shaped by left-wing political
ideology and employee opposition to outsourcing. Environmental factors including
unemployment rate, population size, and population density also play a role. This
study provides empirical generalizations of previous results and contributes a more
coherent knowledge base for future studies.
Points for practitioners
Our analysis indicates that contracting back-in is driven by a mix of both pragmatic and
political factors, but pragmatic factors related to contracting management complexity
shape contracting back-in in a more forceful way. Our findings also suggest that factors
pushing governments to contract out do not necessarily have an impact on contracting
back-in. Government decisions to contract out and contract back-in may be based on
different considerations.
Corresponding author:
Jiahuan Lu, School of Public Affairs and Administration, Rutgers University—Newark, 111 Washington Street,
Newark, NJ 07102, USA.
Email: jiahuan.lu@rutgers.edu.
Article
International
Review of
Administrative
Sciences
International Review of Administrative
Sciences
2023, Vol. 89(2) 595–610
© The Author(s) 2021
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/00208523211046330
journals.sagepub.com/home/ras
Keywords
government contracting, contracting back-in, reverse contracting, meta-analysis
Introduction
Since the New Public Management movement in the 1980s, contracting out has emerged
as a widespread government tool in the public administration landscape around the globe
(Hammerschmid et al., 2019; Hood, 1991; Pollitt and Bouckaert, 2004). When providing
public services to citizens, instead of relying on government employees (i.e. in-house pro-
vision), governments may choose to hire third-party contractors to deliver services (i.e.
contracting out).
1
In fact, despite the significant use of government contracting, the ben-
efits and risks of contracting out are always under scrutiny (Bel, Fageda, and Warner,
2010; Hodge, 2018; Petersen, Hjelmar, and Vrangbæk, 2018). Proponents argue that con-
tracting out promises such advantages as cost savings, efficiency, and program flexibility
(Domberger, 1998; Holum, 2018; Savas, 2000), while opponents claim that contracting
out leads to unintended consequences like increased service costs, poor service quality,
and compromised democratic values (Mulgan, 2005; Sclar, 2000).
In recent years, there has been an increasing number of studies documenting the emer-
gence of contracting back-in around the world, that is, governments bringing previously
contracted services back in-house and once again relying on public employees to deliver
services (e.g. Albalate and Bel, 2020; Damanpour, Magelssen, and Walker, 2020; Gradus
and Budding, 2020; Hall, Lobina, and Terhorst, 2013; Hefetz and Warner, 2004).
2
One
research question that this growing body of literature focuses on is what factors lead to
contracting back-in. Understanding antecedents of contracting back-in is important
because it informs public managers’decisions on service delivery mechanisms.
Building on a diverse set of theoretical frameworks, previous research has identified a
wide range of antecedents, such as weak market competition, poor service quality,
vendor opportunism and political opposition. However, there is still little empirical con-
sensus in the literature as to what drives governments to contract back-in and to what
extent. The competing lines of reasoning and empirical evidence in the literature,
although demonstrating the complexity underlying government contracting, fail to
provide a consistent knowledge base to guide future research and practice. This intellec-
tual gap serves as the motivation for this study.
This study employs meta-analysis to take stock of existing empirical evidence on the
antecedents of contracting back-in across different countries. Through a systematic
review of 332 effect sizes from 16 existing studies, we synthesize the effects of
various managerial, political, and contextual factors across different empirical settings.
The analysis indicates that contracting back-in is a market management strategy driven
by low levels of market competition, high proportions of for-profit contractors, insuffi-
cient cost savings, and inadequate contract management. Meanwhile, contracting
back-in is a political move shaped by left-wing political ideology and employee oppos-
ition to outsourcing. Environmental factors including unemployment rate, population
596 International Review of Administrative Sciences 89(2)
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