While much has been written about the importance of organizational capacity, few have examined systematically the influence of organizational capacity on local service delivery arrangements. This paper highlights the importance of organizational capacity in influencing local government decisions to provide services in house in the realm of public safety (e.g., fire, police and emergency medical services). Our empirical study, conducted in Texas, provides evidence that a local government may reduce the risks of contract failure when it produces services in house, especially in the presence of institutionalized evaluation mechanisms. Instead of relying on alternative service providers to acquire, store and move emergency medical supplies and services, local governments are building capacity to better equip themselves to deliver emergency services and plan for disasters.