Outsourcing Expert Services by State Transportation Departments

Abstract

Privatization has increasingly become a policy option for government agencies struggling to meet rising demands for services but with fewer resources. In the transportation arena, many state departments of transportation (DOTs) have privatized by outsourcing highway functions to the private sector. But the outsourcing of technical and expert services such as those related to the design and construction of highway infrastructure may result in a smaller or less knowledgeable DOT workforce that is unable to perform the necessary contract management to ensure the quality of the work done by contractors. We posit an outsourcing process in which DOTs respond to the combination of increased demand for highway services and growing workforce constraints by contracting out much of the work formerly performed by in-house personnel. This, in turn, can produce perceptions of quality problems regarding the outsourced work and a subsequent expansion of the workforce. We examine the extent to which different highway-related tasks are being outsourced, the effect of workforce and employment factors on outsourcing, the perceptions of highway officials regarding the impact of outsourcing on cost-effectiveness and the service quality of the outsourced work, and subsequent employment levels.

Two Models of Teacher Accountability: Toward an Explanation for the Disappointing Results of Some Market-Based School Reforms

“…At times, outsourcing can lead to greater accountability, but contracting can pose risks to government agencies, as the contracting relationship throughout American history has had more than its share of blemishes (Durant, Girth, & Johnston, 2009; Keeney, 2007), and there are no a priori reasons to assume that outsourcing will produce cost savings or improved services. Empirical results have shown that outsourcing does not always lead to cost savings or improved service delivery (see, for example, Brudney, Fernandez, Ryu, & Wright, 2005; Condrey & Battaglio, 2007; Hodge, 2000; Yusuf & O’Connell, 2014), and may, under some circumstances, increase costs and/or lower quality (Bendick, 1989; Sclar, 2000).…”

Service Outsourcing and Government Fiscal Conditions: Do Market Competition, Bureaucrat Support, and Management Capacity Matter?

“…Regarding the consequences of contracting out public services, a considerable amount of scholarly attention has been paid to the effects of service outsourcing on public sector employees, service performance, and governments’ cost savings (e.g., Buerger & Harris, 2021; Jang & Eger, 2019; Lee & Lee, 2020; Lee et al, 2019; Yusuf & O’Connell, 2014). First, scholars find that contracting out public services not only leads to increasing reliance on inexperienced, short-term, and less educated public employees but also negatively affects public employees’ working conditions, salaries, and job satisfaction (Fernandez et al, 2007; Rho, 2013; Vrangbæk et al, 2015; Yang & Kassekert, 2010).…”

Willingness to pay taxes through mutual trust: The effect of fairness, governability,tax‐enforcementand outsourcing on local tax collection rates

“…Due to transaction cost economics, the limits to competition or contract failures (Crouch, 2015; Domberger & Jensen, 1997), it does not reduce costs or increase efficiency as expected. Furthermore, it does not automatically increase tax collection rates (e.g., Talit, 2012; Yusuf & O'Connell, 2014). Critics concerned about public policy and democracy maintain that outsourcing limits governmental control, leading to negative effects on employment, the fragmentation of the delivery of public services, the displacement of the traditional coordination between governmental arms, and the relegation of local policy makers to public service auditors and inspectors (Brown et al, 2006; Martin, 2010; Milward & Provan, 2000).…”