Analyzing the Contracting‐Out of Government Services: Relevant Cost‐Benefit Considerations

Stanley C. Wisniewski

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Public Policy and Administration Research Public Procurement and Policy Outsourcing and Supply Chain Management

Abstract

This article reviews various approaches to analyzing the contracting‐out decision and distills a set of cost/benefit considerations which each analysis must address in order to properly ascertain whether there is any advantage to contracting out as compared to performing the work in‐house. The author describes an approach to analyzing the contracting‐out decision that begins with an unambiguous, comprehensive statement of service goals to facilitate the measurement of outcomes and is followed by an examination of the other considerations on the cost side of the equation which are basic to the proper measurement of all direct costs, indirect costs, and social costs.

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