Outsourcing Oversight and ARRA 2009: What Factors Explain State Agencies’ Decision to Pursue Collaborative Monitoring?

Abstract

Abstract The research question raised is this study is: what factors affect state agencies' decisions to outsource oversight? The outsourcing of oversight here is conceptualized as a distinct occurrence of collaborative monitoring that expands the traditional principal–agent dyad common in the contracting literature to a small network of three agents. The adoption of the Recovery Act (ARRA) of 2009 presents a workload surge for state agencies that need to implement novel monitoring requirements in addition to their traditional practices regarding the management of grants and contracts. As an external factor creating a dynamic contracting environment the Act is hypothesized to increase the probability that state agencies outsource oversight. Additionally professional capacity is also a factor that might affect state agencies’ decision to contract out monitoring functions. Results from logistic regressions suggest that on average the factors measuring workload surge due to ARRA increase the probability a sampled agency outsources oversight by roughly 5 to 10%. Professional capacity on the other hand was not found to be a significant factor in the estimated models.

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