Competitive Bidding and Outsourcing Decisions

Contracting out is a widely used mode of alternativegovernment service delivery arrangement, but themethodologies to assessing competitive bids andmaking contracting out decisions are historicallyflawed. This research project has introduced atheoretical model on contracting out by addinginsights from public administration, financialmanagement, and management accounting. Two long termcompetitive bidding episodes of an Australian cityCouncil are used to empirically test the theoreticalmodel introduced in this paper. The study finds that:a methodology ingrained in cross-disciplinary areashas a better potential to explain public sectoroutsourcing practices, it is imperative to change thecost management systems for competitive bid costing,especially for big-budget services, and finally, apublic sector entity may benefit if it imitatesprivate sector management and accounting practices.Academics and academic researchers, postgraduatestudents in Accounting and Finance, thepractitioners, and especially the government FinanceOfficers will immensely benefit from the detaileddiscussions of long term bid costing and assessmentmechanisms presented in this research paper.