Competitive Bidding and Outsourcing Decisions

Contracting out is a widely used mode of alternative§government service delivery arrangement, but the§methodologies to assessing competitive bids and§making contracting out decisions are historically§flawed. This research project has introduced a§theoretical model on contracting out by adding§insights from public administration, financial§management, and management accounting. Two long term§competitive bidding episodes of an Australian city§Council are used to empirically test the theoretical§model introduced in this paper. The study finds that:§a methodology ingrained in cross-disciplinary areas§has a better potential to explain public sector§outsourcing practices, it is imperative to change the§cost management systems for competitive bid costing,§especially for big-budget services, and finally, a§public sector entity may benefit if it imitates§private sector management and accounting practices.§Academics and academic researchers, postgraduate§students in Accounting and Finance, the§practitioners, and especially the government Finance§Officers will immensely benefit from the detailed§discussions of long term bid costing and assessment§mechanisms presented in this research paper.