Concurrent sourcing in the public sector: A strategy to manage contracting risk

Public administration scholars utilize transaction cost theory to explain the contracting dichotomy between make or buy. However, recent theoretical developments point to a mixed position, ‘‘make and buy,’’ as a strategic management choice. We draw insights from the private sector management literature on what it terms ‘‘concurrent sourcing’’ to build a theory for public sector mixed contracting, but argue that public managers face a broader range of contracting agents (both private for-profit and public intergovernmental) than private sector managers. The choice of contract agent makes local government contracting important in elaborating a theory of concurrent sourcing. Our empirical findings show that local government managers use concurrent sourcing as a strategy to mitigate potential contracting risks. We find mixed contracting is more common with for-profit agents and total contracting out is more common in contracts to other governments. When contracting with for-profit partners, mixed delivery helps reduce risk, promote market complementarities, and ensure attention to citizen interests.