JPART 19:579–602

A Political Consequence of Contracting:
Organized Interests and State Agency
Decision Making
Christine A. Kelleher
Villanova University

Susan Webb Yackee
The University of Wisconsin at Madison

ABSTRACT
We argue that contracting opens a pathway for organized interests to lobby public
managers. Using multilevel modeling techniques, we test this proposition with data from
administrative agencies in the American states. We ﬁnd that interactions between organized
interests and managers increase in the presence of contracting. We then demonstrate that
the inﬂuence of organized interests over key state agency decision making is driven, in part,
by whether an agency contracts out for public service delivery. The ﬁndings suggest the
presence of an alternate pathway for organized interests to access and inﬂuence government decision makers. Moreover, these results complement previous studies, which primarily
highlight the potential economic beneﬁts of contracting and hold important normative
implications for our understanding of government responsiveness in an era of decentralized
governance.

There is a vast literature concerning the economic consequences of government contracting
for public service delivery (Averch 1990; Dilger, Moffett, and Struyk 1997; Ferris 1986;
Hodge 2000), yet the political consequences of such actions are infrequently investigated
empirically. This oversight is particularly striking given that the administration of public
programs and services in the United States is rapidly changing (Frederickson 1999; Kettl
2005; Light 1999, 2003), with government contracting being a ubiquitous example. In this
article, we focus on one potential political consequence associated with changing public
management practices: the increased inﬂuence of organized interests on agency decision
making after government contracting.
A previous version of this paper was presented at the Public Management Research Conference in Tucson, AZ, in
October 2007. We would like to thank the Bedrosian Center on Governance and the Public Enterprise at USC’s SPPD
for its support. Additionally, we acknowledge the Earhart Foundation, Auburn University, and Odum Institute for
Research in the Social Sciences at UNC-CH for their support of the ASAP data collection. We would also like to
thank Yan Tang, Cynthia J. Bowling, Chung-Lae Cho, Deil S. Wright, Virginia Gray, and David Lowery. A special
thank you goes out to Jeffrey Brudney and Jay Eungha Rhu for sharing their data, expertise, or in many cases, both.
Finally, we are grateful to the anonymous reviewers and editor for their suggestions. Authors are listed in alphabetical
order. Address correspondence to the author at christine.kelleher@villanova.edu.
doi:10.1093/jopart/mun014
Advance Access publication on July 24, 2008
ª The Author 2008. Published by Oxford University Press on behalf of the Journal of Public Administration Research
and Theory, Inc. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org

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We put forth a simple proposition. Government contracts open a new pathway for
organized interests to lobby public managers. We argue that the administration of government contracts increases the amount of time public managers spend interacting with those
entities (such as private companies, nonproﬁt organizations, or other levels of government),
who traditionally act as contractors. These interactions largely consist of government ofﬁcials monitoring the performance and behavior of ‘‘third-party’’ service providers. Yet,
these exchanges also provide opportunities for contractors to convey their recommendations for policy change—be it shifts in programming, budgets, or policy priorities—to
public managers. Stated differently, contacting provides select organized interests access
to government decision makers. Moreover, contracting may also mobilize groups opposed
to this form of privatization to increase their lobbying efforts. We posit that contracting
reduces barriers to lobbying for some third parties and ultimately augments the overall
inﬂuence of organized interests within the administrative state. In the end, this argument
draws on several prominent public administration and political science literatures, including principal-agent theory.
We submit that lobbying through this contract pathway is but one of many avenues
organized interests may use to inﬂuence public decision makers. Indeed, it is not controversial to suggest that scholars have documented a long list of interest group lobbying
tactics, including well-established practices such as providing information to legislators,
handing out political contributions, organizing grassroots activities, submitting public comments to regulations, and engaging in litigation. Yet, it is controversial to suggest that this
standard list of tactics is incomplete and more provocatively that the standard list does not
acknowledge that interest group strategies can, and do, adjust to a shifting political environment that increasingly tilts toward privatization in the American states.
We test the contract pathway argument with data drawn from two sources. First, we
rely on the American State Administrators Project, which secured survey data from agency
heads in each of the 50 states in 1998 and 2004. Second, we supplement these data with
state level contextual factors, including information on the number of organized interests
active across the American states. We employ descriptive statistics and hierarchical linear
modeling to assess the argument. We ﬁnd that, in the presence of contracting out, the interactions between organized interests and government managers increase, albeit slightly.
We then demonstrate that the perceived inﬂuence of organized interests on state agency
decision making is driven, in part, by the degree to which an agency contracts out for public
service delivery. For instance, when controlling for a variety of competing explanations, we
uncover increases between ﬁve and 17 percentage points in overall interest group inﬂuence
on important agency decision making due to contracting. We take this evidence as suggestive support for the proposition that select organized interests may use their standing
as contractors to lobby public managers for policy change and that lobbying opponents may
be mobilized by contracting out.
THEORETICAL FOUNDATIONS AND ARGUMENT

The argument in this article rests on differing perspectives within the political science and
public administration literatures regarding the relationship between the public bureaucracy
and organized interests. As Frederickson (1999) elucidates, these literatures frequently use
conﬂicting conceptual lenses to understand the political world. For instance, whereas recent
research in political science has been largely concerned with the political control of public

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A Political Consequence of Contracting

bureaucracies and the power relationships that ensue, the literature within public administration has moved toward ‘‘theories of cooperation, networking, governance, and institution building’’ (Frederickson 1999, 702). Due to these distinct concentrations, the
literature within political science is more pessimistic regarding the relationship between
administrators and organized interests, whereas the public administration literature appears
somewhat more optimistic. There are, of course, exceptions to this characterization and
many scholars contribute simultaneously to both literatures (e.g., Balla and Wright
2001; Nicholson-Crotty and Nicholson-Crotty 2004; Reenock and Gerber 2008; Yackee
2006). Nevertheless, these opposing perspectives provide leverage as we move toward
an understanding of the political consequences of agency responsiveness to organized interests. We now review select ﬁndings within these traditions.

A Focus on Political Power and Hierarchical Control

Over the past several decades, few research questions received more attention within political science than, ‘‘who controls the United States bureaucracy?’’ The primary theoretical
issue within this literature is a concern over the delegation of decision making to nonelected
bureaucrats with many studies focusing on the democratic legitimacy and accountability of
the public bureaucracy. These studies explicitly, or implicitly, employ principal-agent theory, and thus often have a ‘‘vertical’’ focus that emphasizes a hierarchical relationship between the elected political principal and an agent. In its simplest form, principal-agent
theory within the bureaucratic politics’ tradition is a framework for studying the delegation
agreement between a political principal, such as Congress or the President, delegating responsibilities to an administrative agent, such as a traditional public manager, who carries
out these responsibilities (Moe 1984; Perrow 1986).1 This model is particularly helpful in
understanding the problems associated with the delegation decision, such as the difﬁculty in
selecting the appropriate person for the task at hand, and the fact that agents, once selected,
cannot be easily observed in their work environments. Furthermore, agents typically possess more information and expertise about their tasks than political principals, which can
reduce the ease of oversight by principals.
In particular, scholars have spent considerable time identifying the tools and mechanisms utilized by elected principals to overcome these delegation problems (Aberbach
1990; McCubbins 1985; West 1995; Wood and Waterman 1994). This line of research
typically points to the formal powers that Congress holds over the bureaucracy, such as
setting agency budgets (Bendor and Moe 1985; Calvert, McCubbins, and Weingast
1989; Carpenter 1996; McCubbins 1985; Wood and Waterman 1994), designing agencies
(Wood and Bohte 2004), holding oversight hearings (Aberbach 1990, 2002; McCubbins
and Schwartz 1984), and imposing administrative procedures on policy implementation
(Bawn 1995; McCubbins, Noll, and Weingast 1987, 1989; Potoski 1999, 2002). Yet, other
research also suggests the importance of agents within the relationships. Wood (1988), for
example, ﬁnds that the inﬂuence of elected institutions was constrained when an agency has
substantial bureaucratic resources and a zeal for their use. Likewise, Krause (1996)
1
In the past, these relationships were often conceived of as having one principal and one agency; however, numerous
scholars within the political control tradition (e.g., Hammond and Knott 1996; Waterman and Meier 1998; Waterman,
Rouse, and Wright 1998) have now extended this relationship to include multiple principals.

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demonstrates that bureaucrats are capable of inﬂuencing the behavior of the principals who
monitored them.
Additionally, there has been a recent increase in attention paid to the direct interactions between organized interests and agencies, particularly in the area of rulemaking
(Furlong and Kerwin 2005; McKay and Yackee 2007; Yackee 2006), and many studies
go so far as to treat organized interests as an additional political principal that competes
for control with legislatures and executives (Bendor and Moe 1985; Hammond and Knott
1996; Kelleher and Yackee 2006; Scholz and Wood 1998; Yackee 2006). This perspective
frequently contrasts with the often-cited agency capture literature (Bernstein 1955; Stigler
1971) and the revolving door hypothesis (Mackenzie 1987; Pika 1983) by suggesting that
the inﬂuence of organized interests on agency decision making may be conditioned by the
oversight provided by other political principals. Moreover, whereas a preponderance of the
political science literature focuses on the political control of the bureaucracy, other strands
of scholarship suggest a friendlier and more open relationship between bureaucracies and
organized interests. Some scholars, for example, point to the assistance organized interests
give to agencies in inﬂuencing public opinion (Hrebenar 1997; Rourke 1984), in implementing policies (Pika 1983; Yackee 2006), and in helping to secure agency budgets (Berry
1989).
A related literature within political science focuses on the importance of organized
interests to the larger policymaking process. Regardless of the terminology used—organized
interests, interest groups, clientele groups, pressure groups, or special interests—most political scientists agree, as Baumgartner and Leech (1998, xv) summarize, that these entities
‘‘are a necessary evil best controlled rather than eliminated.’’ Some of the pessimistic tone
in the literature originates from the well-established bias toward business and traditional economic interests present within the United States system of organized interests (Gais 1996;
Gray and Lowery 1996, 2001; Rozwell and Wilcox 1999; Schlozman 1984; Scholzman
and Tierney 1986). J. Yackee and S. Yackee (2006), for instance, ﬁnd that businessrelated interests participate more in the administrative rulemaking process and are more
inﬂuential over this process than other types of participates. Yet, as Meier and Bohte (2007)
conclude, it would be incorrect to assume that a general business bias always translates into
victories for business-oriented interests; instead, a number of cases document policy battles
won by public or consumer advocates over narrower business interests.
A Horizontal Focus on Cooperation and Governance

The public administration literature tends to differ from the political science perspective in
terminology, tone, and substance with respect to the relationship between organized interests and public bureaucracies. In contrast to the political science labels of organized interests or interest groups, scholars of public administration often utilize alternative
terminology—such as third parties or partners in service delivery. Similarly, the tone
of the recent public administration literature also differs from political science. Whereas
political science has continued to be primarily concerned with hierarchical relationships,
public administration is increasingly ‘‘horizontal’’ in its orientation. Stated differently,
prominent public administration scholars tend to highlight government partnerships with
private, nonproﬁt, or other government entities to provide public services via networks,
contracts, and other quasi-governmental collaboratives (Heinrich, Hill, and Lynn 2004;
Kettl 2000). This ‘‘repositioning,’’ to use Frederickson’s (1999) words, provides for a

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A Political Consequence of Contracting

new concentration on the tools and mechanisms of governance in the public administration
literature (Heinrich, Hill, and Lynn 2004; Kettl 2000; Light 1999, 2003; Salamon 2002).
Some have noted that the accompanying concentration on governance over government also provides for a more apolitical, technocratic, and problem-solving tone (Fuchs
2005). Yet, we would be remiss to characterize the public administration literature as naive
to the politics associated with public management. Many scholars note the accountability
problems associated with using third parties to perform public services (Bardach and Lesser
1996; Kettl 2000; Milward and Provan 2000), whereas others point to more general
concerns regarding democracy and citizenship (Box 1999; deLeon and Denhardt 2000;
Denhardt and Denhardt 2000; Eikenberry and Kluver 2004; King and Stivers 1998).
The substance of each literature also differs to some degree. Take, for instance, the
recent concentration on network theory within the public administration literature (La Porte
1996; Milward 1994; Milward and Provan 2000; O’Toole 1997). Network theory helps
explain the relationships between the ‘‘third-party’’ organizations that provide a particular
array of government services and the public managers who oversee the networks. Networks
are inherently horizontal in their orientation (La Porte 1996), and as a result, network management differs from hierarchal management by yielding a different array of managerial
concerns (Milward 1994; O’Toole 1997). Interestingly, although accountability concerns
are raised by numerous scholars, lobbying is infrequently mentioned with regards to network theory, and when it is mentioned, it has been portrayed as one of the problems that
‘‘must be solved if a [networked] system is going to become or remain stable’’ (Milward
and Provan 2000, 371).
Contracting and Governance

The government contracting literature has primarily been the domain of the public administration. Over the past 30 years, numerous articles have explored this topic from a variety
of angles and, as Ni and Bretschneider (2007) note, a good deal of research focuses on local
governments and/or school districts (Boyne 1998; Brown 2007; Brown and Potoski 2004;
Dilger, Moffett, and Struyk 1997; Dubin and Navarro 1988; O’Toole and Meier 2004;
Praeger 2008; Warner and Heﬁtz 2008). Additionally, much attention has been devoted
to the normative or prescriptive arguments tied to contracting (Ni and Brettschneider
2007) and general discussions of its prevalence as a tool of governance (see Avery
2000; Chi and Jasper 1998; Hirsch 1991).
Despite recent calls for a more integrated approach to the study of contracting (Brown,
Potoski, and Van Slyke 2006), one can divide the literature into two distinct lines of inquiry:
(1) the decision to contract and (2) the consequences of the contracting decision. First, why
do agencies contract? A multiplicity of answers exists for this question, ranging from the
individual preferences and motivations of ofﬁcials (Dilger, Moffett, and Struyk 1997;
Greene 2002) to structural and contextual explanations (Ni and Bretschneider 2007;
O’Toole and Meier 2004). Brudney et al. (2005) focus on both levels of analysis in their
recent work, and ultimately ﬁnd that agency-speciﬁc variables are the more powerful of the
two explanations. Others have pursued market-based explanations (e.g., Sclar 2000),
whereas still others have considered the impact of stakeholder values (Kraft and Clary
1991; Serra 1995).
Second, scholars have engaged the consequences of contracting. Here, the literature
can be divided into two streams—one on the economic costs and beneﬁts (Averch 1990;

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Dilger, Moffett, and Struyk 1997; Ferris 1986; Greene 2002; Hodge 2000; O’Looney 1998;
Savas 2000; Sclar 2000) and the other on program quality and/or organizational performance (Bendick 1989; Brown 2007; Heinrich and Choi 2007; Hodge 2000; Kamerman
and Kahn 1989; Norris and Thompson 1995; Sanger 2003; Seidenstat 1999; Van Slyke
2003; Weissert 2000). In both camps, however, the ﬁndings are often inconclusive. For
example, as Brudney et al. (2005) note with respect to economic analyses, ‘‘empirical studies differ substantially in regard to the amount of cost savings achieved’’ (395). And, as
Brown et al. (2006, 326) similarly write, ‘‘the relative strengths of direct versus contract
service delivery appear to vary across circumstances.’’
Nevertheless, despite many articles on the topic of contracting—Auger (1999) reviewed
over 300 for her study alone—and recent calls for increased attention to the political- and
value-based considerations associated with contracting (Brown, Potoski, and Van Slyke
2006), the noneconomic consequences of contracting have often escaped empirical investigation (Brudney et al. 2005; Ni and Bretschneider 2007), as has a broad focus on state
level trends (Brudney et al. 2005; Chi 1993; Ni and Bretschneider 2007; Wallin 1997).
A Political Consequence of Contracting

We suggest an account of agency responsiveness to organized interests, which draws on
several lines of previous inquiry. More speciﬁcally, we argue that government contracts
open a pathway—a contract pathway—for organized interest to lobby public managers.
The administration of government contracts, we argue, causes public administrators to interact and communicate more with horizontal collaborators. We expect these interactions to
occur because both the performance and oversight of decentralized service delivery systems depend on the feedback public managers receive from contractors.
We argue that this feedback takes two main forms. The ﬁrst form is the apolitical
reporting of activities, outputs, and outcomes performed by third parties. This type of feedback may be considered normatively ‘‘good’’ in that policy-relevant information ﬁlters
from agents to principals and thus allows for the enhanced management of public programs.
Yet, we also expect a second form of feedback to take place when ‘‘third-party’’ entities are
involved with the delivery of public services. We suggest that contractors also share policyspeciﬁc feedback with agency ofﬁcials—for example, suggestions for budgetary changes or
proposals for shifts in regulatory burdens. We anticipate that these third parties will advocate their political preferences because they have a high stake in agency decision making.2 We expect contractors to use their standing as ‘‘partners in service delivery’’ to engage
in both forms of feedback, including the opportunity to lobby public managers.3
We ground this main component of our argument within the bureaucratic politics’
tradition of principal-agent theory, and we see our argument as an extension of this line
of reasoning. However, important differences remain. For instance, whereas principalagent models typically describe delegation problems resulting from an elected political
principal shifting some policymaking or implementation power to a public manager,
our argument extends this reasoning to the contracting relationship. Here the administrative
2
For instance, the budgets of contractors depend to some extent on agency decisions and a contractor’s ability to
change or expand programming may also reside with the policy choices made by public managers.
3
We anticipate that some portion of a contractor’s suggestions for policy change to ﬁlter up to the level of senior
agency management even if the feedback generally takes place between contractors and more junior public managers.

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A Political Consequence of Contracting

ofﬁcial is the principal and the contractor is the agent. Yet, under this scenario, the delegation problems of information asymmetries and moral hazards still exist. These problems
drive, in fact, our argument: the two forms of feedback we suggested above are only
important in situations where the agents hold more information than the principal and
in situations where a principal’s oversight of agent tasks is difﬁcult. Given this line of argumentation, several interesting theoretical implications emerge. For instance, one may
suggest that a ‘‘double principal-agent’’ situation exists when contracting is employed because policy-related decisions are one-step further removed from those elected ofﬁcials
charged with the original task of ‘‘making law.’’
Additionally, it may be argued, as we do, that these relationships are complicated
further by the fact that ‘‘third-party’’ contractors may also be considered organized interests—an assumption that is not inconsistent with related literature. Salamon (2006; see also
Salamon 2002) deﬁnes third parties as ‘‘lower levels of government, private banks, insurance companies, businesses, nonproﬁt organizations, and the like’’ that are enlisted to
‘‘carry out government programs and respond to public needs.’’ Using this deﬁnition,
Salamon’s list of third parties closely matches the types of organized interests that scholars
ﬁnd lobbying in multiple political venues, including the public bureaucracy (Baumgartner
and Leech 2001; Gray and Lowery 1996, 2001; Kerwin 2003; J. Yackee and S. Yackee
2006). Beyond this correlation, however, there is also some empirical support for the suggestion that contractors lobby decision makers. For instance, Grier, Munger, and Roberts
(1994) and Mitchell, Hansen, and Jepsen (1997) ﬁnd that as ﬁrms and/or industries become
more enmeshed with government—be it via selling to government or becoming more
regulated—they also tend to lobby legislators.
Thus, we expect select organized interests to lobby more and, in the end, to hold some
inﬂuence when they serve as contractors for government agencies. But we do not expect
these lobbying efforts to occur in a vacuum. In short, we also anticipate that contracting will
spur some lobbying by those opposed to this form of privatization. And there are certainly
natural opponents to contracting out within the lobbying community, such as some groups
representing public sector employee unions. Here our expectation is based on the large and
robust theoretical tradition concerning lobbying conﬂict (Bentley 1908; Schattschneider
1960; Truman 1951), which suggests that contracting may mobilize interests opposed
to this form of privatization to increase their lobbying efforts, as well.
We hypothesize that the use of contracts increases the inﬂuence of organized interests
over agency policy outputs.4 Along with those cited above, this argument builds on two
other established literatures. The interest group literature has long identiﬁed access to public decision makers as a critical mechanism for lobbying (for a summary see, Baumgartner
and Leech 1998; a more recent example, S. Nicholson-Crotty and J. Nicholson-Crotty

4
We theorize that an exogenous relationship exists between government contracting and interest group inﬂuence on
agency decision making. In making this argument, we rely on the numerous studies devoted to explaining contracting,
which, in general, neither posit nor demonstrate empirically that interest group inﬂuence is a key factor on the decision
to contract out. For instance, the explanatory model of contracting out by Brudney et al. (2005) in the American states
has 23 predictor variables, including several variables tapping the dimension of ‘‘politics and ideology.’’ Yet, these
authors do not reference the importance of interest groups in explaining a state agency’s decision to pursue this form of
privatization. Nevertheless, like most research within the social sciences, we must be concerned about the potential for
endogenous relationships. We address this fact in two ways. First, the time ordering of events within the ASAP survey
is used to our advantage when testing the theory. Second, we estimate a two-stage least squares (2SLS) model. These
strategies are both discussed in greater detail later in the article.

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2004). We argue that the increased connectedness between contractors and agency ofﬁcials
provides access to contractors, which then allows select organized interests to lobby the
administrative state. The second literature is the contracting literature, which strongly suggests that public managers—despite making the decision to contract for the provision of
some government services—retain decision-making ability on key issues of policy, regulation, and contract details (Boyne 1998; Brudney et al. 2005; Ferris 1986).

TESTING THE ARGUMENT
Data and Methods

We draw on data from multiple sources to test this argument. However, we rely primarily on
the American State Administrators Project (ASAP), which secured survey data by mail from
1,175 agency heads in 1998 and 940 agency heads in 2004. The data include all 50 American
states and all categories of state agencies active over this time period. The response rates with
the corresponding years were 33% (1998) and 28% (2004). These response rates have been
conﬁrmed as representative of the agency heads contacted by the ASAP surveys.5
We utilize survey data tapping the attitudes and assessments of state administrative
agency heads to test our argument for two main reasons. First, the literature speciﬁcally
examining organized interest involvement with state agency decision making is relatively
thin. Although there are exceptions (e.g., Brudney and Hebert 1987; Kelleher and Yackee
2006; Nicholson-Crotty and Nicholson-Crotty 2004), our understanding of these relationships is incomplete, especially considering the important role that these agencies play
within the arena of state politics (Barrilleaux 1999; Dometrius 2002). Moreover, the current
status of the literature does not fully account for the recent transformation of public management in the United States and the fact that even ‘‘more responsibility for both making
and implementing policy has ﬂowed to state and local governments’’ (Kettl 2000, 489).
And, as Auger (1999) and Brudney et al. (2005) conclude, much additional work is needed
to fully understand contracting in the American states.
Second, the perceptions of agency heads are key components in our understanding of
state agencies’ decision making. As Schneider, Jacoby, and Coggburn write, ‘‘[a]dministrators in state agencies have wide latitude to make vital decisions in important public programs’’ (1997, 240). Whereas the perceptions of agency heads do not explain the entirety of
political reality, surveys of public ofﬁcials provide a powerful tool for understanding the
perceived inﬂuence of outside entities on state bureaucracies (Hoffmann 1967). Thus, the
response of political actors to their environment within the framework of their perceptions
represents an important aspect of reality (Ring and Van de Ven 1989; Weick 1979, 1995,
2001). The responses of administrators used in this article from the American State
Administrators project are part of a steady stream of research over the past four decades
that has offered countless insights into state government. Select recent examples include
Bowling and Wright (1998), Brudney, Hebert, and Wright (2000), Cho and Wright (2004),
Brudney et al. (2005), Bowling et al. (2006), and Kelleher and Yackee (2006).

5
Telephone follow-up conversations with a random sample of the nonrespondents were completed in 1998 and 2004.
In both years, these additional analyses led the survey administrators to conclude that the actual respondents to the
questions were representative of the universe of administrators to whom the ASAP surveys were sent.

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In this article, we employ descriptive statistics and a multilevel linear modeling strategy with individuals nested in states to test the previously presented hypothesis. A hierarchical design offers a multitude of methodological advantages. First, it recognizes and
controls for the clustering of individuals within larger units, and thus, it does not violate the
assumption of statistical independence. Additionally, it accounts for the possibility of nonconstant variance across different states (Rahn and Rudolph 2005; Raudenbush and Bryk
2002; Steenbergen and Jones 2002). Finally, as suggested by Lynn, Heinrich, and Hill
(2001) and Brudney et al. (2005), some sort of hierarchical structure of governance drives
all programs, and thus, it is critical that scholars acknowledge these distinctions in their
efforts to explain policy and administrative decisions. Failure to use a multilevel strategy
for nested data can result in biased standard errors as well as incorrect Type I error rates
(Steenbergen and Jones 2002). A multilevel model essentially involves the estimation
of both a level-1 (individual) and a level-2 (state) model (Raudenbush and Bryk 2002;
Steenbergen and Jones 2002).
The quantitative models pool data from the 1998 and 2004 ASAP surveys. We account
for any year-speciﬁc differences with the inclusion of a ﬁxed effect for data collected in
2004. We also control for any substantive differences that may arise across type of state
agency. To do so, we use a classiﬁcation system established by Deil Wright and utilized by
other scholars (e.g., Brudney and Herbert 1987). Wright groups state agencies into 13 substantive categories based on the agency’s functional role in state government. We provide
a list of these categories in Table 1. We include 12 ﬁxed effects in the model speciﬁcations
to account for differences across types of administrative agencies.
Dependent and Independent Variables

The dependent variable in our analyses is a scale assessing the overall inﬂuence of organized interests on agency decision making. This scale measures state administrator perceptions of organized interest inﬂuence on agency policymaking. The wording of the question
follows: ‘‘In making agency decisions it is usually possible to identify and weigh several
major sources of inﬂuence. Among these are . . . clientele groups. Please indicate below (by
circling) the degree of inﬂuence . . . on decisions your agency makes in the following decision areas.’’ Administrators were asked to respond about multiple decisions areas using
the following choice categories: none (0), slight (1), moderate (2), and high (3) degree of
inﬂuence. From these scores, we created an additive scale combining the responses for
three major decisions areas—total agency budgets level, budgets for speciﬁc programs,
and major policy changes—into a single measure. The alpha on the scale is moderately
high at 0.83 for 1998 and 2004, and thus, conﬁrms the general reliability of the scale construction. The ASAP survey speciﬁcally asks about the perceived inﬂuence of ‘‘clientele
groups’’ on major agency decision making. We utilize the ASAP survey’s terminology as
an approximate, but not exact, proxy measure of administrative attitudes toward organized
interests.6 In the end, we are limited by the existing survey’s wording; however, although
imperfect, the questions generally tap the concept that we are interested in assessing: the
degree to which outside parties (and particularly those that may serve as contractors)
6
The ASAP survey, which dates back to the early 1960s, began asking this question in 1978 when the term ‘‘clientele
groups’’ was commonly used by scholars. For instance, see a seminal article by Aberbach and Rockman (1978), which
employs the term clientele groups synonymously with ‘‘interest groups.’’

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Table 1
State Administrative Agencies Classiﬁed by Functional Category

Functional Category
1
2
3
4
5
6
7
8
9
10
11
12
13

Examples of Agencies Represented

Elected ofﬁcials
Staff: ﬁscal
Staff: nonﬁscal
Income security and social services
Education
Health
Natural resources
Environment and energy
Economic development
Criminal justice
Regulatory
Transportation
Other

Auditing, Attorney General
Comptroller General, ﬁnance
Personnel, purchasing
Aging, welfare, employment services
Higher education, vocational education
Mental health, emergency services
Agriculture, ﬁshing, mining
Water resource management, air quality
Tourism, small and minority business assistance
Department of corrections, state police
Insurance, food and drug, child labor
Highway safety, mass transit
Libraries, emergency management, women’s services

Source: Wright’s 13 functional categories.

inﬂuence agency decision making. Throughout the article, we rely on the more common
term ‘‘organized interests.’’
This dependent variable has the unique advantage of being measured at a level of
aggregation that allows us to assess whether contracting affects the overall level of interest
group inﬂuence on agency decision making. This fact is critical to the testing of the article’s
hypothesis. However, one disadvantage of the ASAP survey is that it does not ask any
supporting, or supplementary, questions tapping whether those third parties who are actively engaged in contracted service delivery, per se, hold more inﬂuence over the administrative state. Table 2 displays the descriptive statistics of this variable and all other
variables included in the models.
We also generated a number of control variables from this same ASAP question. Along
with the degree of inﬂuence of clientele groups, respondents also evaluated the overall inﬂuence of the governor, legislature, and professional associations in the same three decision
areas—total agency budgets level, budgets for speciﬁc programs, and major policy changes.
We constructed similar scales for each entity. It may be argued that administrative agency
heads who are open to the inﬂuence of one type of political principal are likely to be open to
the inﬂuence of other political principals, as well. If this line of argumentation holds true, then
we may expect a positive relationship between administrative attitudes toward the inﬂuence
of organized interests and attitudes toward traditional political principals, such as the governor or legislatures, or other related organizations, such as professional associations. Thus,
we include these scales as control measures for the general openness of administrative attitudes toward outside inﬂuence factors.7 The alpha values range from 0.73 to 0.86.

7
The 1998 and 2004 ASAP surveys also asked about the perceived inﬂuence of the state courts on major agency
decision making. From a theoretical perspective, we were not motivated to include a similar scale of state court in the
basic model speciﬁcations because we did not see the courts as inﬂuencing the openness of agency decision making to
the same degree as the other listed actors. That said, we did investigate this issue further by including a courts scale
within the quantitative models. The inclusion of this scale as an additional control variable in the models presented later
in the paper did not change our substantive conclusions.

Kelleher and Yackee

A Political Consequence of Contracting

Table 2
Descriptive Statistics

Mean
Level-1 variables (administrator)
Overall inﬂuence of organized interests on
agency decision making (dependent variable)
Contracting
Time spent with organized interests—high
Inﬂuence of governor
Inﬂuence of legislators
Inﬂuence of professional associations
Merit position
Years in current agency
Gender
Education
Partisanship
Level-2 variables (state)
Total number of organized interests
Government ideology
Total number of nonproﬁt registered
organizations

Minimum

Maximum

3.91

0

9

1.93
0.04
7.45
7.35
2.63
0.22
5.55
0.22
4.34
3.12

0
0
0
0
0
0
0
0
0
1

6
1
9
9
9
1
36
1
5
5

687.87
47.52
22,707.74

72
2.5
3,700

2,272
97.92
142,681

Note: Descriptive statistics are for 1,699 cases appearing in Model 2 in Table 4, with the exception of the ‘‘time’’ variables, which are the
descriptive statistics for the 1,677 cases in Model 3 in Table 4.

Our primary independent variable in all analyses is contracting. This variable is
a seven-point scale ranging from zero to six, and it is constructed from two questions
on the ASAP survey. First, respondents were asked to assess whether or not their agencies
use contracting via the following question: ‘‘In recent years, some governments and agencies have used contracts (or contracting out) to deliver services to the public. Does your
agency use such contracts?’’ Negative responses are coded a zero on the contracting scale.
Of the afﬁrmative responders, the subsequent survey question was asked: ‘‘Currently, about
what percentage of your agency’s budget is allocated to contracts for delivering services to
the public?’’ The six choice categories for this question make up the remainder of our
seven-point contracting scale, with a one indicating that 1%–5% of the agency’s budget
was allocated to contracts. The remaining categories are as follows: two (6%–10%), three
(11%–20%), four (21%–30%), ﬁve (31%–40%), and six (over 40% of agency’s budget).8
We anticipate a positive, signiﬁcant, and somewhat modest-sized relationship between the
contracting and the dependent variable, overall inﬂuence of organized interests on agency
decision making, due to the level of aggregation in measurement. In other words, because
the dependent variable taps the general inﬂuence of all organized interests (and we know
that all such groups are not necessarily contracting with state agencies), the contracting
8
We rely primarily on the contracting categories provided by the ASAP survey. However, as a sensitivity check, we
also recoded category one of the contracting scale so that it equates with 1%–10% of the agency’s budget. The
remaining categories were as follows: two (11%–20%), three (21%–30%), four (31%–40%), and ﬁve (over 40% of
agency’s budget). The zero category also remained in the scale. We made this change to make the categories on the
lower end of the scale somewhat equivalent. We then substituted this new contracting scale in to the models presented
later in the paper. Similar results were returned.

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Journal of Public Administration Research and Theory

variable offers an explanation for only a proportion of their overall inﬂuence. Across 1998
and 2004, approximately 70% of administrators reported some degree of contracting.9
One key advantage of the contracting survey questions described above is that these
questions require agency heads to reﬂect on choices made in the past regarding their
agency’s decision to contract. Therefore, the wording of the contracting questions mitigates
considerably the potential problem of endogeneity between the dependent variable and this
predicted variable. Stated differently, we anticipate that contracting decisions, which were
made before the survey was administrated, will affect the respondent’s perceptions of interest group inﬂuence at the time the survey was completed.10
A number of additional variables of interest are also included at both levels of analysis
in select models. For instance, we include administrator characteristics to control for
whether, for one example, the longevity of an administrator may affect their perceptions
regarding the overall inﬂuence of organized interests on policymaking decisions. The list
and speciﬁc operationalization of the statistical controls follow. Years in current agency
measures the longevity of administrator tenure within the speciﬁc agency. Administrator
education measures the overall level of educational achievement with possible responses
of: high school, some college, bachelor’s degree, graduate study, and graduate degree.
These two controls were included because works by Boecker (1997) and Kraatz and
Moore (2002) have pointed to the importance of administrator backgrounds and experience
on the likelihood of implementing new policies. Merit position taps whether the administrator’s position is covered via a civil service system or not. We include this variable to
control for the possibility that merit-based agency heads will be inﬂuenced less by organized interests due to the security in their appointment. We also include a ﬁve-point scale of
the respondent’s partisan identiﬁcation with a one indicating strong Democrat, a two suggesting weak Democrat, and three being Independent, a four indicating weak Republican,
and a ﬁve suggesting strong Republican. This variable is included to control for general
administrative preferences for privatization that may be captured via his/her political
partisanship.
Others have noted differences between men and women with respect to their administrative and organizational goals and values. For example, Fox and Schuhmann (1999) discovered that women city managers were more likely than male managers to facilitate
communication, utilize citizen input, and to encourage citizen participation in policymaking. Brudney, Hebert, and Wright (2000) concluded that ‘‘demographic characteristics have
been shown to relate to critical administrative attitudes and behaviors’’ (510). Thus, administrator gender is also included in the models with women scoring a one. Yet, as Meier,
O’Toole, and Goerdel (2006) note, the ﬁndings on the role of gender in relation to management and leadership are inconclusive. Thus, we have no speciﬁc expectation or hypothesis
about the nature of the effect for this variable; rather, we include it as a statistical control.
9
Brudney et al. (2005) use this measure as the dependent variable in their article on contracting out. They note
conﬁdence in the ability of administrators to accurately predict contracting (and therefore, establish the validity of this
measurement) because the reported rates from the ASAP survey parallel the ﬁndings of other similar studies of state
governmental contracting (Apogee Research 1992; Chi 1993; Chi and Jasper 1998).
10
To test for endogeneity, we also estimated a 2SLS model (with contracting as the dependent variable in the ﬁrst
stage and overall inﬂuence of organized interests on agency decision making as the outcome for the second stage).
Inspired by the work of Brudney et al. (2005), we also included two new variables—per capita income (tapping state
ﬁscal capacity) and state reinvention involvement. When the residuals of the model are included in Stage 2, they are
insigniﬁcant, indicating a slim chance of endogeneity in the model.

Kelleher and Yackee

A Political Consequence of Contracting

We utilize two measures of interest group and agency interactions. The ﬁrst variable,
time spent with organized interests, taps the amount of time that state agency heads devote
to organized interests as opposed to their time spent on other management and administrative tasks. The wording used on the ASAP survey is as follows: ‘‘How do you divide your
time—in approximate percentage terms among: . . . Public Support (with Clientele and
Interest Groups)?’’ We create a second measure, called time spent with organized interests—
high, using this same question. To do so, we collapsed this variable into a dichotomous
measure, with values of one indicating greater than 50% of time spent cultivating the support
of clientele and interest groups. We then generate an interaction term that combines this
dichotomous measure with the contracting scale. In accordance with our argument, we anticipate that contracting out in combination with high interest group interactions with agency
ofﬁcials will lead to greater interest group inﬂuence over key public agency decisions.
We incorporate three variables to control for state level forces that might drive the
overall inﬂuence of organized interests. The ﬁrst variable is the total number of organized
interests in state as measured by Gray and Lowery’s (1996; 2001) over time research regarding the number of organized interests registered to lobby in the American states. The
inclusion of this variable is particularly important because it serves as a primary rival hypothesis for our expectations. One may argue, for instance, that contracting is of little importance to the level of interest group inﬂuence on agency behavior when compared to the
fact that interest groups have become a more prevalent and powerful force in the American
states in general. This variable is collected in 1997 and 1999, and we match these data with
the subsequent ASAP survey year.
We also include the measure of state government ideology by Berry et al. (1998),
which is a combination of a number of indicators such as congressional election outcomes,
the partisan division of state legislatures, and gubernatorial political party. A higher value
on the measure indicates a desire for more liberal policies or opinions. Finally, we incorporate a measure to tap the total number of nonproﬁt organizations registered in the state.
This variable was collected from the National Center for Charitable Statistics.
RESULTS

We begin with descriptive ﬁndings concerning how the presence of contracting may affect
the interactions and communications between organized interests and public administrators. The article’s argument suggests that contracting will provide increased lobbying opportunities for select organized interests. If this hypothesis is correct, then we should see
illustrative patterns in data measuring the overall time agency heads devote to cultivating
support with clientele and interest groups.
We look for this evidence ﬁrst in a difference of means analysis. To do so, we use the
variable time spent with organized interests to see whether differences exist in the presence
or absence of contracting out. Across both years, with respect to how they allocated their
time, we noted a statistically signiﬁcant difference between those reporting the presence of
contracting and those administrators that did not. More speciﬁcally, among agency heads
who noted the administration of government contracts, the average time spent with organized interests was 26%. For those who did not report the use of contracts, this time was
somewhat lower at 24%. Although small, these statistically signiﬁcant increases provide
preliminary support for the proposition that government contracting with select parties may
help drive the overall interactions between administrative decision makers and organized

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Journal of Public Administration Research and Theory

interests. Moreover, the subtlety of the results is not surprising given that the population of
contracted parties represents only a part of the overall community of organized interests
within a state.
With this tentative and preliminary evidence in hand, we now turn to the results from
the hierarchical linear models, which provide for a more robust assessment of the argument.
These results are presented in Table 3. In order to estimate the variation in the dependent
variable attributable to state level differences, we estimate an ‘‘unconditional’’ or null
model (Raudenbush and Bryk 2002, 24; Steenbergen and Jones 2002, 224). Such a model
includes no predictors at either the individual or state level. The level-1 model—essentially
a one-way analysis of variance with random effects—follows,
Overall influence of organized interestsij 5 b0j 1 rij :
The level-2 model then seeks to explain b0j via the following equation,
b0j 5 g00 1 u0j :
By substituting the level-2 equation into level-1, the full hierarchical model to be estimated
is,
Overall influence of organized interestsij 5 g00 1 u0j 1 rij ;
where g00, the constant, represents the average level of organized interest inﬂuence, u0j (the
state level random effect) is the variance component of the level-2 units, and rij (the individual level random effect) is the variance component of the level-1 units. Essentially, at
this stage in the analysis, we are primarily interested in u0j, which tells us whether significant state level variation (or clustering) is present. In other words, this effect captures
whether the inﬂuence of organized interests varies signiﬁcantly at the state level in the
sample.
Next, to investigate how the overall variance in the dependent variable is divided between the individual and state level, we calculate the intraclass correlation coefﬁcient
(ICC). The ICC indicates how the overall variance is divided between the model’s levels
(Raudenbush and Bryk 2002). For the dependent variable, approximately 3% of the

Table 3
Null Model of Responsiveness to Organized Interests

Overall Inﬂuence of Organized
Interests on Agency Decision
Making
Fixed effects
Intercept
Random effect
State level variance
Individual level variance
Intraclass correlation coefﬁcient (proportion of variance
explained by state level variance component)

3.941* (0.073)
0.136* (0.053)
4.900* (0.160)
0.027

Note: Standard errors in parentheses. The dependent variable is a scale constructed from the following items: clientele group inﬂuence
on total agency budget, budgets for speciﬁc programs, and major policy changes.
*p , .05, two-tailed test. Signiﬁcant coefﬁcients are shown in bold.

Kelleher and Yackee

A Political Consequence of Contracting

variance is attributable to state level differences. Although this ICC percentage is quite
small, it is not inconsistent with other articles using similar modeling strategies. For example, in Rahn and Rudolph’s article (2005), only 4% of the variation in the model can be
attributed to the level-2 predictor variables. And as Steenbergen and Jones (2002) suggest,
due to the individual level measurement of the dependent variable, we should expect to see
the majority of the variance explained at the individual level.
With some evidence of meaningful differences at the state level now established, we
turn to the multivariate analyses in which we seek to explain this variation more completely. We begin with the dichotomous relationship between our key independent variable
and the dependent variable in the ﬁrst column of Table 4. Recall that the dependent variable
is a scale of administrative attitudes toward clientele groups, which we use as an approximate measure of the perceived inﬂuence of organized interests. We observe a positive and

Table 4
Government Contracting and Interest Group Inﬂuence

Model 1
Level-1 variables (agency
administrator)
Contracting
Contracting Â time spent with
organized interests—high
Time spent with organized
interests—high
Inﬂuence of professional
associations
Inﬂuence of governor
Inﬂuence of legislators
Merit position
Years in current position
Gender
Education
Partisan identiﬁcation
2004 dummy variable
Level-2 variables (state)
Total number of organized
interests
Government Ideology
Total number of nonproﬁt
registered organizations
Intercept
State level variance component
Individual level variance
component
Number of level-1 units
Number of level-2 units

0.149* (0.026)

Model 2

Model 3

0.078* (0.024)

0.070* (0.025)
0.156* (0.114)
0.184 (0.324)

0.471* (0.023)
20.052 (0.027)
0.138* (0.030)
0.054 (0.115)
0.014 (0.009)
0.205 (0.116)
0.055 (0.051)
0.038 (0.030)
20.331* (0.097)

0.0002 (0.000)

20.0003 (0.002)
20.000002 (0.000)

1864
50

20.054* (0.027)
0.139* (0.030)
0.051 (0.115)
0.017 (0.009)
0.207 (0.117)
0.056 (0.051)
0.039 (0.030)
20.318* (0.098)

0.0002 (0.000)

3.642* (0.090)
0.379
2.193

0.468* (0.023)

20.0002 (0.002)
20.000003 (0.000)

1.575* (0.396)
0.182
1.919

1.566* (0.400)
0.174
1.921

1699
50

1677
50

Standard errors in parentheses. Models estimated using STATA, xtmixed function. The dependent variable is a scale constructed from
the following items: clientele group inﬂuence on total agency budget, budgets for speciﬁc programs, and major policy changes. Fixed
effects for 12 functional categories are included in Models 2 and 3 but are not reported due to space constraints.
*p , .05, two-tailed test. Signiﬁcant coefﬁcients are shown in bold.

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Journal of Public Administration Research and Theory

signiﬁcant relationship between the contracting scale and the overall inﬂuence of organized
interests as perceived by state agency heads.11 We also assess whether this relationship
holds in a setting controlling for other administrator and state level characteristics in Table
4, Model 2. The exact speciﬁcation for the level-1 and level-2 models is below. Each of the
bkj terms for the level-1 model represents the effect of that particular variable on interest
group inﬂuence.
Overall interest group influenceij 5 b0j 1 b1j contractingij
1 b2j influence of professional associationsij
1 b3j influence of governorij
1 b4j influence of legislatorsij
1 b5j merit positionij
1 b6j years in current positionij
1 b7j genderij
1 b8j educationij
1 b9j partisan identificationij
1 b10j 2004 dummy variableij 1 rij :
The level-2 model seeks to explain the intercept from the above equation using state level
variables.
b0j 5 g00 1 g01 total number of organized interestsj
1 g02 government ideologyj
1 g03 total number of nonprofit registered organizationsj
1 u0j :
In the multivariate setting, we again observe a positive and signiﬁcant relationship between
contracting and the dependent variable. This ﬁnding implies that as government contracting
increases, so too does perceived interest group inﬂuence on key agency decision making.
Thus, the core relationship is preserved despite the inclusion of other control variables
mesauring the inﬂuence of other political actors, the substantive nature of an administrators’ agency, and administrator background characteristics. The ﬁt for Model 2 is well
within normal bounds for survey research, as well as comparable with work using similar
data (e.g., Brudney et al. 2005).
With respect to the control variables, some interesting ﬁndings emerge. Overall, neither the individual level administrator characteristics nor the state level controls inﬂuenced
interest group inﬂuence. We were particularly surprised to see the lack of signiﬁcance on
the gender variable across all the model speciﬁcations. As previously mentioned, gender
has been shown to play a role in public organizations (Bowling et al. 2006; Brudney,
Hebert, and Wright 2000; Dolan 2000, 2004; Fox and Schuhmann 1999; Riccucci and
Saidel 1997), with anecdotal, quantitative, and qualitative evidence pointing to different

11

We also estimated this model including the dummy for 2004, and the results were identical.

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A Political Consequence of Contracting

policy interests, management styles, and outcomes when men versus women are in positions of leadership. However, our results lend greater support to those scholars who point to
less decisive or mixed ﬁndings, such as Meier, O’Toole, and Goerdel’s recent article
(2006). Likewise, the insigniﬁcance of the merit control variable is somewhat unexpected.
We had anticipated that merit-based agency heads would be inﬂuenced less by organized
interests due to the security of their appointment. However, this factor does not appear to be
an important explanatory variable in the model.
We did observe a signiﬁcant, positive relationship for two of the three measures tapping the inﬂuence of political actors. These results suggest that as the perceived inﬂuence of
both professional associations and legislators increases, the dependent variable also
increases. We interpret these ﬁndings to mean that the general openness of administrative
attitudes toward the inﬂuence of legislatures and professional associations also affects the
administrator openness to the inﬂuence of organized interests on major policy decisions.
This suggests that agency heads who are open to the inﬂuence of one type of political principal are likely to be open to the inﬂuence of other political principals as well. Yet, this
explanation falls short in predicting the signiﬁcant and negative sign associated with the
inﬂuence of governor under one of the model speciﬁcations. Overall, these ﬁndings imply
a more complex relationship between the political principals and agency heads than a simple explanation of administrator openness, and thus, more research is necessary to sort out
these potentially conﬂicting relationships.
To more fully understand the magnitude of these relationships in Table 4, Models 1 and
2, we calculated the predicted value of the dependent variable given shifts in the contracting
variable. All other variables in the model are set to their mean values. Our ﬁndings point to
clear and measurable increases in the dependent variable as the degree of contracting by
public managers increased. Across 1998 and 2004, the predicted value of the dependent
variable in the Model 1 analyses jumps by nearly 10 percent when contracting moves from
its minimum (of zero) to its maximum value on the scale (6 or over 40% of agency’s budget).
In Model 2, which is more fully speciﬁed, the predicted inﬂuence of organized interests
jumps similarly by 5.2% as we move across the possible range of values for contracting.
These results are noteworthy given that we would expect the relationship with the dependent
variable—which is measured at a high level of aggregation—to be attenuated considerably
given that contracted parties make up just one component of the overall interest group community. That said, part of this movement may also be occurring due to the theorized pathway
regarding opponent lobbying. In the end, we can conclude from these ﬁndings that there is
suggestive support for the hypothesis that government contracting does, in fact, lead to increases in the perception of interest group inﬂuence on general agency budgetary decisions,
budgets for speciﬁc programs, and policy changes.
In Table 3, Model 3, we further unpack the theorized relationship between state agencies, contracting, and the inﬂuence of organized interests. To do so, we include two new
variables. One construct is the dichotomous variable, time spent with organized interests—
high, and the second variable is the product of the interaction between contracting and time
spent with organized interests—high.12 In accordance with our argument, we anticipate that
the contracting effect will be magniﬁed by a high level of interest group activity with

Our number of observations drops slightly across Table 4 due to missing values in the additional predictor
variables.

12

595

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Journal of Public Administration Research and Theory

agencies. To assess this relationship, we sum the contracting coefﬁcient and the interaction
term coefﬁcient. The combined effect is 0.236, and this combined effect is signiﬁcant (P ,
0.05). These results suggest that the importance of contracting is heightened under the conditions of increased interactions and communications between organized interests and
agency heads. To understand the magnitude of these effects, we calculated the effects
of contracting on the predicted value of the dependent variable while varying time spent
with organized interests—high. Across 1998 and 2004, the predicted value of the dependent
variable increases by over 17 percent when interactions with interest group interactions
with agency ofﬁcials are high and contracting is high (i.e., greater than 40% of the agency’s
budget).
Our task now is to understand the implications of these results, and we suggest two
dimensions on which to explore the consequences. First, consider the trade-off between
equity and responsiveness within the public bureaucracy. As Wilson (1989) articulates,
the bureaucracy has been traditionally concerned with equity (for all) over responsiveness
(to some). This article’s results imply that the growing presence of contracting out in the
American states may begin—albeit in an admittedly incremental fashion—to counteract
this long-standing bias toward equity and thereby may shift our understanding of bureaucratic accountability in the process. Second, consider two alternate ways to frame the contracted relationship: (1) acceptance of contractors as ‘‘partners in service delivery’’ or (2)
suspicion of contractors as ‘‘special interests.’’ If one leans toward the ﬁrst interpretation,
then these results may appear uncontroversial. Yet, if one is inclined toward the second of
these frames, then the results imply yet another avenue for interest group inﬂuence within
the political and administrative process.
CONCLUSIONS

We began this article with an argument: government contracts open a new pathway for
organized interests to lobby the administrative state. We argued that contracting prompts
public administrators to interact more with organized interest collaborators. We argued that
this access to decision makers leads to increased interest group inﬂuence over agency decision making. We also theorized that contracting out will increase the lobbying efforts of
those opposed to this form of privatization. To test this argument, we utilized descriptive
statistics and multilevel models. We found that interactions between organized interests
and government managers are somewhat more frequent in the presence of contracting.
We then demonstrated that the inﬂuence of organized interests over key state agency decision making is driven by the degree to which an agency contracts out for public service
delivery. These ﬁndings provide support for the article’s argument.
We conclude that there are political and administrative consequences attached to government contracting. Yet, more provocatively, we also conclude that government managers
may—overtly or inadvertently—shift their management strategies, orientations, and decision making when government contractors are utilized. These conclusions are particularly
important because they represent an effort to engage both the political science and public
administration literatures with respect to the inﬂuence of third parties on the process of
governance. As Hooghe and Marks (2003, 233) write, ‘‘New forms of governance and dispersion of decision-making away from central states have gained the attention of a growing
number of scholars across political science.’’ However, despite this increased attention, the
political science literature still devotes too little energy to understanding the implications of

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A Political Consequence of Contracting

recent shifts away from government toward governance. Public administration research, on
the other hand, still lacks a full understanding of the new and possibly realigned power
relationships present within systems of horizontal or more-networked governance.
Furthermore, the article’s argument and analyses directly respond to a number of burgeoning scholarly propositions. For instance, we engage Fuchs (2005, 55) and her critique
that the concept of governance is too often applied within an apolitical, problem-solving
frame and that scholars must begin to ask questions about the ‘‘preferences, channels, and
extent of inﬂuence’’ of those new actors who are engaged in governance. Likewise, we also
address Heinrich, Hill, and Lynn’s (2004) call for new empirical investigations into the
political and normative consequences brought about by recent shifts in governance. On
the contracting side, we also respond to recent calls for a broader approach to the issue
of contracting out by Brown, Potoski, and Van Slyke (2006), with the speciﬁc focus on
the political mechanisms and consequences of contracting, rather than the common foci
that highlight the motivations for contracting (e.g., Chi and Jasper 1998) or its economic
considerations and consequences (e.g., Averch 1990; Dilger, Moffett, and Struyk 1997).
These ﬁndings also begin to answer Frederickson’s (1999, 703) challenge: ‘‘How do we
deﬁne and understand public management when it is not entirely clear for whom we [public
managers] work?’’
We begin to bridge these literatures and scholarly propositions by specifying an additional pathway for interest group inﬂuence within the administrative state. Yet, more
research is needed so that scholars and practitioners may fully understand the spectrum
of political consequences associated with government contracting. Future studies should
assess several lobbying tactics, including the contract pathway discussed in this article, to
provide a more complete assessment of lobbying within the administrative state. Moreover,
this work ought to clarify and specify an understanding of the connection between access to
agency decision makers and ‘‘third-party’’ inﬂuence on policy outputs. In this process, scholars should investigate the differences between types of organized interests, including who
stands to win and who stands to lose after the contracting decision. Additionally, although
this article’s empirical results offer early evidence of a relationship between government contracting and aggregate-level patterns of organized interest inﬂuence, future research should
tease out an estimate of the inﬂuence tied speciﬁcally to those third parties that are actively
engaged in contracted service delivery and those that are opposed to contracting. Finally, further theoretical and empirical exploration of the ‘‘double principal agent’’ relationships suggested here will expand our understanding of the politics of privatization.
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