Panel Paper: Does Subcontracting Affect Organizational Performance? the Case of U.S. Immigration Enforcement

Friday, November 9, 2018
8206 - Lobby Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Zachary Bauer, American University

Government subcontracting is an elusive topic in the public management literature even though the practice has paralleled the rise of contracting. Scholarship on traditional contracting uses principal-agent theory, along with others, to explain relationships among public, private, and nonprofit actors as they implement public policies. However, subcontracting has received less attention in the past and is an area in need of further exploration.

Governments at the federal, state, and local levels frequently confront subcontracting in some capacity, whether as the government contracting with other entities that may elect to subcontract, or as subcontractors to other governmental principal contractors. Subcontracting extends beyond governments to incorporate nonprofit and for-profit organizations as well. The limited literature on subcontracting posits that the practice is used to increase organizational capacity, to devolve implementation to specialists, to improve economies of scale, and to create a flexible workforce, but a host of challenges are salient. Chain subcontracting – the practice of a principal contracting to an agent who then contracts with another agent, and so on – poses challenges to government control and oversight.

The U.S. Immigration and Customs Enforcement (ICE) agency is one governmental organization that partly relies on subcontracting to manage its more than 150 detention facilities. Prior to the Trump election, ICE had entered intergovernmental service agreements with states and local governments to hold more than 70 percent of detained immigrants; the new Trump administration’s immigration enforcement priorities are expected to drive that percentage higher, exacerbating capacity issues. A majority of the states and local governments that directly contract with ICE then subcontract with another government or private detention provider. This raises the question of whether there are performance disparities between facilities that do and do not subcontract due to information barriers, potential goal displacement, and other factors associated with longer implementation chains.

The current study examines a pooled sample of more than 300 state and local jails across the U.S. that detain undocumented immigrants; many of these then subcontract facility management responsibilities. Using publicly available data from ICE and the Department of Justice, state and local detention facilities that contracted with ICE between 2010 and 2016 are examined to gain further perspective on how performance (confinement quality) varies in facilities that subcontract to another entity. This research will contribute in two ways. First, it will conduct a cross-discipline analysis of the subcontracting literature to posit about the conditions that lead to effective subcontracting and implementation in principal-agent relationships with a single principal (ICE) and an extended line of agents. Second, I will examine the performance of state and local government facilities that both contract with ICE and subcontract, as compared with those that do not subcontract, with the intention of assessing whether and how subcontracting with multiple agents affects performance.