A New Guide To Government's Make-or-Buy? Decisions: Leveraging Transaction Cost Economics (TCE)


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Date: January 2008
Type: White Paper
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Overview: This paper published by Naval Postgraduate School is to apply lessons from Transaction Cost Economics (TCE) to develop new insights into public-private competitions. The model and discussion leads to two important policy recommendations. First, one size does not fit all. To declare a victor in public-private competitions, the Office of Management and Budget (OMB) should apply 30 different decision rules to different classes of transactions. Second, if the private sector wins, the type of contract chosen to govern the relationship should be based on an understanding of key characteristics that define the different classes of transactions.

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