Private provision of public services: Contracting by large local governments

This study examines public service delivery by counties and municipalities of over 500,000 popula tion, through the practice of contracting out with the publicsector. It is based on responses to a question naire sent to purchasing officials in American and Canadian cities, counties, and state governments Results indicate the types of services contracted out the frequency of contracting out, procedures utilized and administrative attitudes. We find that a diverse group of non-professional,non-construction services are being provided by private contractors for these jurisdictions, but the jurisdictions are not providing a majority or even a significant portion of their services in this manner.     

Government contracting and procurement: a critical process for both the public and private sectors

The costs and benefits of government purchases of goods and services from businesses are examined from the perspective of both public and private sector officials. Generally, governments see more benefits than costs, often because of fiscal stress. Businesses, especially newer, smaller firms are more likely to see more costs than benefits. The article concludes with ten projections for changes in public procurement systems by the year 2000. These are: (1) expansion of current vendor pools; (2) intergovernmental adoption of standardized forms and procedures for getting and staying on government vendor lists; (3) mainstreaming of purchasing into the government financial management decision-making loop; (4) more rigorous training requirements for government purchasing personnel; (5) greater use of public-private task forces to reform procurement policies and practices; (6) greater use of surveys inside and outside government to identify specific problem areas and structure reforms; (7) expansion of the auditing and contract monitoring section of purchasing departments; (8) extension of bidding/contract monitoring and evaluation requirements and procedures to subcontractors of prime government contractors; (9) greater efforts to include quality dimensions in cost estimates; and (10) more tension and litigation over “protectionism” in public procurement.     

Developing New Forms of Partnership With the ‘Market’ in the Procurement of Public Services

This article provides a conceptual framework for understanding the key differences between newly emerging ‘market’ relationships and more traditional forms of procurement by public sector organizations. It highlights how multiple relationships between service clients in the public sector and other stakeholders mean that service clients may often co‐produce welfare changes in their communities in ways which professional and commercial providers cannot easily control and may not fully understand. It highlights the very different nature of collaborations which affect single commissioners and contractors (relational contracting), multiple commissioning bodies with a unified procurement policy (partnership procurement) and multiple commissioning bodies with diverse procurement policies empowered by a single purchasing body (distributed commissioning). The article suggests that traditional conceptions of the ‘market’ and of ‘market management’ are now outdated and need to be revised to take into account the potential of collaborative relationships between multiple stakeholders in the public domain.     

Analysis of Factors of Overpricing in Public Procurement: A Study for Low-performing EU Countries

ABSTRACT

The paper deals with the issue of overpricing of public procurement in low-performing EU countries. It examines a uniquely large sample of public procurement in 11 Central and Eastern European countries. Hierarchical regression is used to analyze the factors that influence public contract. Our results indicate that institutional factors have a greater impact on overpricing than individual decisions by the contracting authority. Our analysis for low-performing EU countries provides interesting results and also draws attention to behavior that is not typical of the better established and more advanced EU countries. Our results are particularly important for public policy in each country, as they show the direction of regulatory action in the field of public procurement. The results introduce a debate on the appropriateness of “one size fits all” regulations within the EU.     

ON THE PERFORMANCE OF COMPETITIVELY TENDERED, PUBLIC SECTOR CLEANING CONTRACTS

Quantitative analysis of competitive tendering and contracting typically focuses on their effect on the cost of providing public sector services. In this article we turn to the systematic factors that appear to influence the performance of cleaning contracts. This is defined as compliance with contract specification, public perception of service quality and other qualitative measures of service characteristics as observed by the contracting authority. Our analysis attempts to isolate particular features of contract design, monitoring and enforcement that influence performance positively or negatively. Econometric results based on a sample of public sector cleaning contracts suggest that contractor selection procedures and contract enforcement mechanisms have the greatest influence on performance.     

Public Procurement Directives in the European Union: A Study of Local Authority Purchasing

Prompted by the Single European Market initiative, virtually all public procurement, except for defence equipment, is now subject to European Union rules which prohibit discriminatory (buy national) purchasing policies. This paper examines the impact of recent procurement Directives on local authority tendering and contract award behaviour (compliance), and considers whether the legislation has been successful in opening-up such public procurement to international competition. Although local authorities are making extensive use of the Official Journal to advertise their requirements, there is evidence that purchasers do not always adhere to the new legislation and it is not obvious that adherence to the legislation is improving. Moreover, an analysis of local authority contract award data for 1993 revealed that almost all contracts were won by domestic firms. However, doubts about the ultimate ownership of such firms and the sourcing of components means that there remains considerable scope for further work.     

TRANSFORMING PUBLIC SERVICES: CONTRACTING FOR SOCIAL AND HEALTH SERVICES IN THE US

Government contracting with private service organizations has grown rapidly in the United States in the last 25 years. Advocates of contracting hope that it will spur competition among service agencies, lowering costs and improving service quality. In practice, however, contracting departs significantly from this competitive model. Instead, government and private agencies develop long-term relationships which can be considered regimes governed by specific norms and expectations. These regimes profoundly influence the delivery of services and the politics of contracting. This article analyses these regimes in the context of the contested nature of public authority. The article concludes with suggestions for reforming public policy to improve the performance and effectiveness of contracted services.     

CONTRACTING IN THEORY AND IN PRACTICE: SOME EVIDENCE FROM THE NHS

The contract is the main mechanism for governing transactions within public sector'quasi markets'. This article explores the nature of the contracting process in the light of new empirical data from a qualitative study of the development of contracting for hiv / aids services within the National Health Service. These data are compared with four possible models of the contracting process emerging from the academic literature, classical, relational, regulated and pseudo contracting.
The White Paper on the nhs reforms uses a classical concept of contracting, in which purchasers are represented as making well informed and unrestricted choices between competing options. This bore little relation to the process observed within the four purchasing organizations studied. Instead, elements of all the models were observed, with the dominance of any one model varying with different situations, times and localities. Competition was only patchily evident, with purchasers more commonly encouraging co-operative relationships between providers to preserve stability. Attempts to utilize the contract process to mould and reconfigure services were often hampered by restrictions imposed by regulations and slow implementation of new mechanisms. Contracting was also adversely affected by rapid organizational change and lack of adequate information. It is concluded that contracting in the nhs is an evolving process and has yet to achieve its full potential as a management mechanism.     

THE PUBLIC MANAGEMENT CHALLENGES OF CONTRACTING WITH NONPROFITS for SOCIAL SERVICES

ABSTRACT

States and municipalities increasingly pursue privatization as a way to deliver public goods and services because of two expected outcomes, reduced costs and quality improvements. Several reasons are frequently cited for these anticipated benefits ranging from market competition to increased management flexibility and discretion to fewer rules and regulations. One policy area in which government has privatized many services through contracting with nonprofit organizations is social services. Contracted services are as diverse as providing shelters for the homeless, vocational education and job retraining, domestic violence services, refugee esettlement, child and elder abuse services, and food banks. A proliferation of public administration and nonprofit organizational scholarship has examined a range of issues associated with the government-nonprofit social service contracting relationship, not the least of which are topics related to management, measurement, and accountability. This article examines the public management challenges and implications of contracting with nonprofit organizations for the delivery of social services.     

The Contracting Quandary: Managing Local Authority–VNPO Relations

Problems with competitive transactional contracting raise the possibility of relational contracting as an attractive alternative for managing local authority–VNPO (voluntary non-profit organisation) relations. This empirical study of 45 relational social service contracts examines the conditions under which advantages such as flexibility and social capital development emerge as opposed to dangers of political abuse, defiance and resource frustrations. Findings suggest that successful relational contracting requires partners whose professional and management reputations inspire competence trust and whose commitment encourages goodwill trust. Decisions between competitive transactional contracting and relational contracting present difficult dilemmas. The costs and benefits of relational contracting need to be weighed against those of transactional contracting. At the same time there are political and ideological pressures, as well as public service norm constraints.     

CONTROL PATTERNS IN CONTRACTING‐OUT RELATIONSHIPS: IT MATTERS WHAT YOU DO,NOT WHO YOU ARE

The contracting‐out of public services has often been accompanied by a strong academic focus on the emergence of new governance forms, and a general neglect of the processes and practices through which contracted‐out services are controlled and monitored. To fill this gap, we draw on contracting‐out and inter‐organizational control literatures to explore the adoption of control mechanisms for public service provision at the municipal level and the variables that can explain their choice. Our results, based on a survey of Italian municipalities, show that in the presence of contracting‐out, market‐, hierarchy‐, and trust‐based controls display different intensities, can coexist, and are explained by different variables. Service characteristics are more effective in explaining market‐ and hierarchy‐based controls than relationship characteristics. Trust‐based controls are the most widespread, but cannot be explained by the variables traditionally identified in contracting‐out and inter‐organizational control studies.     

Privatization in developing countries: ideal and reality

In both developed and developing countries, governments finance, produce, and distribute various goods and services. In recent years, the range of goods provided by government has extended widely, covering many goods which do not meet the purist's definition of “public” goods. As the size of the public sector has increased steadily there has been a growing concern about the effectiveness of the public sector's performance as producer. Critics of this rapid growth argue that the public provision of certain goods is inefficient and have proposed that the private sector replace many current public sector activities, that is, that services be privatized. Since Ronald Reagan took office greater privatization efforts have been pursued in the United States. Paralleling this trend has been a strong endorsement by international and bilateral donor agencies for heavier reliance on the private sector in developing countries.

However, the political, institutional, and economic environments of developing nations are markedly different from those of developed countries. It is not clear that the theories and empirical evidence purported to justify privatization in developed countries are applicable to developing countries.

In this paper we present a study of privatization using the case of Honduras. We examine the policy shift from “direct administration” to “contracting out” for three construction activities: urban upgrading for housing projects, rural primary schools, and rural roads. The purpose of our study is threefold. First, we test key hypotheses pertaining to the effectiveness of privatization, focusing on three aspects: cost, time, and quality. Second, we identify major factors which affect the performance of this privatization approach. Third, we document the impact of privatization as it influences the political and institutional settings of Honduras. Our main finding is that contracting out in Honduras has not led to the common expectations of its proponents because of institutional barriers and limited competitiveness in the market. These findings suggest that privatization can not produce goods and services efficiently without substantial reform in the market and regulatory procedures. Policy makers also need to consider carefully multiple objectives at the national level in making decisions about privatization.     

The Not So Good,the Bad and the Ugly: Over Twelve Years of PPP in Ireland

Public–private partnerships have been adopted extensively in Ireland for over 12 years. This article analyses the practice of PPP procurement at the level of local government. It adopts economic and governance perspectives on PPP which highlight challenges with procurement under PPP such as complexity, uncertainty, hold-up, transparency and accountability. These perspectives provide a basis for an analysis of three cases of PPP procurement. Two cases from the water services sector illuminate problems arising from the complexity of value for money assessment at the ex ante contracting stage. These cases were also characterised by governance problems stemming from central government's role as policy advocate and steward of public funds. The case of PPP to deliver social housing also demonstrated the challenges of procurement under conditions of economic uncertainty and difficulties with achieving appropriate levels of risk transfer. All three cases demonstrate the value of stakeholder consultation in terms of meeting the governance challenges faced when adopting PPP.     

A replication of “Contracting out: For What? With Whom?”

In the 1980s, governments around the world adopted New Public Management ideas about inserting competition into government as a way to improve the performance of public organizations. In many nations, contracting out was one method of making governments more businesslike. Yet, there have been few studies of how government contracting behaviors have changed since the early 1980s. We replicate Ferris and Graddy's classic 1986 study of local government production and sector choice to assess how public procurement has changed over the past 35 years. Our findings show that today, contracting out is more commonly used across 25 local government service areas. In contrast to the original study, much of the growth has been in government-to-government contracts. For profit firms are also winning more contracts for high transaction cost work, while nonprofits are receiving fewer government contracts in nearly every service area. Our analysis suggests that contracting out remains of the highest importance in 21st-century governance and that additional research is needed on how to manage contracts to achieve the best value.     

WHAT WORKS BEST WHEN CONTRACTING FOR SERVICES? AN ANALYSIS OF CONTRACTING PERFORMANCE AT THE LOCAL LEVEL IN THE US

During the last decade the field of public administration has undergone a period of renewed interest in the topic of performance and effectiveness. Key contributions to the growing stream of research on public sector performance include work focusing on the adoption and implementation of performance measurement in the public sector (see, for example, Julnes and Holzer 2001; Behn 2003 ); theoretical and empirical research on management’s effect on organizational performance (see, for example, O’Toole and Meier 1999; Meier and O’Toole 2002 ); and efforts to identify the determinants of organizational effectiveness (see, for example, Rainey and Steinbauer 1999; Brewer and Selden 2004 ). Surprisingly, this literature includes very few studies that explicitly address the issue of performance in contracting for services (exceptions include Domberger and Hensher 1993; Romzek and Johnstone 2002 ). In the United States alone, hundreds of billions of dollars are contracted out every year, and innumerable policies and programmes are implemented, at least in part, through contractual arrangements between public agencies and private providers ( Savas 2000; DeHoog and Salamon 2002; Kelman 2002; Cooper 2003 ). Moreover, contracting for services appears to be a growing trend in Western Europe and other regions ( Kettl 2000; Savas 2000 ). With the stakes so high, there is a pressing need for research that identifies factors and practices that contribute to success in contracting for services. This paper takes on the challenge by developing a model of contracting performance and testing it using Substantively Weighted Analytic Techniques (SWAT), a new methodology that allows researchers to isolate high performance among a large number of observations in order to identify variables practitioners can manipulate to improve practice ( Meier and Gill 2000 ).     

Contracting out local road and park services: economic effects and their strategic,contractual and competitive conditions

ABSTRACT

The economic rationale for contracting out local services is increasingly contested by empirical research. This article aims to contribute to this literature, first by scrutinising the economic effects of contracting out in local road and park services and, second, by exploring how characteristics such as markets, contracts, municipal strategies and contracting history influence these outcomes. Drawing on original survey data from Danish municipalities, we find that competitive tendering has on average reduced costs. Further analysis shows that savings are not associated with lower quality, thus indicating that ‘quality shading’ was not taking place. Another finding is that municipalities that repeatedly contract the services experience smaller savings, suggesting that competitive tendering is subject to declining marginal returns. Finally, we find that larger municipalities and those emphasising expenditure cuts realise larger savings, whereas the characteristics of markets and contracts do not seem to explain variations in cost savings.     

Contract Regimes and Reflexive Governance: Comparing Employment Service Reforms in the United Kingdom, the Netherlands, New Zealand and Australia

Contemporary debates concerning the nature of 'new governance' typically focus upon the shifting roles played by bureaucracies, networks and markets in the provision of public services (Kooiman 1993; Ormsby 1988). At the core of these recent changes we find a strong interest in having private agents deliver public services. Sometimes this is expressed as privatization and in other cases a 'mixed economy' of public and private participation may be devised (Williamson 1975; Moe 1984). In this study a number of central elements of neo-liberal public management are brought together in a single focus upon the 'contract regime' in order to examine the extent to which single initiatives might combine to produce a recognizable system of governance. Such an institutional form may then be more carefully specified and its impact compared in different governmental systems. Using a four-country comparison of employment service reform the study shows that distinctions based upon degree of privatization do not adequately explain regime types whereas distinctions based upon 'compliance-centred' or 'client-centred' forms of contracting are more powerful. The type of reflexive interaction between different elements or levels of contracting also explains country differences.     

Innovation in Public Management: Is Public E-Procurement a Wave of the Future? A Theoretical and Exploratory Analysis

Project management has become an answer to many traditional organizational structuration and performance shortcomings, while gaining currency in business and public sector organizations. Public procurement systems have evolved into public electronic procurement systems with variations and distinctions in the age of globalization and digitalized complexities. This article examines the development of public e-procurement as an innovation in public management in the contexts of project management, public procurement management, and e-governance. It also links practice to theory—through a fourfold theoretical perspective—with contributions to the knowledge in public procurement, governance, and public administration.     

THE ORDER OF QUESTIONS IN A SURVEY ON CITIZEN SATISFACTION WITH PUBLIC SERVICES: LESSONS FROM A SPLIT‐BALLOT EXPERIMENT

Surveys of citizen satisfaction with local public services have become widespread, with the results increasingly used to reorganize services, to allocate budgets, and to hold managers accountable. But evidence from a split‐ballot experiment that we conducted suggests that the order of questions in a citizen survey has important effects on reported satisfaction with specific public services as well as overall citizen satisfaction. Moreover, the correlations of specific service ratings with overall satisfaction, and thus the identification of key drivers of overall satisfaction, also turn out to be highly sensitive to question order. These findings are in line with research on priming and question order effects in the survey methodology literature, but these effects have not been carefully examined before in the context of citizen surveys and public administration research. Policy and management implications of these finding are discussed.