Parkinson's Law and the New Public Management? Contracting Determinants and Service‐Quality Consequences in Public Education

Why is contracting used more frequently under some circumstances than others? What is its impact on spending for core mission and on service quality? These questions are explored with data from more than 1,000 Texas school districts. The evidence for a recent three‐year period shows that contracting is negatively related to spending on school districts' central task and is not positively associated with district performance. Why, then, do districts contract? While several variables are associated with the degree of contracting, the most interesting is the relative size of a district's bureaucratic staff. Furthermore, the relationship between contracting and bureaucracy is reciprocal: Each is associated with subsequent growth in the other. The dynamic suggests an updated version of Parkinson's law. These findings indicate the need for researchers to probe the causes and consequences of contracting more thoroughly to help public managers assess this important option.     

A Political Perspective on Contracting Out: The Politics of Good Times. Experiences from Danish Local Governments

Privatization has been on the political agenda for the last two decades. The literature points to two major explanations of privatization. One explanation is political-ideological, considering privatization to be a Liberal-Conservative strategy. Economic crisis or fiscal stress is the other main explanation of privatization. The two theses are investigated by evaluating the determinants of contracting out in Danish local governments. The analysis shows that fiscal stress is strongly, but inversely related to contracting out, while Liberal-Conservative political leadership is not associated with higher levels of contracting out than Social Democratic governance. Thus, the richer a local government becomes, the more it contracts out. Although party politics is not decisive for contracting out, the motivation seems to be political rather than economical. Specifically, it is argued that in a strongly decentralized public sector with influential public employees, contracting out is possible in good times when revenue and public expenditure are easier to increase, which reduces public employee resistance to contracting out.     

Contracting Out Local Services: A Tale of Technical and Social Services

Governments face a fundamental choice between in‐house production and contracting out for the delivery of services to citizens. This article examines the importance of ideology, fiscal pressure, and size for contracting out in technical and social services. The analysis builds on a panel data set covering municipal spending on services in all 98 Danish municipalities. The authors find that contracting out is shaped by ideology in social services but not in technical services, which indicates that social services are the contemporary ideological battlefield of privatization. The analysis further reveals that economically prosperous municipalities are more likely to contract out social services, whereas contracting out of technical services is not influenced by economic affluence. Finally, larger municipalities contract out more in technical services but less in social services, demonstrating that the size effect is contingent on the transaction cost characteristics of the service.     

Contracting Out and Public Values: A Symposium

The three papers that constitute this symposium were first commissioned for a workshop entitled Citizenship and Contractualism held in October 2000. The theme of that workshop centred on the contractualisation of the relationship between service deliverers and their clients. 1 They have been published elsewhere in a special issue of Law in Context, March 2001, co‐edited by Terry Carney, Gaby Ramia and Anna Yeatman.
These three papers did not fit that theme. They are concerned more with the general use of contracting out as a tool of contemporary governance. I have used the title contracting out and public values because all three of these papers raise fundamental questions about the implications of contracting out for public values.     

Political Ideology and Social Services Contracting: Evidence from a Regression Discontinuity Design

Theoretical perspectives on the ideological influences on government contracting predict that local governments controlled by right-wing political parties will contract out a higher proportion of services than those controlled by left-wing parties. However, empirical evidence on the impact of political ideology on contracting out remains inconclusive. To cast new light on this important issue, the authors apply a quasi-experimental research design to contracting choices in children's social services in English local government. Because local governments in England are largely divided along partisan lines, it is possible to estimate ideological effects using a regression discontinuity design that captures changes in political control at 50 percent of the seats gained in local elections. The regression discontinuity estimates reveal that left-wing controlled local governments exhibit a marked aversion to private sector involvement in service provision and a clear preference for in-house service provision. These results are robust to a variety of alternative specifications.     

Documenting Disparity in Minority Contracting: Legal Requirements and Recommendations for Policy Makers

The challenge of advancing policy goals and public administration is compounded when legal compliance rests on data and complex analysis. This is true of disparity studies that support local government‐sponsored minority contracting programs. How can local governments prepare to work with such programs in this complex environment? The authors analyze several court cases challenging minority contracting programs and illustrate the difficulty of administering public programs at the juncture of public policy goals, subtle changes in law, and demands for quality statistical analysis. Many public agencies, especially at the local level, are not prepared to address the data requirements demanded by these programs. To help with this challenge, the authors develop a set of guiding principles to help practitioners satisfy the legal requirements and meet the policy goals of minority contracting and similar programs. This includes a new emphasis on continuous gathering of valid, local‐level data.     

Government-to-Government Contracting: Stewardship,Agency, and Substitution

ABSTRACT

This paper provides empirical evidence detailing the distinctive nature of service delivery provided through contracts with other governments. The results of a survey of Ohio city and county managers both confirm and stand in contrast to implications derived from stewardship theory. Consistent with stewardship, our data demonstrate that contracts with public sector service partners generate less intensive monitoring by contracting governments than do services contracted with private entities. In contrast to stewardship theory, we find that contracting governments do not use other governments for services requiring intensive monitoring. In an era of accountability and results-oriented management, reliance on trust may not satisfy constituents who seek evidence of effective service delivery. The inability of the contracting government to affect another government's service delivery reduces the attractiveness of that government as a contracting partner. If the tools of stewardship prove to be inadequate, the imposition of carrots and sticks appropriate for a principal-agent relationship could undermine the trust central to stewardship. Given these tensions, it is not surprising that governments are contracting less with other governments.     

Complex Contracting: Management Challenges and Solutions

Governments at all levels buy mission‐critical goods and services whose attributes and performance requirements are hard to define and produce. Many governments—and the public managers who lead them—lack experience and knowledge about how to contract for complex products. The contract management counsel provided to public managers is thin. Missing is a conceptual managerial framework to guide purchasing the complex products that are often so critical to public organizations' core missions. Drawing on perspectives from across the social sciences, the framework presented in this article provides guidance on how managers can harness the upsides of complex contracting while avoiding its pitfalls. The framework helps identify conditions that increase the likelihood of positive outcomes for the purchasing government and the vendor—the win‐win. To illustrate the framework, the article provides examples of successful and failed acquisitions for complex products such as transportation projects, social service systems, and information technology systems.     

The Effects of Administrative Professionals on Contracting Out

An often-debated subject in the public administration literature concerns why some units contract out more than others. The present article decomposes the influence of public employees on municipal contracting as different types of employees have different skills and incentives and must be treated accordingly. First, the analysis shows that the apparent negative relationship between public employees in general and municipal contracting is partly reflecting the fact that the number of public employees is endogenous to contracting. Second, we suggest that administrative professionals and not bureaucrats in general have a positive impact on contracting. This is because administrative professional skills are vital for carrying out a tender and because contracting is essentially a part of administrative professionals' bureau-shaping interests. Finally, we find support for two often-discussed claims in the literature, namely, the influence of prosperity and ideology.     

Contracting for Indigenous Health Care: Towards Mutual Accountability

In Australia and other industrialised countries, governments contract with the non‐government sector for the provision of primary health care to indigenous peoples. Australian governments have developed policies and funding programs to support this health sector, but the current arrangements are unduly complex and fragmented. The results of our study show that the complex contractual environment for Aboriginal Community‐Controlled Health Services (ACCHSs) and their funders is an unintended but inevitable result of a quasi‐classical approach to contracts applied by multiple funders. The analysis in this article highlights potential policy and program changes that could improve the effectiveness of funding and accountability arrangements, based on the use of an alliance contracting model, better performance indicators and greater clarity in the relative roles of national and jurisdictional governments.     

Contracting Capacity and Perceived Contracting Performance: Nonlinear Effects and the Role of Time

Contracting out has become a popular strategy in public service delivery, but it remains uncertain whether and how government can ensure contracting performance. As a result, a growing literature emphasizes the importance of governments' contracting capacities. Yet very few studies have empirically assessed how contracting capacities relate to contracting performance. This article identifies four types of contracting capacities in terms of agenda setting, contract formulation, contract implementation, and contract evaluation, relating them to three performance dimensions including cost, efficiency, and quality. Drawing from a manager survey from Taiwan, the article shows that the relationships between the capacities and the performance indicators are not always straightforward or linear, and the relationships are complicated by the role of time. The results suggest that contracting capacities have both benefits and costs, and the solutions rooted in the economics theory should not be taken beyond their appropriate boundaries.     

Competition and Collaboration in the Contracting of Family Relationship Centres1

In 2005–06 the Australian government announced the establishment of 65 Family Relationship Centres (FRCs) – a ‘gateway’ service assisting separating couples to reach agreement about child custodial arrangements without recourse to courts. The use of a multi‐round competitive contracting regime for the purpose of selecting service providers gave rise to a number of tensions amongst not‐for‐profit organisations (NFPOs) which, to a degree, compromised the full realisation of stated public policy aims. Reporting on fieldwork conducted with a sample of FRC operators, industry representatives and key government officials this article evaluates the extent to which the case of FRCs conforms to critiques commonly aired in the social policy literature that attribute various forms of policy failure and/or social capital depletion to the competitive contracting of human services within quasi‐markets. Although the competitive selection process imposed significant costs on the NFPOs involved, the program also exhibited substantial collaborative and collegial behaviours between government and NFPOs, thus diverging from the critique usually portrayed in the literature.     

The Use of Contracting in the Public Sector—Recent New Zealand Experience

This research note examines the expanding use of contracting within the public sector in New Zealand. The term 'contracting' is interpreted broadly to include both external contracting (ie outsourcing) as well as the use of more explicit or formal 'contracts' within and between public sector organisations. No attention is given here to the separate, albeit related, processes of corporatisation, commercialisation and full privatisation (ie asset sales and the termination of public funding as well as provision). The empirical data, although limited, suggest that the recent increase in contracting in New Zealand has brought significant gains in terms of fiscal savings, productive efficiency, consumer choice and managerial accountability. Recent trends, however, have also posed some important policy issues, among them the limits to contracting out and the potential dangers associated with 'hollow' government.     

Cheap and Dirty: The Effect of Contracting Out Cleaning on Efficiency and Effectiveness

Contracting out of public services, especially ancillary services, has been a key feature of New Public Management since the 1980s. By 2014, more than £100 billion of U.K. public services were being contracted out annually to the private sector. A number of high‐profile cases have prompted a debate about the value for money that these contracts provide. Value for money comprises both the cost and the quality of the services. This article empirically tests the contestability and quality shading hypotheses of contracting out in the context of cleaning services in the English National Health Service. Additionally, a new hypothesis of coupling is presented and tested: the effect of contracting of ancillary services on patient health outcomes, using the hospital‐acquired infection rate as our measure. Using data from 2010–11 to 2013–14 for 130 National Health Service trusts, the study finds that private providers are cheaper but dirtier than their in‐house counterparts.     

Public management and organizational performance: The effect of managerial quality

This paper presents the first large study of public management quality and its effect on program performance. Using 5 years of data from more than 1000 Texas school districts, the authors measure quality as the additional salary paid to school superintendents over and above the normal determinants of salary. This measure of managerial quality is positively correlated with 10 of 11 performance indicators covering organizational goals ranging from standardized tests to school attendance. These relationships hold even in the presence of controls for other determinants of program success. The measure has the potential to be used in tests of existing management theories, thus moving the literature beyond case studies to more systematic research involving many subjects. © 2002 by the Association for Public Policy and Analysis and Management.     

Schoolhouses,courthouses, and statehouses after Serrano

The constitutionality of public school finance systems has been challenged in 43 states in the 25 years since the landmark Serrano decision. Using data on revenues from more than 16,000 school districts over the 1972-1992 period, this article assesses the impact of court-mandated reform on the role of the states in school finance. We find that resources from the state increased while revenues from local districts were roughly unchanged after successful litigation. States also followed a more aggressive redistribution policy in the aftermath of court-mandated reform; after successful litigation, state aid to the poorest districts increased and aid to the wealthiest districts remained unchanged. Finally, we find that reforms that were initiated by the states without judicial prodding were typically ineffective.     

The Challenges of Contracting and Accountability Across the Federal System: From Ambulances to Space Shuttles

This article focuses on two questions related lo governmentcontracting and accountability. How are key components of contractingsimilar or different for city, state, and federal governmentsin the United States? To what extent do the three levels ofgovernment share the widely recognized challenges of contractdesign and contract management? To address these questions,we compared and contrasted six contracting cases, two each forlocal, state, and the federal governments. We found that forall governments in the U.S. federal system, the public managementfunctions of contracting are remarkably similar, and that contractmanagement and the achievement of accountability are "weak links"in the contracting process. Our findings do not support thehypothesis that contract management is more effective in localgovernment relative to state and federal governments.     

The Impact of the Australian Government Job Network Contracting on Not‐for‐Profit Service Providers

This article examines the impact of Australian government contracting for the provision of Job Network services on not‐for‐profit organisations ¹ . The term not‐for‐profit is used to categorise organisations which are variously described as non‐government, non‐profit, community and third sector organisations ( Lyons 2001 ).     

Citizens' Blame of Politicians for Public Service Failure: Experimental Evidence about Blame Reduction through Delegation and Contracting

Theories of blame suggest that contracting out public service delivery reduces citizens’ blame of politicians for service failure. The authors use an online experiment with 1,000 citizen participants to estimate the effects of information cues summarizing service delivery arrangements on citizens’ blame of English local government politicians for poor street maintenance. Participants were randomized to one of four cues: no information about service delivery arrangements, politicians’ involvement in managing delivery, delegation to a unit inside government managing delivery, and delegation through a contract with a private firm managing delivery. The politicians managing delivery cue raises blame compared to citizens having no information. However, the contract with a private firm cue does not reduce blame compared to either no information or the politicians managing delivery cue. Instead, the delegation to a unit inside government cue reduces blame compared to politicians managing delivery, suggesting that delegation to public managers, not contracting, reduces blame in this context.