CONTRACTING FOR PUBLIC SERVICES: A REVIEW OF ANTIPODEAN EXPERIENCE

In this article the evolution of competitive tendering and contracting ( ctc ) policy in Australia and New Zealand is documented and evaluated. Policy implementation at Commonwealth, State and local levels in Australia is examined in some detail. This was followed by a similar analysis of the two levels of government in New Zealand. An overall appraisal of the impact of CTC on efficiency and effectiveness of service delivery is undertaken, based on disaggregated contracting surveys of State and Commonwealth government agencies as well as a wide range of other sources of information. The key findings, which are summarized in tabular form, indicate that the pace of implementation has varied widely across jurisdictions. This variability is largely a function of differences in political orientation of the governments in power, particularly in Australia. Despite these differences, the findings suggest that efficiency gains stemming from the application of ctc are substantial and widespread. Furthermore, quality of service has not, in general, been sacrificed to cost reductions. There is every indication that the current rate of progress of policy implementation is set to continue. In Australia, it may even accelerate with the onset of a national competition policy which will place competitive pressures on providers of public services.     

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.     

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.     

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 ).     

QUALITY AND PUBLIC SERVICES

The issue of quality of service is becoming increasingly important in the public service as a result of new approaches that are being adopted to management, notably the development of contract-based management. The argument of this article is that the concept of quality is a particularly difficult one for the public services, because of problems of information asymmetries. The first sections of the article are concerned with the meaning of the concept of quality and the problems of managing quality in the service sector and the public service in particular. The central argument of the article is that there are important problems of information asymmetries between service providers and service consumers. Four different situations of differential information availability are distinguished. The article argues that the issue of quality in the public service is an inherently political one.     

CONSUMER COMPLAINTS IN PUBLIC SECTOR SERVICES

This article summarizes the findings of a recent research project investigating complaints handling in local government. It discusses the results of a survey of half the local authorities in England, to discover their complaints handling practices. The article also summarizes the results of a more limited survey of local authority consumers; this aimed to discover their attitude to and experience of complaining, and the level of awareness of their local authority's procedure. Finally there is a discussion about the desirability of formalized complaints procedures and the form they might take.     

CHANGE IN THE MANAGEMENT OF PUBLIC SERVICES

This article identifies the main themes in recent changes in public sector management and shows the extent of the challenge to past organizational assumptions. While recognizing the objectives of the changes could bring benefits if realized, it argues that there are a series of issues that are unresolved. The language of consumerism, the development of government by contracts, the form of performance management and the use of quasi-markets are seen as creating problems. These are seen as deriving from an attempt to apply approaches drawn from the private sector to the public domain. It is argued that they need to be balanced by approaches that recognize the values of the public sector.     

THE PRACTICE OF CONTRACTING IN PUBLIC PRIVATE PARTNERSHIPS: TRANSACTION COSTS AND RELATIONAL CONTRACTING IN THE IRISH SCHOOLS SECTOR

This paper explores the practice of contracting in public private partnerships (PPP). Focusing on the first Irish PPP to provide secondary schools, it draws on perspectives from transaction cost economics and socio‐legal theory. It finds that the ex ante contractual setting was undermined by pushing forward with the PPP before conducting an adequate level of project appraisal. It explores the experiences of key stakeholders in the ex post contracting stage and concludes that the conduct of contracting practice was not characterized by the shift to relational contracting expected under PPP. Whereas this approach to contractual governance did not hinder the development of broadly trusting relations between the client and contractor, this was not manifest in terms of relations between the contractor and schools. A significant degree of conflict was evident in some schools‐contractor relations, something which can be attributed to sources of transaction costs, including incomplete information, bounded rationality and uncertainty.     

ENTREPRENEURIAL EXIT RESPONSE TO DISSATISFACTION WITH PUBLIC SERVICES

Following Hirschman's seminal Exit, Voice and Loyalty, an exit response to dissatisfaction with public services is often portrayed as a replacement of one service provider with another, depending on the availability of alternatives. This article enriches Hirschman's typology by conceptualising an ‘entrepreneurial exit' response referring to citizens who exit proactively by creating a viable alternative themselves. The practical aspects of entrepreneurial exit are analysed based on five manifestations: planned homebirth, homeschooling, urban self‐defence groups, children with disabilities, and claim clubs in the American West. Whereas citizens' roles within the public service sphere are referred to as ‘participators’, ‘customers’, and ‘co‐producers', entrepreneurial exit indicates the entrepreneurial role citizens may play. Similar to the additional forms of exit, entrepreneurial exit becomes meaningful if the newly introduced form of service gains social acceptance, especially when it reflects policy non‐compliance within which laymen are transformed into providers of professional services.     

MANAGERIAL CHALLENGES IN PUBLIC SERVICE CONTRACTING: LESSONS IN GREEN‐SPACE MANAGEMENT

In this article, we address a series of interrelated issues in the managerial challenge of public service contracting. This is done by prompting ten issues within four objectives and highlighting their relevance and potential interrelatedness in effective contract management. In contrast to prevalent piecemeal and theoretically one‐dimensional approaches, the objectives and issues constitute a holistic framework that advances a comprehensive and pragmatic understanding of contracting processes. We hope that the framework merits further in‐depth exploration that may generate new insights, themes and questions for research in public service contracting. We identify and exemplify the framework by combining insights from different theoretical perspectives with empirical evidence through an iterative process. The evidence is educed as a set of observed and self‐reported stories in a cross‐national sample of 15 cases of contracting‐out in urban green‐space management.     

IMPROVING UK PUBLIC SERVICES: A REVIEW OF THE EVIDENCE

Over a number of years in the UK, public service improvement has been at the centre of both Conservative and Labour policy. Keen to make improvements in public services, the current Labour government is pursuing this issue more strongly than any other. This paper examines the concept of improvement and reviews the academic literature which has empirically assessed improvements in a range of public services. Drawn from over 50 studies of improvement, the evidence highlights seven determinants or improvement ‘triggers’ which have been put in place and which have had a positive effect on a public service. These include quality frameworks and public participation forums. The paper reviews the evidence and evaluates the strengths and weaknesses of the studies themselves. The findings of the paper indicate that, despite a political drive to improve public services, there is insufficient evidence available on ‘what works’ in bringing about improvement. The need for sustained research in this area is emphasized and conclusions are drawn on a way forward.     

SCRUTINIZING PERFORMANCE: HOW ASSESSORS REACH JUDGEMENTS ABOUT PUBLIC SERVICES

Strengthening the accountability and improving the performance of public services is an important issue in many countries. A common response is to impose elaborate oversight or scrutiny arrangements. While we know a good deal about the formal operation of these arrangements, we know much less about the informal practices of scrutiny bodies and how they make judgements. This paper investigates scrutiny processes in three national audit bodies, three service inspectorates, and two inquiry committees in the UK. Judgement processes were analyzed along five dimensions: intuitive to analytical thinking; implicit to explicit assessment criteria; inductive and deductive methods; internal and external validity; and the principles used to make and evaluate judgements. These processes varied considerably, suggesting the need for a broader conception of the nature of and influences on scrutiny processes, which recognizes the inherent tensions in these processes and the skills required by those who engage in them.     

DESIGNING CONTRACTS FOR COMPLEX SERVICES

In this article, we employ transaction cost economics and the contingency stream of organization theory to answer two related questions. First, when contracting for complex services, do governments design contracts for flexibility? Second, is the contingency perspective relevant to understanding contract design? Examining 130 professional service contracts awarded by state government agencies in the USA, we find that task complexity and task unpredictability, two dimensions of task uncertainty, increase the probability of flexible governance. This research highlights for managers the important fact that the potential for opportunism and task complexity are different sources of uncertainty that pose different challenges and call for different governance solutions. The study enriches our understanding of transaction costs by probing the conditions under which task uncertainty matters most (and least), and further shows the utility of integrating transaction cost economics with contingency theory to better understand contract governance.     

THE LIMITS OF KNOWLEDGE MANAGEMENT FOR UK PUBLIC SERVICES MODERNIZATION: THE CASE OF PATIENT SAFETY AND SERVICE QUALITY

This article assesses the contribution of management of knowledge across organizational and professional boundaries towards improved public services. We empirically investigate the potential for knowledge sharing within the context of the NHS modernization agenda, taking as our focus the current ‘patient safety’ policy agenda. Specifically, we evaluate the introduction of a knowledge management system, namely the National Reporting and Learning System (NRSL) and its impact in the area of operating theatres within a university teaching hospital. We suggest that government policy in this area needs to reflect more upon limits to the management of knowledge and issues of the nature of knowledge, professional cultures and institutional power and politics.     

PAYING FOR LOCAL GOVERNMENT: CHARGING FOR SERVICES

The latest Green Paper on reform of local government finance was published in January 1986. It represents an attempt to achieve local accountability which the present system is regarded as having failed to achieve. Increased use of fees and charges is seen as 'an even more direct way of ensuring that local people can see what they are getting for what they are paying' and, at the same time, 'has benefits in terms of efficiency as well as accountability'. This article critically appraises just what is meant by 'realistic charging policies', 'efficient use of resources' and 'effective pricing policies'. Realistic pricing policies are then outlined based on radical improvements in the nature and quality of information available to local authorities. The danger of a blinkered approach to increased use of charging is stressed and factors to be considered when reviewing charging are discussed.