Competition, Negotiation, or Cooperation

Abstract

Contracting for public services from public or private suppliers is now a common prescription to improve government efficiency. The competitive bidding model is usually viewed as the ideal contracting process. However, this article explains that two other approaches-the negotiation model and the cooperation modelmay be more appropriate under certain conditions. The primary factors that are likely to determine which of the three approaches is most suitable are (a) the characteristics of the external environment (especially the number of service suppliers), (b) the level of organizational resources (e.g., personnel, funds, time, and expertise), and (c) the degree of uncertainty about funding, future events, service technologies, and causal relationships between service outputs and desired outcomes. The main point is that there is no one best way to contract for services; rather, government units should adapt their contracting procedures to both internal external conditions to implement service contracting in an effective manner.

Nonprofits as Local Government Service Contractors

“…As the scope of local public service provision and contracting has expanded over the last couple of decades, nonprofit organizations have been challenged to work collaboratively with governments to find better ways to respond to social needs. Despite the growing role that contracts with nonprofits play in local service delivery, only limited scholarly attention has been directed to why some cities rely more on nonprofit organizations to produce services, or how political institutions influence the role that nonprofits play in service provision (DeHoog 1990; Ferris 1998; Gooden 1998; Grønbjerg 1993; Kennedy and Bielefeld 2002; Smith and Lipsky 1993; Stein 1990).…”

Governing Diversity: The Impact of Social Heterogeneity on Human Service Delivery

“…In service contracting, competition is limited, service performance is hard to define, and contract monitoring is costly, all implying that service market does not function well enough to meet the requirements of the ideal privatization prescription (Savas 2000). This further complicates human service contract design and enforcement (DeHoog 1990;Sclar 2000). However, this does not mean service delivery should be pushed back to in-house.…”

“…Human service provision is featured by its ambiguous performance and high provider discretion, which complicates contract design and enforcement by public administrators (DeHoog 1990;Johnston and Romzek 1999). Nondistribution constraint weakens nonprofits' incentives to take advantage of the information asymmetries in service delivery, while social mission alignment with government would lead to nonprofit pursuit of social improvement, rather than self-interest maximization.…”

Walking the High Wire

“…The specifics of contractual arrangements vary greatly, and can range from one-time agreements to commitments of more than 20 years (Heilman & Johnson 1992). In reality, there are other contract models that emphasize longterm and collaborative relationships (DeHoog, 1990). These contract variations may move the arrangement out of Box 4 and into another box.…”