What Determines the Formal Versus Relational Nature of Local Government Contracting?

Abstract

In this article, we examine the governance structures used to manage local service delivery contracts with an eye toward two specific concerns. First, we contend that public managers likely use dual regimes in which contract writing is more formal in nature than is the management style adopted during contract implementation. We also explore the determinants of such mechanisms. We find some evidence to support our contention in that managers frequently contact and communicate with their vendors despite the presence of clearly and formally written contracts. We further find that the formal versus relational nature of written contract features is influenced by different factors (service characteristics, market conditions, vendor ownership) than is management style (reputation, management capacity, expectations of continuing relationships).

Outsourcing, bureaucratic personnel quality and citizen satisfaction with public services

“…Although this negative expectation is well grounded, there is also a considerable literature claiming that the effects of outsourcing are conditional, pointing to the buyer's management capacity as one of the most salient conditioning factors (Romzek and Johnston ; Van Slyke ; Brown et al , ). Specifically, it was found that the quality of management‐level personnel matters when it comes to selecting the most suitable provider (Romzek and Johnston ) and contract drafting, monitoring the contract's performance (Kettle ; Brown and Potoski ; Van Slyke ), and adjusting its implementation (Van Slyke ; Amirkhanyan ; Brown et al ; Lamothe and Lamothe ). As Van Slyke (, p. 296) put it, ‘To reap the benefits of competition, government must be a smart buyer, a skilful purchasing agent, and a sophisticated inspector of the goods and services it purchases from the private sector.’…”

Impact of Product Characteristics and Market Conditions on Contract Type: Use of Fixed-Price Versus Cost-Reimbursement Contracts in the U.S. Department of Defense

“…Our measures of product characteristics are derivative of well-established measures in the extant literature (Brown & Potoski, 2005;Lamothe & Lamothe, 2012;Levin & Tadelis, 2010). We followed the measurement scheme of Brown and Potoski (2005), with some important improvements.…”

“…Second, we produce unique measures of product characteristics that are not currently available in the literature. Past research on product characteristics at the local level has proved useful to many scholars interested in the dynamics of local government contracting (e.g., Brown & Potoski, 2005;Lamothe & Lamothe, 2012;Levin & Tadelis, 2010). We provide measures that can be used by scholars undertaking similar research at the federal level.…”

Contracting social services in China: The case of the Integrated Family Services Centres in Guangzhou

“…Thus, the case of the IFSCs in Guangzhou has illustrated that the service agreements and the independence of NGOs need to be legally protected by the administrative orders and laws of central government. This means that the Chinese government’s service contracts with NGOs need to be ‘detailed, binding legal agreements that specify the obligations and roles of both parties in the relationship’ (Vandaele et al, 2007, quoted in Lamothe and Lamothe, 2012: 324). This type of contract helps protect ‘the rights and properties of potentially opportunistic participants’ (p. 324).…”