Complex contracting in the public sector: Managing relations and negotiating contracts in the absence of market discipline

Posted on February 4, 2011

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Note: The following is an excerpt from today’s post in the Contracting Intelligence Blog.  Use the link at the conclusion of this post access the article in its entirety.

Governments buy lots of goods and services. The U.S. federal government spent over $419 billion in fiscal year 2006 for procurement, almost double 2001 procurement expenditures (Hutton, 2008). The rationale for buying is to lower costs through scale or market efficiencies, spark service delivery improvements or innovation through competition, and access expertise or capacity unavailable in-house (Kelman, 2002). The risks are that contracting’s cost savings are sometimes illusory, quality suffers, and delivery delayed (Sclar, 2000).  Some fear that such large scale procurement undermines accountability: when government purchases rather than produces, the chain of accountability is extended yet further and perhaps even weakened. People working for government are more easily held accountable than people working for organizations that sell to the government. When contracting fails, contracting muddles responsibility: does fault lie with the seller, the buyer, or unforeseen circumstances that nature delivered?

from Accountability Challenges in Public Sector Contracting for Complex Products, prepared for the Kettering Symposium on Public Accountability, May 22 – 24, 2008

The above referenced excerpt is from a 2008 paper that was written by Trevor Brown (John Glenn School of Public Affairs, The Ohio State University), Matthew Potoski (Department of Political Science, Iowa State University), and David Van Slyke (Maxwell School of Citizenship and Public Affairs, Syracuse University).

Consisting of four sections, the authors attempt to relate to the reader, the dynamics of complex contracting in the public sector.  Outside of the context of today’s post, I would definitely take the time to review the paper and their findings in its entirety through the SlideShare viewer below.

However, one statement or observation that stood out was the writers’ assertion that “Contracting in complex circumstances does not guarantee failure, but it does make it more likely, ” citing as a reason the fact that “buyers and sellers can no longer rely on market discipline, but instead must manage their relations to ensure the exchange bears its win-win fruits.”

Use this link to access the full article “Complex contracting in the public sector: Managing relations and negotiating contracts in the absence of market discipline.”

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