Contract Management Capacity Breakdown? An Analysis of U.S. Local Governments

• DOI: http://doi.org/10.1111/j.1540-6210.2012.02587.x
• Published date: 01 November 2012
• Date: 01 November 2012
• Author: M. Ernita Joaquin,Thomas J. Greitens

M. Ernita Joaquin is assistant professor

of public administration and policy at San

Francisco State University. She earned

her doctorate in political science from

Northern Illinois University. Her research has

appeared in journals such as American

Review of Public Administration,

Administration & Society, Public

Performance and Management

Review, and Public Integrity. She studies

bureaucratic adaptation and learning and

the issues of performance, capacity, and

accountability in multisector governance.

E-mail: ejoaquin@sfsu.edu

Thomas J. Greitens is assistant

professor of public administration at Central

Michigan University. His research focuses

on the challenges of implementing public

management ideals in government, from

performance-driven metrics to privatization

mandates to e-government transformations.

His work has appeared in Administration

& Society, Public Performance and

Management Review, and several books

on e-government and citizen participation.

E-mail: thomas.greitens@cmich.edu

Contract Management Capacity Breakdown? An Analysis of U.S. Local Governments 807

Public Administration Review,

Vol. 72, Iss. 6, pp. 807–816. © 2012 by

The American Society for Public Administration.

DOI: 10.111/j.1540-6210.2012.02587.x.

M. Ernita Joaquin

San Francisco State University

Thomas J. Greitens

Central Michigan University

Research indicates that successful government contract-

ing depends on suf‌f‌i cient internal management capacity.

Numerous studies have examined the decision to contract

out and its pitfalls, but few have tracked government

contract management capacity.  is study explores

whether a change is observable in the capacity of U.S.

local governments to engage in ef‌f ective contracting from

1997 to 2007.  e authors discuss whether this change

represents a decline or degradation, and in which form

and type of government it occurred. Using data from 537

local government units, the analysis reveals that some

aspects of capacity have declined as local governments

continue to contract out for highly complex services.  e

authors speculate on the reasons behind the f‌i ndings and

suggest capacity enhancement strategies.

Privatization or contracting1 has been transform-

ing American government since the 1970s.

New Public Management and the “reinventing

government” movement have vigorously promoted

alternative forms of service delivery, particularly con-

tracting out to businesses and nonprof‌i ts (Auger 1999;

Osborne and Gaebler 1992;

Savas 1987). Many consider

contracting a legitimate tool

of governance, with potential

f‌i scal benef‌i ts as public rev-

enues dwindle (Donahue 1991;

Greene 2002; Osborne and

Gaebler 1992; Salamon 2002).

Contracting did produce savings

for early adopters, especially in sanitation and mainte-

nance (Ahlbrandt 1973; Savas and Benson 1976), but

it may have already been pushed beyond its pragmatic

limits (Miller 1997). As a result, a “shadow” govern-

ment of contractors has ballooned (Light 2003),

corresponding to a “decline of the public sector by

design,” possibly including a reduction in government

contract management capacity (Farazmand 2009,

1009; Waxman 2008).

 e concerns with overcontracting abound. For exam-

ple, contracting has sometimes become a function

of politics rather than a tool for administrative

ef‌f‌i ciency (Boyne 1998; Joaquin 2009; O’Toole and

Meier 2004). Contracting in some agencies seemed

to project an image of better performance (Greitens

and Joaquin 2010; Terman and Yang 2010). But with

limited markets for some services, contracting has

inadvertently increased the risk of program failure

(Brown and Potoski 2003a; Cooper 2003; Hefetz and

Warner 2004; Milward and Provan 2000; Romzek

and Johnston 2002). Recent trends of bringing

services back or “reverse privatization” indicate a lack

of savings and quality of contracted services. In metro-

politan areas with heterogeneous environments, such

reversals have been found to be more likely (Warner

and Hefetz 2010). It appears that contracting actually

pushes up rather than diminishes the demand for

in-house competencies to avoid disastrous outcomes

(Goodsell 2007; Rainey 2003). And while numerous

studies have focused on the decision to contract out

and the pitfalls of contracting, few have tracked the

level of government contract management capacity

over time.

 is article examines whether

U.S. local governments have

maintained contract manage-

ment capacity as the scope

of contracting has increased.

Contract management may

be def‌i ned as “all activities

performed by the govern-

ment … that are relevant to contracts with private or

nonprof‌i t organizations … such as writing or creat-

ing the Invitation to Bid or Request for Proposal,

devising a rating system for bid responses, rating

the bid responses, awarding the contract, additional

negotiations leading to a signed contract, and contract

administration” (Lawther 2002, 9).

Management can be moderately dif‌f‌i cult (Hefetz

and Warner 2012) or quite complicated, as contract-

ing straddles vertical and horizontal authorities and

is often undertaken for new services (Cooper 2003;

Contract Management Capacity Breakdown? An Analysis of

U.S. Local Governments

 is article examines whether

U.S. local governments have

maintained contract manage-

ment capacity as the scope of

contracting has increased.