Contract–Management Capacity in Municipal and County Governments

• Published date: 01 March 2003
• Author: Trevor L. Brown,Matthew Potoski
• DOI: http://doi.org/10.1111/1540-6210.00276
• Date: 01 March 2003

Contract-Management Capacity in Municipal and County Governments 153

Trevor L. Brown

The Ohio State University

Matthew Potoski

Iowa State University

Contract-Management Capacity in Municipal and

County Governments

Under pressure to do more with less, governments across the country have moved from direct

service provision to providing services by contract. Proponents argue that contracting can reduce

costs and improve flexibility and customer satisfaction. Critics point to a growing number of failed

contracts, arguing there are numerous pitfalls associated with contracting. Missing from these

debates is a discussion of how governments’ managerial capacity can improve contract perfor-

mance. In this article, we identify specific capacities that governments can use to harness the

promise of contracting while avoiding its pitfalls. We present analyses of data on municipal and

county government contracting activities that show how governments invest in contract-manage-

ment capacity in response to several internal and external threats to effective contract perfor-

mance. Because government investment in contract-management capacity is uneven—that is, some

governments invest in less capacity even when circumstances would call for more—our analyses

may help to explain why some contract arrangements are more successful than others.

Under pressure to do more with less, governments across

the country have moved from direct service provision to

providing services by contract. Today, citizens receive pub-

lic goods and services not only from their general-service

local governments, but also from a variety of vendors work-

ing under contract, including for-profits, nonprofits, and

government agencies from other jurisdictions. Advocates

of such alternative service-delivery arrangements promote

competitive contracting with promises of efficiency, cost

savings, and improved effectiveness (Ferris and Graddy

1991; Ostrom and Ostrom 1977; Stein 1990). Citing a

growing number of incomplete, failed, and corrupt con-

tract arrangements, critics argue that contracting creates

numerous accountability problems, sacrifices service qual-

ity for efficiency and cost savings, often does not result in

improved efficiency and cost savings, and ultimately “hol-

lows” the state (deLeon and Denhardt 2000; Milward 1996;

Milward, Provan, and Else 1993).

Missing in the contracting debate is rigorous analysis

of the capacity of both governments and contract vendors

to manage the contracting process. Contracting is not a

one-size-fits-all proposition. The success or failure of any

alternative service-delivery arrangement likely depends on

how well governments can manage the entire contract pro-

cess, from assessing the feasibility of contracting through

implementation to monitoring and evaluation—activities

that require strong government contracting capacity. Gov-

ernments investing in contract-management capacity may

be better positioned to harness the promise of effective

contracting while avoiding its pitfalls.

In this article, we examine investments in contract-man-

agement capacity that municipal and county governments

have made. Effective contract management requires miti-

gating specific problems that can plague the contract pro-

cess. These problems arise from dissatisfaction with prior

contracting experiences; transaction costs; characteristics

Trevor L. Brown is an assistant professor at The Ohio State University, where

he teaches public management and organizational theory. His research fo-

cuses on contracting and contract management, performance measurement

and management, intergovernmental relations, and democratization. Email:

brown.2296@osu.edu.

Matthew Potoski is an assistant professor at Iowa State University, where he

teaches politics, policy, and administration. His research studies the organi-

zation of the U.S. House, state environmental policies, and businesses’ re-

sponses to them. Email: potoski@iastate.edu.