Contract Design Decisions: An Empirical Analysis of Federal Contract Characteristics

by Craig R. Smith Assistant Professor School of Public Administration & Policy Eller College of Management University of Arizona Tucson, AZ

&

Deanna Malatesta Assistant Professor School of Public and Environmental Affairs IUPUI Indianapolis, IN

As American government expanded from its relatively humble origins, public administrators and managers had to seek out and employ additional methods to meet citizen demands. As a result, in recent decades contracting out services to nongovernmental organizations has emerged as the primary alternative to direct provision by public employees and become an indispensible tool of governance. Moreover, the private, for-profit and nonprofit sectors have been progressively more active in public service delivery to enable governments to meet the changing demands of their constituencies while facing the external challenges imposed by politicians, federal regulations, and reform movements (Milward and Provan 2000). In fact, the term governance is often used to evoke a broad, multi-dimensional approach to service delivery, which stretches beyond the “lonely” public organization (Pierre and Peters 2000; Lynn et al. 2001). Indeed, governmental and nongovernmental organizations often develop mutual dependency in a service delivery or policy domain, which has been conceptualized in various ways including public sector networks, alliances, partnerships, and collaborative structures. Not surprisingly, the increased reliance on contracting out has elicited a great deal of attention in the public administration literature. In general, there are three primary streams of contracting research in this literature. In the first stream, researchers typically focus on the potential cost savings and the relative quality of the services provided by private