How Competitive Is “Competitive” Procurement in the Social Services?

Abstract

The scholarship on contracting generally argues that markets for social services are weak and lacking in competition. Using data gathered from Florida’s largest social service agency, the Department of Children and Families, this article adds to the discussion by constructing a more rigorous measure of competition that accounts for the quality of bidding entities. The findings indicate that while the measures used in earlier studies align reasonably well with the raw number of initial responders to competitive solicitations, they tend to overestimate competition when the quality component is included in the analysis. That is, social service markets may be even weaker than previously reported. Furthermore, an examination of the relationship between competition and performance fails to find a significant association.

Keywords

contracting competition social services

Get full access to this article

View all access options for this article.

References

Bel

Fageda

(2011). Big guys eat big cakes: Firm size and contracting in urban and rural areas. International Public Management Journal, 14, 4-26.

Brannman

L. J.

Klein

Weiss

L. W.

(1987). The price effects of increased competition in auction markets. The Review of Economics and Statistics, 69, 24-32.

Bresnahan

T. F.

Reiss

P. C.

(1991). Entry and concentration in concentrated markets. Journal of Political Economy, 99, 977-1009.

Brown

T. L.

Potoski

(2003). Transaction costs and institutional explanations for government service production decisions. Journal of Public Administration Research and Theory, 13, 441-468.

Carr

J. B.

LeRoux

Shrestha

(2009). Institutional ties, transaction costs, and external service production. Urban Affairs Review, 44, 403-427.

Cohen

(2001). A strategic framework for devolving responsibility and functions from government to the private sector. Public Administration Review, 61, 432-440.

Cooper

P. J.

(2003). Governing by contract: Challenges and opportunities for public managers. Washington, DC: CQ Press.

DeHoog

R. H.

(1984). Contracting out for human services: Economic, political, and organizational perspectives. Albany: State University of New York Press.

Domberger

Hensher

(1993). On the performance of competitively tendered, public sector cleaning contracts. Public Administration, 71, 441-454.

10.

Donahue

J. D.

(1989). The privatization decision: Public ends, private means. New York, NY: Basic Books.

11.

Eisenhardt

K. M.

(1989). Agency theory: An assessment and review. Academy of Management Review, 14, 57-74.

12.

Fernandez

(2007). What works best when contracting for services? An analysis of contracting performance at the local level in the U.S. Public Administration, 85, 1119-1141.

13.

Ferris

Graddy

(1986). Contracting out: For what? With whom? Public Administration Review, 46, 343-354.

14.

Florida Department of Children and Families. (2009). Prevention Partnership grants: Application instructions. Retrieved from http://www.dcf.state.fl.us/programs/samh/substanceabuse/docs/PPGApplication5.pdf

15.

Florida Department of Children and Families. (2010a). Application instructions: 2010 Emergency shelter grants facility grant (Grant Solicitation #LPZ03). Retrieved from http://myflorida.com/apps/vbs/vbs_www.ad.view_ad?advertisement_key_num=89583

16.

Florida Department of Children and Families. (2010b). Application instructions: 2010 Emergency shelter grants prevention grant (Grant Solicitation #LPZ04). Retrieved from http://myflorida.com/apps/vbs/vbs_www.ad.view_ad?advertisement_key_num=89581

17.

Florida Department of Children and Families. (2010c). Guide to grant solicitations and awards (CFOP 75-7). Tallahassee, FL: Department of Children and Families.

18.

Florida Legislature, Office of Program Policy Analysis & Government Accountability. (2006, December). Report No. 06-72: Further contracting enhancements would help DCF correct vendor noncompliance. Tallahassee, FL: OPPAGA Report Production.

19.

Florida Senate. (2009, January). Agency sunset review of the Department of Children and Family Services (Issue Brief 2009-304). Committee on Children, Families, and Elder Affairs. Tallahassee, FL.

20.

Greene

J. D.

(1996). Cities and privatization: Examining the effect of fiscal stress, location, and wealth in medium-sized cities. Policy Studies Journal, 24, 135-144.

21.

Gupta

(2002). Competition and collusion in a government procurement auction market. Atlantic Economic Journal, 30, 13-25.

22.

Hefetz

Warner

(2004). Privatization and its reverse: Explaining the dynamics of the government contracting process. Journal of Public Administration Research and Theory, 14, 171-190.

23.

Hefetz

Warner

(2007). Beyond the market versus planning dichotomy: Understanding privatization and its reverse in US cities. Local Government Studies, 33, 555-572.

24.

Hefetz

Warner

(2012). Contracting or public delivery? The importance of service, market and management characteristics. Journal of Public Administration Research and Theory, 22, 289-317.

25.

Jensen

M. C.

Meckling

W. H.

(1976). Theory of the firm: Managerial behavior, agency costs and ownership. Journal of Financial Economics, 3, 305-360.

26.

Johnston

J. M.

Girth

A. M.

(2012). Government contracts and “managing the market”: Exploring the costs of strategic management responses to weak vendor competition. Administration & Society, 44, 3-29.

27.

Johnston

J. M.

Romzek

B. S.

(1999). Contracting and accountability in state Medicaid reform: Rhetoric, theories, and reality. Public Administration Review, 59, 383-399.

28.

Johnston

J. M.

Romzek

B. S.

Wood

C. H.

(2004). The challenges of contracting and accountability across the federal system: From ambulances to space shuttles. Publius: The Journal of Federalism, 34, 155-182.

29.

Keisler

J. M.

Buehring

W. A.

(2005). How many vendors does it take to screw down a price? A primer on competition. Journal of Public Management, 5, 291-317.

30.

Kemper

Quigley

J. M.

(1976). The economics of refuse collection. Cambridge, MA: Ballinger Publishing.

31.

Kettl

(1993). Sharing power: Public governance and private market. Washington, DC: Brookings.

32.

Klemperer

(2004). Auctions: Theory and practice. Princeton, NJ: Princeton University Press.

33.

Kodrzycki

Y. K.

(1998). Fiscal pressure and the privatization of local services. New England Economic Review, January/February, 39-50.

34.

Krishna

(2002). Auction theory. San Diego, CA: Academic Press.

35.

Lamothe

(2009). Beyond the search for competition in social service contracting: Procurement, consolidation, and accountability. American Review of Public Administration, 39, 164-188.

36.

Lamothe

(2010). Competing for what? Linking competition to performance in social service contracting. American Review of Public Administration, 40, 326-350.

37.

Lamothe

(2012a). To trust or not to trust? What matters in local government-vendor relationships? Journal of Public Administration Research and Theory, 22, 867-892.

38.

Lamothe

(2012b). What determines the formal versus relational nature of local government contracting? Urban Affairs Review, 48, 322-353.

39.

Lamothe

Feiock

R. C.

(2008). Examining local government service delivery arrangements over time. Urban Affairs Review, 44, 27-57.

40.

Levin

Tadelis

(2010). Contracting for government services: Theory and evidence from U.S. cities. Journal of Industrial Economics, 58, 507-541.

41.

MacDonald

J. M.

Handy

C. R.

Plato

G. E.

(2002). Competition and prices in USDA commodity procurement. Southern Economic Journal, 69, 128-143.

42.

McAfee

R. P.

McMillan

(1987). Auctions and bidding. Journal of Economic Literature, 25, 699-738.

43.

McDavid

J. C.

(1985). The Canadian experience with privatizing solid waste collection services. Public Administration Review, 45, 602-608.

44.

Milgrom

(1989). Auctions and bidding: A primer. Journal of Economic Perspectives, 3, 3-22.

45.

Milward

B. H.

Provan

K. G.

(2000). Governing the hollow state. Journal of Public Administration Research and Theory, 10, 359-379.

46.

Miranda

Lerner

(1995). Bureaucracy, organizational redundancy, and the privatization of public services. Public Administration Review, 55, 193-200.

47.

Osborne

Gaebler

(1992). Reinventing government. Reading, MA: Addison-Wesley.

48.

Romzek

B. S.

Johnston

J. M.

(2005). State social services contracting: Exploring the determinants of effective contract accountability. Public Administration Review, 65, 436-449.

49.

Ross

S. A.

(1973). The economic theory of agency: The principal’s problem. American Economic Review, 63, 134-139.

50.

Savas

E. S.

(1987). Privatization: The key to better government. Chatham, NJ: Chatham House Publishers.

51.

Savas

E. S.

(2000). Privatization and public-private partnerships. New York, NY: Chatham House Publishers.

52.

Savas

E. S.

(2002). “Competition and choice in New York city social services. Public Administration Review, 62, 82-91.

53.

Schlesinger

Dorward

Pulice

(1986). Competitive bidding and state’s purchase of services: The case of mental health care in Massachusetts. Journal of Policy Analysis and Management, 5, 245-263.

54.

Sclar

E. D.

(2000). You don’t always get what you pay for: The economics of privatization. Ithaca, NY: Cornell University Press.

55.

Selten

(1973). A simple model of imperfect competition where four are few and six are many. International Journal of Game Theory, 2, 141-201.

56.

Smith

S. R.

Lipsky

(1993). Nonprofit for hire: The welfare state in the age of contracting. Cambridge, MA: Harvard University Press.

57.

Smith

S. R.

Smyth

(1996). Contracting for services in a decentralized system. Journal of Public Administration Research and Theory, 6, 277-296.

58.

University of Florida. (2005). Florida statistical abstracts. Gainseville: Bureau of Economic and Business Research, University of Florida.

59.

U.S. Census Bureau. (1999). Metropolitan areas and components, 1999, with FIPS codes. Washington, DC: U.S. Department of Commerce. Retrieved from http://www.census.gov/population/estimates/metro-city/99mfips.txt

60.

Van Slyke

D. M.

(2003). The mythology of privatization in contracting for social services. Public Administration Review, 63, 296-315.

61.

Van Slyke

D. M.

(2007). Agents or stewards: Using theory to understand the government-nonprofit social service contracting relationship. Journal of Public Administration Research and Theory, 17, 157-187.

62.

Vickrey

(1961). Counterspeculation, auctions, and competitive sealed tenders. Journal of Finance, 16, 8-37.

63.

Warner

Hefetz

(2004). Pragmatism over politics: Alternative service delivery in local government, 1992-2002. In International City/County Management Association (Ed.), Municipal year book 2004 (pp. 8-16). Washington, DC: International City/County Management Association.

64.

Weisbrod

B. A.

(1977). The voluntary non-profit sector: An economic analysis. Lexington, MA: Lexington Books.