Research
Publications
"Assessing the effects of user accountability in contracting out." (with Marc Esteve, Juan Carlos Garrido, Christian Schuster, and José Zafra-Gomez) Journal of Public Administration Research and Theory
Abstract: How does contracting out affect service performance? Evidence to date is mixed. We argue that this is partially due to prior studies focusing often on whether—not how—services are contracted. Yet, how services are contracted matters. In particular, we argue that whether users pay user fees for services to contractors affects efficiency. Where they do, contractor revenue depends on user satisfaction and contractors face incentives to provide quality services to users to retain revenue. Where, by contrast, governments fund services, information asymmetry about the quality of services users receive allows contractors to shirk quality. The assertion is substantiated by empirical evidence derived from a comprehensive analysis of conditional efficiency within the water supply services across 2,111 municipalities in Spain, employing a two-stage conditional order-m data panel estimation. Our results show that contracting out where users pay service fees and thus have incentives to hold contractors accountable outperforms contracting out without user fees in quality-adjusted service provision.
Working papers
"Do markets shape management? Experimental evidence for the effects of competition on contract management." Winner of the Christopher Pollitt Prize for best paper at the 2024 IRSPM Conference, 16-18 April 2024
Abstract: One of the central aims of contracting is to introduce competition into public service delivery. Despite the challenges governments face to create and maintain markets, competition remains one of the core rationales for the practice. Recently, governments have faced new calls to generate more competition for their contracts, to unlock greater efficiencies, improve the quality of public services, and ward off corruption. Yet evidence for the effect of competition on contract performance is conflicting. Understanding the reasons behind these mixed findings is an important task in the context of the renewed focus on competition among practitioners. This paper investigates the effect of competition on contract management, as a potential link between competition and performance. This paper examines two crucial elements of contract management that previous literature has shown can substantially influence the outcomes of government contracts: the flexibility managers give suppliers and the closeness with which they monitor them. The paper builds a theory that under competitive conditions managers will more tightly control suppliers’ behaviour, which existing research suggests may be counterproductive. The paper argues that, in highly contested markets, public managers will expect relationships to be shorter and the payoffs from more intensive styles of management to be higher. To test this theory, the paper presents data from a vignette experiment, conducted through a survey of 576 public managers with experience of managing external relationships. Results indicate that high competition does indeed lead to less flexibility and more monitoring, while low competition leads to a reduction in monitoring intensity.
Abstract: Careful contract design is essential for ensuring the incentives within government contracts lead suppliers to perform well and to produce positive contract outcomes. Governments are increasingly departing from the standard fixed-price contract and using cost-reimbursement contracts to manage risk to the supplier, or performance-based payment to sharpen incentives between contract awards. At the same time competition is a crucial ingredient in the contracting process to realize the expected benefits of the practice and to prevent corruption and other adverse outcomes. Yet our understanding of potential competitors' responses to different payment structures is scant. This paper presents a theory that both cost-reimbursement contracts and performance-based payment will discourage suppliers from bidding, compared to a fixed-price design. The theory rests on the idea that each design presents a different balance between potential profit and the certainty of that return. I argue that suppliers will prefer the more even balance of risk and reward offered by a fixed-price design over cost-reimbursement contracts (high certainty, low potential profit) and performance-based contracts (high potential profit, low certainty). I test this theory through a conjoint experiment with 513 existing and potential government suppliers. I find that, as hypothesized, participants find both cost-reimbursement and performance-based contracts less attractive, relative to a fixed-price design. The data also provide evidence that certainty of profit plays a role in suppliers' decision-making and that governments may be able to make cost-reimbursement contracts more attractive by using simpler bidding procedures.