The Dynamics of Government-to-Government Contracts

Source: Trevor L. Brown
Public Performance & Management Review
Volume 31, Number 3 / March 2008

This paper explores the dynamics of government-to-government contracting at the local level in order to examine how governments’ shared organizational characteristics, notably a governance structure based on political accountability, potentially make them more attractive vendors for services that risk contract failure. Relying on panel data from the 1992 and 1997 International City/County Manager Association’s (ICMA) Alternative Service Delivery surveys along with data from the U. S. Census and other sources, this paper identifies service areas in which governments most frequently turn to government vendors. In particular, a comparison of public works and transportation services–a service area with low risks of opportunism leading to contract failure–and health and human services–a service area with high risks of opportunism leading to contract failure–shows that contracting governments are more likely to utilize governments over private firms and nonprofits for high-risk services. This is not the case for low-risk services, suggesting that governments view other governments as trusted contract vendors.

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