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Book ChapterDOI

Contracting for Social Programs

22 May 2023-pp 585-C40.P81
TL;DR: In this paper , the fundamental challenges for government contracting in this area include identifying (1) social programs as appropriate candidates for contracting, (2) competitive markets of providers, and (3) accurate transaction costs.
Abstract: Abstract Government contracting for social programs typically entails complex multiparty networks of providers, subcontractors, and shared clientele. The fundamental challenges for government contracting in this area include identifying (1) social programs as appropriate candidates for contracting, (2) competitive markets of providers, and (3) accurate transaction costs. Once the decision to contract is made, the government principal’s challenge is to develop the capacity to fashion and manage the contract, by identifying performance measures and procedures to collect performance data, and establishing strategies for accountability. Social service contracts are prone to incomplete or relational contracts because of the difficulty of specifying performance measures in advance. As a result, multi-provider contracts typically emphasize relationship building among a contract principal and multiple agents. Incomplete contracts typically rely as much on trust and informal accountability relationships among actors as they do on formal, structured accountability mechanisms.
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