Contracting for Social Services: Process Management and Resource Dependencies

A new interorganizational environment has emerged as nongovernmental organizations have increasingly been used to implement public policy in the social services. As yet, there is a paucity of appropriate concepts, models, and data to describe the organizational consequences of separating governmental funding from service delivery as found in purchase of service contracting. Drawing mainly on three recent studies of contracting in the San Francisco Bay Area, this paper employs a political economy model to analyze the choices and constraints faced by local governmental agencies and nonprofit service providers as they move through the five stages of the contract management process. The strategies used by provider agencies to cope with their dependencies on government for funds and clients are then described. A series of questions is identified for policymakers interested in improving the contracting process.