The Dynamics of Public Service Contracting: The British Experience

The Dynamics of Public Service Contracting: The British Experience

The Dynamics of Public Service Contracting: The British Experience

The Dynamics of Public Service Contracting: The British Experience


The contracting out of public services, introduced by the Conservative government in the UK, is set to continue under the New Labour administration''s policy of Best Value. This book seeks to investigate compulsary competetive tendering.


The study described in this book investigates the factors influencing compulsory competitive tendering (CCT). It also attempts to show the importance of the politics of transaction costs in relation to the implementation of cct policy.

In Britain during the last decade there has been sustained ‘top-down’ pressure to privatise local government services. Empirical policy output studies associated with competitive tendering decisions at the local level, and research on the political dynamics underlying cct policy implementation and policy output, have been largely unexplored in research literature. This is due to the inordinate emphasis on an economic approach derived from public choice theory and on the theoretical pros and cons of cct policy, which represent partisan views. Spatial variations in cct output or the effects of privatisation have largely been neglected and the dynamic relationships between policy implementation and policy output have received less attention than they should. This work seeks to remedy the neglect of these topics by examining the determinants of cct policy output and investigating how the output has been made.

The theoretical questions addressed in this study focus on specific aspects of privatisation. the questions are: ‘What determines the local variation in cct output?’ and, ‘How do the determinants affect it?’

In examining the determinants of cct output, the investigation will centre on the 296 non-metropolitan districts in England, employing path analysis. the contributions of a transaction cost approach to an analysis of the continuous trade-off between the parties involved are now widely recognised. However, one dimension of the transaction cost approach, the politics, is much less developed. For this reason, four local authorities will be case studied in an attempt to explain better the political dynamic underlying cct policy implementation and policy output. This will be carried out by applying the politics of transaction cost perspective, drawn from transaction cost economics, to the four selected districts.

This research found that in the path analysis for 1991 the political variable, party control, was the strongest determinant influencing the cct output, whereas in the analysis for 1994 the strategic variable, geographical location, was the strongest. This implies that as time went on private contractors also influenced significantly the decisions about who won . . .

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