The Contracting Quandary: Managing Local Authority–VNPO Relations

Abstract

Problems with competitive transactional contracting raise the possibility of relational contracting as an attractive alternative for managing local authority–VNPO (voluntary non-profit organisation) relations. This empirical study of 45 relational social service contracts examines the conditions under which advantages such as flexibility and social capital development emerge as opposed to dangers of political abuse, defiance and resource frustrations. Findings suggest that successful relational contracting requires partners whose professional and management reputations inspire competence trust and whose commitment encourages goodwill trust. Decisions between competitive transactional contracting and relational contracting present difficult dilemmas. The costs and benefits of relational contracting need to be weighed against those of transactional contracting. At the same time there are political and ideological pressures, as well as public service norm constraints.

Notes

Despite these policies, some evidence suggests the continued existence of a considerable amount of more traditional relations between public organisations and NPOs that provide social services. For example, Leach and Wilson (1998: 14) bring data from Bemrose and MacKeith (1996: 1) showing that, ‘the practice of allocating grants with few, if any strings attached and little in the way of performance monitoring remains resilient’.