The Effect of Formal and Informal Contracting Mechanisms on Implementation Performance in the U.S. Federalist System

Abstract

The relationship between contract management capacity and implementation success in local government contracting is well established. However, less is known about how specific contract mechanisms are linked to this success. This study uses implementation of the Energy Efficiency and Conservation Block Grant Program to examine the use of formal and informal contract management techniques in the implementation of energy projects. The use of formal contract mechanisms, such as full and open competitive bidding, contact rescission and outcome-based performance measures, exhibits a statistically significant effect on implementation performance. The findings advance contracting theory and have practical implications for local government contracting and implementation success in fiscal federalism.

Key Words:

• Local government
• service delivery
• contracting mechanisms
• energy policy
• third-party governance

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. When taken together, empirical research on the cost-savings of contracting-out is actually mixed (Boyne 1998; Hodge 1999). In a meta-analysis of contracting studies, Hodge (1999) found that, on indicators related to the quality of services (as distinct from cost-savings), many effect sizes for using contractors were not ‘significantly different from zero’ (1999, 106).

2. The survey went out to all 1,094 EECBG recipients, which yielded a total of 809 respondents.

3. To convert the log odds in Table 2 to odds ratios, the log odds coefficient must be exponentiated (e(^0.872) = 2.391).

Additional information

Funding

Data collection for this project was sponsored by National Science Foundation [grant number 1127992], titled, Informed Principals and Learning Agents: Modeling Outcomes from Federal Grants for Sustainable Energy.

Notes on contributors

Jessica N. Terman

Jessica Terman is an assistant professor in the School of Policy, Government and International Affairs at George Mason University. Her research focuses on implementation issues in public management. She is particularly interested in intergovernmental grants and contractors. Her most recent work looks at the integration of federal and state policy tools as they relate to energy efficiency and sustainability programmes.

Richard C. Feiock

Richard Feiock is Augustus B. Turnball Professor and Jerry Collins Eminent Scholar at Florida State University. His research on local government and local democratic institutions is internationally renowned. He has been principal investigator on four National Science Foundation research grant awards and has received grant awards from Lincoln Institute for Land Policy, Aspen Institute, and the IBM Center for the Business of Government.