Is Competitive Contracting Really Competitive? Exploring Government–Nonprofit Collaboration in China

ABSTRACT

Local governments in China have adopted competitive contracting in social service delivery to restructure burgeoning government–nonprofit collaborations. The stated purpose of using competitive contracting is to forge formal, effective, and accountable collaborative relations. By applying institutional, transaction cost, and resource dependence theories to China's context, we reveal the institutional pressures of adopting a competitive contracting policy and identify the challenges of economizing transaction costs and handling mutual resource dependence in its implementation. We find the prevalence of “decoupling” to meet these competing pressures at the sacrifice of competition: that is, many contracts only appear competitive. We conducted interviews, participant observations, and a questionnaire survey to study a large-scale, social-service-contracting program in Shanghai. The results provide evidence of weak competition. Local governments in Shanghai were not able to effectively coordinate competitive bidding and thus strategically kept a decentralized implementation and management system based on existing relations.

ACKNOWLEDGEMENTS

We thank the two anonymous reviewers for their insightful comments that were incorporated into this article. We greatly appreciate the advice from Trevor Brown and Ting Gong. The article also benefits from the comments and discussions of the symposium on “Collaborative Governance in Mainland China, Taiwan, and Hong Kong: Trends, Issues and Perspectives” held in June 2011 at Fudan University. This research was funded by the National Social Science Foundation of China (11BGL706).

Notes

Note: Cost reduction refers to the difference between contract value and the maximum price set in the RFP.

Source: Compiled from the SMBCA records.

Source: Compiled from the SMBCA records.

Source: Compiled from the SMBCA records.

Source: Compiled from the SMBCA records and other sources.

The data are from the Web site of the Ministry of Civil Affairs of the People's Republic of China (http://mjj.mca.gov.cn/).

The State Council of China is the central government of China.

This rule was not strictly enforced at the beginning. Four projects received less than three proposals but still got into bid opening.

A total of 143 bids were held, including 16 failed bids and 14 successful rebids.

Nonprofit development in Beijing benefited from Beijing's political status that attracted active involvement of international nongovernmental organizations. The small government tradition of Guangdong and Zhejiang also reserved more space for nonprofit development. Comparatively, Shanghai did not have these conditions.

Data were collected at http://www.shstj.gov.cn.

All of the 127 projects only covered 56.9% of the grants offered by the SMBCA.

Such spending included some money from the contracting projects as some projects were started in late 2009.

Additional information

Notes on contributors

Yijia Jing

Yijia Jing ([email protected]) is Professor in Public Administration and Associate Dean of the School of International Relations and Public Affairs at Fudan University. He earned his BA and MA in economics from Peking University, an MA in sociology from University of Maryland, and a PhD in public policy from the Ohio State University. He conducts research on privatization, governance, collaborative service delivery, and comparative public administration. He is particularly interested in the formation, performance, and consequences of collaborative governance in transitional countries and is the Director of the Center for Collaborative Governance Research at Fudan University.

Bin Chen

Bin Chen ([email protected]) is an Associate Professor in the School of Public Affairs, Baruch College of the City University of New York. He received his PhD in public administration from the University of Southern California, MSc in public administration and public policy from the London School of Economics, and BA in English from the Shanghai International Studies University. His research and teaching interests focus on cross-sectoral governance and inter-organizational collaboration in public policy implementation, government–nonprofit relations, inter- and intra-organizational network analysis, and comparative public administration and public policy.