March 14, 2006
Relational Contracting and Privatization
Privatization of social services is a big topic these days. Much of the literature, according to Colorado's Nestor Davidson (left), seems to rely on a vision of arms'-length discrete contracting, under which the solution to assuring accountability is detailed specifications and constant monitoring. In a new paper, Relational Contracts in the Privatization of Social Welfare: The Case of Housing, forthcoming in the Yale Law & Policy Review, Davidson argues that this is misguided. Here's the abstract:
Privatization has become a permanent and increasingly significant part of contemporary public policy, especially in the social welfare arena. Commentators are increasingly debating how to maximize privatization's potential to enhance the efficiency of service delivery while grappling
with the threat that privatization holds for accountability. A recurring prescription in this debate calls for additional government control of private providers, through agreements that contain ever-more-careful terms, monitored with ever-greater care. This view reflects a model of discrete contracting that places great faith in the capacity of government entities to state requirements in complete terms and to enforce these terms through the threat of termination. This conceptual framework, however, misses the fundamentally relational nature of many of the agreements that define privatization. These agreements reflect the inherent difficulty of capturing requirements over the course of a long-term, closely entwined public-private partnership. Examining a collection of subsidized housing programs, this Article identifies the relational aspects of core agreements between the government and private providers. It then argues that embracing and enhancing the relational features of public-private partnerships holds promise to capture privatization's benefits while providing a different approach to accountability.
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