Purchase of Service Contracting: Proposal Rating as a Moderator

The development of partnerships between governmental funding agencies and private contractors for the delivery of social services has been steadily growing over the past quarter century. National statistics indicate that approximately half of all public social service dollars are used-for these partnerships (Gibelman & Demone, Jr., 1989; Rehfuss, 1989). As privatization of social services continues to gain popularity, attention has been given to studying these partnerships from a variety of perspectives. A body of research has explored why governments have opted for privatization. The reasons can generally be grouped under factors associated with quantity, quality, and cost. The focus on exploring the why has provided valuable information on what drives the original decision to contract. For example, some of the benefits of contracting often cited are lower costs, greater efficiency, increased flexibility, greater competition leading to enhanced consumer choice, better effectiveness, improved quality of care, less bureaucratic red tape, and access to specific expertise (Bachman, 1994, 1996; Donahue, 1989; Gormley, Jr., 1991; Judge and Smith, 1983; Kamerman, 1983; Kettner and Martin, 1985; Kramer and Grossman, 1987; Malka, 1990; Mann, McMillin, Rienzi, and Eviston, 1995; Paulson, 1988; Smith and Lipsky, 1992; Terrell and Kramer 1984). Others have examined the various types of contracting and the process involved, many using case analysis to explore these topics (Bachman, 1994, 1996; DeHoog, 1985, 1986; Donahue, 1989; Gormley, Jr., 1991; Kettner and Martin, 1986, 1989, 1993; Kramer and Grossman, 1987; Mann, McMillin, Rienzi, and Eviston, 1995; Pack, 1991; Smith and Lipsky, 1992; Terrell and Kramer, 1984). These explorations of the process have added greatly to the understanding of how privatization takes place and what can influence the contracting decision. After the initial decision to contract or privatize has been made, the contracting process generally includes four basic stages: (1) issuance of a request for proposals (RFP), (2) rating proposals and selecting contractors, (3) negotiation and awards of contracts, and (4) monitoring and performance evaluation (Terrell and Kramer, 1984). A fifth step, also explored by some, entails the decisions for renewal or termination of contracts. Although distinct in function, these stages are sequential but interrelated. The conclusions of these other researchers draw attention to the need to explore what internal and external factors may influence the various steps of the contracting process. A number of authors have implied or directly stated that 'politics' is a factor that needs to be recognized and taken into consideration when exploring the reasons for privatization, how contracting takes place, and the final contracting decision. For example, Mann, McMillin, Rienzi, and Eviston (1995) conducted a two year study of drug and alcohol abuse services delivered by both a government provider and contracting agencies in a large California county. One of the hypotheses they tested involved an exploration of the influence of political connections by the contractors. Through interviews they discovered that several nonprofit executive directors maintained close political ties with funding agents. They go on to state that "during the two-year period of study, no instance or intervention with the duties of the administrator or evaluators by a Supervisor came to the attention of the investigators" (p. 407). Although their study pointed out that political connections appear to exist, the study did not appear to be designed to ferret out the impact of these connections. Bachman (1996) also points to politics as an influencing factor in the contracting process. She used interviews and content analysis to study purchase of service contracting of mental health services in six states. She states "in addition to the role political ideology plays in the decision to use contracting or other privatization strategies, persons implementing contracts may be subject to political influence" (p. …