Mixed contracting of service delivery in federal agencies and bureaus: A study in inter-organizational network structure and program effectiveness

This study examines one type of privatization strategy, that of mixed contracts defined as a role for both government and private sector in delivering service. It considers the relationship between inter-organizational network structure and program effectiveness. Inter-organizational network structure is defined as a bureau's or program's network alliance of organizations formed to accomplish an operations or production goal. Program effectiveness is defined as the extent to which the federal program produces a quality outcome in government service delivery arrangements. Building on previous research, this study hypothesizes service delivery arrangements that mix private and/or nonprofit sector operations or production with some in-house production deliver a higher quality service and are generally more cost effective. The evidence suggests the introduction of some redundancies into the service delivery can increase organizational performance through cost reduction and/or better service to the public. However, government functions still require adequate resources to manage and implement overall programs including contractor functions and activities, and activities of other organizations in the network. In order to accomplish organizational production goals, organizations work together as part of a social network, and stand to lose or benefit by network involvement. A focus on outcomes of the network as a whole is useful to determine how well individual service providers are performing their particular component of the services required by their clients. Program effectiveness is assessed at the network level when service is delivered at the network level by many different organizations. The value of this study to mixed contracting of service delivery in federal agencies and bureaus is to provide evidence to determine if the program is more effective in delivering service. Specifically, the study combines transaction cost and ecological approaches to provide for a systematic collection of evidence to address the complexities and political views of public vs. private sector performance. To comprehensively examine the relationship of inter-organizational network structure and program effectiveness, this study merges the models of Miranda and Lerner (1995) and Provan and Milward (1995) used in recent studies and applies the case study research methodology of Yin (1994).