Effective Contract Implementation and Management: A Preliminary Model

Using data derived from and initial case of state contracting for social services for the elderly, this article builds, a theoretical model to explain variations in the effectiveness of the implementation and management of state contracts. Contracts for complex social services often present unforeseen challenges and administrative consequences that make for difficult transitions for both the state agencies and their nongovernmental contractors. We expect that these challenges can compromise the effectiveness of contract implementation and management. A preliminary test, based on the original case plus four additional cases of contracting, suggests support for the model. Successful contracting requires an extraordinary amount of advance planning, negotiation, and on-going collarboration among contracting partners. Our results indicate that contract implementation and management effectiveness can be enhanced by competition among providers, resource adequacy, performance measurement planning, training for state contract managers, careful evaluation of contractors' staff and financial management capacities, and the presence of a sound rationale for the reform. Effectiveness can be undermined by contracting with agencies that also advocate for their clientele groups, by complex subcontractor relationships, and by risk shifting to the contractors.