Contracting in ten English local authorities: preferences and practices

During the 1990s the contract has become a key feature in the restructuring of the UK public sector. Currently available literature demonstrates an awareness that the implementation of contracting must entail new forms of management control and organizational structure which involve new patterns of intra‐ and extra‐organizational relationships. However, there is little consideration of the nature of the relationships which are developing between contractors and clients nor the factors that influence those behavioural processes. This paper reports on research funded by ESRC into contracts in ten local authorities in the UK. Analysis was undertaken to identify the nature of the contracts and the factors which both clients and contractors felt had led them to develop a particular type of relationship. This is followed by an exploration of the literature on partnerships, summarising the implications for the nature of the relationship between the client and contractor, based in particular on the distinction between transactional and relational contracting. It is shown that “textbook” approaches provide a useful heuristic, but do not reflect the subtleties of the interactions which develop during contracts. The overall implications are then considered, and related to theories of fair process and trust. The practical implications for public sector contracting (in particular best value) and for partnership activity are then outlined.