The Responsible Contract Manager: Protecting the Public Interest in an Outsourced World

6. How Do You Find the Right Contractor?

104 Chapter 6 How Do You Find the Right Contractor? IN OTHER CHAPTERS and other places (Cohen and Eimicke 2002, 143–56), the wisdom of contracting out is questioned by a number of major scholars, particularly because of its impact on democratic government (Milward 1994; 1996; Milward and Provan 2000). Unfortunately, the decision to contract is sometimes based solely on ideological belief that whatever can be privatized should be privatized. A more thoughtful argument for contracting out government services is that competition will sometimes lead to better public goods and services at lower cost. As we discussed in chapter 2, governments that fully embrace the competition principle may decide it is feasible and desirable to permit government agencies to compete with private contractors. Former Indianapolis mayor Steve Goldsmith won the Innovations in American Government award for his public-private competition program in the 1990s (Osborne and Hutchinson 2004, 149–57). A key element in Indianapolis’s contracting effort was its reliance on a yellow pages test—if there are five or more companies listed under a particular product or service in the community’s yellow pages, then that community should consider either a competition or outsourcing (Goldsmith 1997, 13–27). Despite the concerns regarding the hollowing out of the state, the high and often hidden transaction costs in contracting, and concerns about accountability and failures of performance of the magnitude of the United States war in Iraq, we expect that the contracting out of government services will not only continue but will expand at an even more rapid pace. The challenge facing most public managers is not whether to contract but how to contract most effectively. Facing this reality, it is essential that managers learn to do a better job of finding the right contractor. Finding the right contractor is not as simple as it sounds, as anyone who owns an older home learns when a pipe breaks, the roof leaks, or the water How Do You Find the Right Contractor? 105 heater stops working. The process becomes much more complicated when a manager of a public organization must find a contractor. A wide array of laws and regulations comes into play, most very well intentioned and designed to ensure open competition, fairness, honesty, accountability, and security. The effective contract manager complies with these process protections and also comes up with a contractor that does the job well. In this chapter we will look at a variety of methods that public agencies use to find the right contractor. We will then discuss the methods of ensuring contracting capacity, oversight of the contractor, and contractor accountability. Next, we will examine techniques for measuring and improving contractor performance. Finally, we discuss the rapid growth in government contracts with nonprofit organizations. Identifying a Broad Range of Eligible Contractors Most governments have formal requirements for advertising the availability of government contracts. Historically, these legal requirements mandated the publication of solicitation in official government publications and often in major area newspapers and relevant trade journals. Increasingly , business trade is done over the Internet, and government is rapidly catching up to the private sector in “e-commerce.” As government expands the scope and volume of contracting, it is going beyond advertising to a more proactive outreach to encourage contractors to bid on government contracts. In New York City, the Department of Small Business Services (NYCDSBS) has established a Procurement Outreach Program (POP) that helps businesses develop the capacity and expertise to identify and bid on federal, state, and city contracts. The POP staffers offer a monthly training seminar, “How to Sell to Government,” which includes a question-and-answer session and the distribution of information packages on mayoral agencies and independent agencies (NYCDSBS 2006, 1). There is also a citywide site with a wide array of information for new and existing vendors aptly titled “sell to NYC” (NYC .gov 2006). At the federal level, the U.S. Small Business Administration (SBA) offers a similar business-friendly, web-based outreach and education site 106 Chapter 6 called Contracting 101 (U.S. Small Business Administration 2006). The site provides basic information on how government buys goods and services , describes the various forms of solicitation, and links the reader to sites listing all procurement opportunities in excess of $25,000 (www .FedBizOpps.gov) and the rules and regulations for the federal procurement process, the Federal Acquisition Regulation (FAR). In October 2001, the federal government shifted from the...