New Models of Contracting in the Public Sector: A Review of Alliance Contracting, Prime Contracting and Outcome-based Contracting Literature
Social Policy & Administration
The co-ordination of public services is an enduring challenge and an important policy priority. One way to achieve collaboration across organisational boundaries, which is being considered in public services such as the English NHS, is through the adoption of alliance contracting, prime provider contracting and outcome based contracting. This paper reviews the cross-sectoral literature concerning the characteristics of these new contractual models, how they function, their impact, and their
... tion to public sector governance objectives. These new contractual forms are characterised as models which, in line with the New Public Management/post New Public Management agenda, seek to incentivise providers through the transfer of risk from the commissioners to the providers of services. Key findings are that the models are likely to incur high transaction costs relating to the negotiation and specification of outcomes and rely heavily on the relational aspects of contracting. There is also found to be a lack of convincing cross-sectoral evidence of the impact of the models, particularly in relation to improving co-ordination across organisations. The paper questions the reconciliation of the use of these new contractual models in settings such as the English NHS with the requirements of public sector governance for transparency and accountability. The models serve to highlight the problems inherent in the New Public Management/post New Public Management agenda of the transfer of risk away from commissioners of services in terms of transparency and accountability.