Moore, Alice; (2024) The relationship between government contract management and competition. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

Competition is central to the reasoning behind contracting out public services. In practice, however, harnessing markets to improve public service performance has been a challenge for governments. They struggle to attract and maintain competition and the promised efficiencies from markets are often illusory. This thesis examines these challenges through the lens of contract management. It aims to answer the question: How do contract management approaches and market competition affect one another in the context of government contracts? I argue that contract management approaches, especially those that prioritize developing close working relationships, deter competing suppliers. Meanwhile, competition itself encourages public servants to manage contracts in ways that involve less flexibility and closer monitoring, which may prevent them from realizing the benefits of contracting. The thesis employs a range of quantitative methods. First, I examine the impact of strong buyer-supplier relationships on competition for government contracts in the UK. I use machine learning to construct a dataset of contracting relationships in the UK and use a combination of regression techniques to identify the association between prior relationships and the number of bids received. I find evidence that stronger prior relationships are associated with lower competition and that this relationship is produced by bureaucratic discretion. Next, I further probe the effect of contract management approaches on competition through a conjoint experiment with suppliers. I assess the impact of performance-based payment and relational governance on bidding decisions and find that both discourage participants from choosing a contract, when compared to fixed-price contracts and new contracts without a relationship history respectively. Finally, I examine the impact of market environment on contract management through a vignette experiment with public managers. The results suggest that high competition encourages more rigid management styles that may undermine the expected gains from contracting out.

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