The Contract City

“I can’t overstate the importance of competition for the reform and provision of city services. Traditionally, governments might compete among themselves for the provision of a public service. For example, a city government might provide its own road maintenance or it might contract with a county or state to provide it instead. In rare cases, they also might contract with another city for these services. This limited competition may be quite beneficial for the cost and quality of public services, but the use of private industry for service contracts creates a much more competitive environment.” — Oliver Porter

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In this booklet, Oliver Porter tells the successful story of Sandy Springs, a city in Georgia, USA which in eleven months was able set up an efficient privatization system which drastically improved good governance indicators in the state. What the city administration came up with is called the “Competitive Contracting Model” (CCM).

This mode of transferring services to the private sector does not involve selling municipal assets permanently, but instead relies on public-private partnerships to deliver a wide array of services. In the case of Sandy Springs, some of those included transportation, IT, accounting, community development, public works and emergency services.

These PPPs are realized through a competitive bidding process after the city implementing the CCM issues requests-for-proposals. The proposals are then valued based on non-political criteria, such as qualifications, previous experience, implementation plans and cost. The winner of the bid, which can be a private company or even another public institution, gains a multi-year contract subject to yearly reviews.

The objective is to create a well aligned incentive structure that lets market competition improve services while making corruption and cronyism less likely. Oliver indicates two of his other books for further reading: “Creating the New City of Sandy Springs” and “Public/Private Partnerships for Local Governments”, which seek to help new and existing cities, respectively, to implement the CCM.

The book is split into 4 chapters which introduce in the following order the story of Sandy Springs, the CCM and the process of implementation. The 4th chapter includes some final remarks.

Creators of zones and societies should read chapters 2 and 3, as well as Oliver’s book “Creating the New City of Sandy Springs” to understand how new municipalities can follow the city’s example.

Policymakers and analysts can also read chapters 2 and 3 but should read “Public/Private Partnerships for Local Governments” for a more in-depth analysis of how to apply competitive contracting in existing cities.

Scholars and experts may go to chapter one for the empirical data about the state of Sandy Springs before and after the CCM was implemented.

The book can be found here.

Written by: Francisco Litvay