Formal relational contracting

Public service delivery has been increasingly inspired by business and market-style approaches since the 1980s, but these approaches have sometimes succumbed to their inherent risks. One is of wholesale market failure as seen in the case of Carillion. Another, perhaps more pervasive and insidious, is the repeatedly poor performance of complex, cross-cutting public service delivery. Given the distinction between purchasing and providing services that a market mechanism brings about, contracts are needed, but this can lead to fragmentation. For people using services, that often means duplicative, superficial interactions with multiple services which are not joined up. Fixing this requires coordination – or perhaps even integration – of a range of support across multiple organisations. Conventional bilateral contracting approaches are not well suited to this. Practice is moving towards more relational, and more multilateral, forms of contracting.

Our Research Director, Dr Eleanor Carter, was awarded a four-year Future Leaders Fellowship by UK Research and Innovation (UKRI). Work supported by the UKRI Fellowship will investigate whether the current focus on commissioning individual public services is fit-for-purpose, and how the use of delivery networks might better serve the people who use them.

Dr Carter is joined in this work by Dr Felix-Anselm van Lier and Michael Gibson, and together they are building a pioneering theoretical and empirical research agenda on formal relational contracting in the public sector. This work will explore how we can strike the right balance between the informal, relational norms and practices needed to support flexibility and collaboration and the formal contractual structures needed to ensure public accountability. Employing a mixed-methods approach, it will seek to understand when and how a formal relational approach might support better contractual performance, and ultimately, better public value.