Contracting

Contracts have a very important role in the structuring and administering of the government/contractor relationships. Analysts estimate that savings from better management of contracts, and therefore better management of the relationships they represent, are very significant. Contracted services differ significantly from government provided services. Contracted services rely on contract authority based in contract law, and the contract policies, processes, and procedures that support contract law.
Given the significant transactions costs associated with writing, monitoring, and enforcing a contract, and given relationship-specific assets necessary for providing the services, governments often choose to own and operate these assets themselves. The city managerial structure would involve a tradeoff between two different kinds of costs, namely, the cost of private service delivery and the cost of public service delivery.