Competition and Choice in New York City . Social Services

Abstract

Privatization is intended to improve public services by introducing competition and choice. Does privatization of social services result in competition? To answer this we studied New York City's experience with contracts for three services: shelters for homeless adults, home care, and employment training.A total of 132 contract awards to nonprofit agencies were examined. The evidence suggests the procurement procedures were competitive and followed good practices. There was significant competition in terms of the number of announcements issued, the number of requests for proposals distributed, and the number of proposals ultimately submitted-an average of 2.48 proposals per award.Contracting for homeless shelters has produced a voucher-like system with desirable features. Vouchers are also used for some employment training and could be used for home care. Such systems can introduce even more competition and choice for clients of social services. Problems of contracting with nonprofit agencies are reviewed.

Increasing the Size of the Pie: The Impact of Crowding on Nonprofit Sector Resources

“…However, contract competition rarely exists, especially for social services (Van Slyke 2003). For instance, in New York City where there are many nonprofits, Savas (2002) found that the Department of Homeless Services often received only one proposal per contract. This research suggests that higher nonprofit density, to the extent that organizations can bid on the same public contracts, may increase sector revenue through greater government outsourcing to the sector.…”

How Competitive Is “Competitive” Procurement in the Social Services?

“…The most straightforward method of assessing the competitiveness of the service market is to ascertain how many potential vendors actually responded to a given competition (e.g., Savas, 2002;Schlesinger et al, 1986). This is done by reviewing competitive tendering documents to examine exactly how many entities participated.…”

“…The level of resources required for such an endeavor is often prohibitive. Hence, researchers utilizing this technique tend to restrict their analyses to a relatively small number of competitions within a limited geographical boundary (Savas, 2002, looked at three social services in New York City and Schlesinger et al, 1986, focused on mental health care in Massachusetts). Therefore, while count measures do appear superior as true indicators of the market environment, the challenges involved with gathering them seems to make them unlikely candidates for use in large-N, generalizable studies.…”

“…multiplicity of past studies examining this topic, what has been largely uninvestigated is the extent of competition as determined by the exact number of bidders drawn from contract documents (see Savas, 2002, for an exception) and, more importantly, the quality of those respondents.…”

Attitudes toward Privatization Policy within the Human Services Arena

“…Some believe the solution to this state of affairs is to introduce competition through privatization. Competition within the private sector for government contracts would then serve as a means to foster a free market model in human service delivery (Blackstone, Buck, & Hakim, 2004;Savas, 2002). While this economic model was devised with a focus on for-profit sales of common goods, its philosophy has been translated into assertions regarding human service systems and supplemented with common beliefs regarding public and private organizations.…”