Quality of Outsourced Services, Rent-Seeking and Contract Design. Evidence from Cleaning Contracts.

Quality of Outsourced Services, Rent-Seeking and Contract Design. Evidence from Cleaning Contracts.
Jean Beuve and Lisa Chever
Abstract: This paper estimates the impact of contract design on the enforceability of quality in outsourced public contracts. Using a four-year panel data of 102 cleaning contracts, our findings suggest that quality enforcement highly depends on the ex ante contracting process.
Moreover, since those quality improvements are not accompanied by prices increases, our results suggest that public contract managers have significant leeways to reduce rent-seeking behaviors for standard transactions. Such findings are in line with propositions from the theoretical literature on the endogenous verifiability of quality. They also depart from previous studies on this issue by focusing on determinants of enforcement that are left to the managers’ discretion.