Conclusions 125
Contracting may also have perverse eff ects on policy outcomes. Janice Dias
and Steven Maynard-Moody (2007) show that the fi rm monitoring structures
oft en present in contracts can create confl icts between management and workers,
and distort the incentives for behavior on the part of the contractor. Emphasis
on short-term production over long-term goals, or on maximizing output while
minimizing costs, can create policy failure, since contracts such as these simply
ignore the importance of public management. Th e key here is that a focus on
establishing a principal-agent relationship, traditionally understood to be neces-
sary for successful contracting, can actually come at the expense of success, rather
than enhancing it. Clearly, the usefulness of agency theory and New Public Man-
agement approaches is being increasingly questioned. We can conclude that, even
though management by contract is not new and is here to stay, we are only just
beginning to fully understand its implications for governance.
Our discussion on contracting out described the changed functions of the
public manager in a contract regime. Contracting, however described, weakens a
manager’s capacity to manage directly by delegating management. In the abstract
and theoretical sense, those who support contracting argue that contracting out
should allow managers to focus on goal setting, performance standards, and pol-
icy framing—referred to in the popular literature as steering—and leave the con-
tractor to do the rowing (Osborne and Gaebler 1992). But the evidence appears
to run in the other direction. Contracting appears to export not only the details
of day-to-day government work but also much of the capacity to direct or to con-
trol policy (Peters 2000; Rhodes 1994). Several approaches to eff ective contract
management have already been set out. Nevertheless, insofar as contracting out
is part of the governance perspective, it is diffi cult to escape the conclusion that
contracting may result in short-run savings and effi ciencies as well as reduce the
capacity of public managers to manage.
In addition, of course, is the matter of accountability. All systems of proxy
management decrease the clarity of accountability. In tranquil times, this may not
be a problem; but when there is a crisis, a lack of clear accountability in a contract,
or a chain of contracts and subcontracts is oft en the subject of political inquiry.
Conclusions
At its origins and for the fi rst fi ft y years of the fi eld, management was at the core
of public administration. Because management is what most public adminis-
tration professionals do, theories of management fundamentally informed the
practices of public administration. But at about midcentury, American public
administration scholars lost interest in management theory and turned to the-
ories of rational choice and decisionmaking, loosening much of the early close
connection between theory and practice. During this period, the fi eld of business
administration, as well as social scientists in the so-called middle-range theo-
ries (group theory, role theory, communication theory), was busy developing