Engaging Citizens in Government Contracting: A Theoretical Approach for the Role of Social Service Nonprofits

Outsourcing may lead public administrators to regard service recipients as customers to be satisfied rather than as citizens demanding access and empowerment. This research investigates the extent to which social service nonprofits might bridge the gap between citizenship and customer service to advance shared values and reinforce public institutions. Due to unique institutional and organizational features, such as value-driven commitments, restrictions to financial distribution, and special knowledge of under-represented groups, social service nonprofit contractors may offer distinct advantages over for-profit firms in contract management. We begin by analyzing the conflicting and complementary aspects of citizenship and customer service in democracy and identify the advantages of nonprofit contractors. Then, using the lenses of transaction cost economics and agency theory, we explore how nonprofits can mitigate contract risks while bolstering citizenship. We present several suggestions to guide public agencies and future scholarship on reasserting the importance of public values in modern governance.