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contracting_exercise___public_policy_implementation_.docx
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Contracting exercise & assignment
To prepare for this exercise, prepare a contract for the provision of services. This initial contract should
advance the goals of your organization and should be at least minimally acceptable to the other
organization. Contracts should include major elements such as scope of work, length of contract,
records, accountability and performance measures, dispute resolution & termination, and other topics
that you see as critical to establishing a clear working relationship.
There are several good online guides. Baker Tilly has a good short overview at
http://bakertilly.com/insights/developing-effective-contracts-for-the-public-sector/. Maryland has a
contracting website at http://commerce.maryland.gov/grow/business-to-government. Their manual for
winning government contracts is more comprehensive than you’ll need for this exercise; you may find
pages 39-42 to be useful. The 2014 contract of the W2 program covered in Heinrich & Choi is available
at https://dcf.wisconsin.gov/files/w2/contracts/w-2-contract-2014.pdf; dcf.wisconsin.gov has several
other documents relating to that program and its contracts. You do not need to develop your contract
to this level of detail; it should serve as a guide. Write a brief (no more than 5 single pages) contract;
include a 1-page briefing memo that covers the principles behind the contract.
The subject (The local nonprofit organization Bridge over Troubled Waters )
Draft a contract in which, for the next year, the Board spends up to $370,000 on
services provided by Bridge. Bridge runs three residential treatment facilities for
teenagers with multiple problems such as substance abuse, mental disorder, and
living in an abusive home environment.
The Board had a budget of $4,925,000 last year. It would like to spend 5% more
than that this year. But funding is uncertain because it receives 49% of its funds
from the state, which is undergoing a fiscal crisis. It receives 6% of its funding from
the federal government, 32% from the county, and 13% from patient fees. It had a
year-end caseload last year of 2,000 persons.
Agencies like Bridge, with some direction from the Board, control admissions and
discharges from their programs. Fifteen citizen volunteers serve on the Board, of
which ten have been appointed by the county commissioners and the rest have been
appointed by the state mental health director.
The treatment philosophy of the Board is to minimize inpatient treatment in favor of
less restrictive, and less costly, alternatives. The Board is also concerned that
inpatients neither stay too long nor get pushed out too early.
The Bridge facilities (Montoya, Caspar, and Dugmont) have, respectively, 8, 15, and
20 beds. The operating costs for each facility last year were, respectively, $160,000;
$250,000; and $300,000. Costs have been increasing at the rate of 5% a year for the
last three years. The average daily occupancy rates last year were 6.2; 14; and 18.
The total number of children passing through Bridge’s residential facilities last year
was 55.
The facilities differ somewhat in treatment services. Caspar serves the most
severely disturbed children, who need the highest level of care and supervision.
Bridge also runs some nonresidential youth development programs, including an
outdoorsman- ship program, a nighttime basketball program, and a counseling
program. These three programs served 300 teens last year and cost $30,000. It also
runs a service program providing home visits and hot meals to the homebound
elderly.
The budget of Bridge comes about 50% from contracts with the Local Mental Health
Board; 20% from the state Department of Social Services; 15% from local
foundations; and 15% from private fundraising. Of the 55 teens served by the
residential facilities last year, 25 were spon- sored by the Local Mental Health
Board.
The Local Mental Health Board last year paid for 50% of the residential program
and 40% of the nonresidential programs.
What Should Be in the Contract
I suggest your contract have separate sections, such as:
General Purpose
Scope of Services
Financial Terms
Quality Assurance
A real contract would have some other sections of lesser importance and plenty of
boilerplate. You can neglect all that. If you wish to include other sections, however,
or to modify the above, please feel free to do so. You can also omit all the legalese.
Issues to Think About
Usually it’s good to pay for outcomes, or at least outputs, rather than for inputs.
Does that principle apply here? What outcomes or outputs do you want anyway?
The contract is mostly about programming and about money. Regarding
programming, Bridge is able to provide both residential capacity and services to
residential clients. Ordinarily, you would want to utilize the capacity in order to tap
the services. However, that might not be so in this case. Why not? Is it possible to
structure the financial incentives to get the optimal level of capacity utilization? If
not, why not?
What can you do to increase the odds that the services provided will be of adequate
quality? Of superior quality? What might be the costs — financial and otherwise — of
these measures? Who should bear them?
Is the LMHB interested in spending less than the available $370,000? Why might or
might not this be a good idea on programmatic grounds? On philosophical grounds?
On political grounds?
How much micromanagement by the LMHB is the right amount? Who should bear
the financial risk of low utilization of beds in the residential facilities?
What assumptions are you making about the convergence or divergence of interests
as between Bridge and the LMHB?
Is there a risk that a very detailed contract will cause ill will between Bridge and the
LMHB and that this might somehow impair either performance quality or cost?
Conversely, is there a possibility that a very detailed contract would have beneficial
effects?
…
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