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Document
ART - A Closer Look At The Trophy Case 2012
Year Created: 2012
DOCUMENT
ART - Procuring Expertise: The Case of Local Government Water and Sewer Rate Analyses 2003
- YEAR CREATED: 2003
- ENTITY TYPE: Scholarly Publication
- TYPE OF DOCUMENT: ART - Article, Paper, Review, Survey, Report
- Education and Training
- Management
The document is an article from the Journal of Public Procurement, published in 2003, written by Gerasimos A. Gianakis and XiaoHu Wang. The article discusses the procurement of expertise by local governments for non-recurring analyses, specifically focusing on the case of water and sewer rate analyses. The authors argue that local governments often need to purchase expertise for these analyses because it is not cost-effective to maintain such expertise in-house or because independent analyses are preferred by watchdog agencies or mandated by state statutes. However, they highlight that these analyses inevitably involve policy choices that elected policy makers may not be aware of. External analysts may not be aware of local factors and may apply boilerplate perspectives that limit policy options. The authors suggest that policy makers should take an active role in these studies to ensure that local preferences and specific factors are considered. They propose the use of citizen committees or experts from local colleges and universities to provide oversight. The article also discusses the use of short-term contracts to purchase expertise and the potential trade-offs between short-term contracts and long-term contracts with internal employees. The authors then review a water and sewer rate study undertaken by a private firm under contract with a Florida coastal community, presenting their own study of the fiscal impacts of the rate study. The article concludes with a summary of caveats that local governments should consider when purchasing expertise through short-term contracts. The article also briefly discusses principal-agent theory and its application to the relationship between the city (the principal) and the rate maker (the agent) in the context of water rate analyses. The authors highlight the information asymmetries between the principal and agent and the need for monitoring or incentives to reduce agency costs. The article also briefly discusses some of the economic and equity issues involved in structuring water rates. Additionally, the authors mention their indebtedness to Hanemann (1998) for the analysis of potable water service rates.