The influence of government capacity on contract management efficiency

Utilizing a novel and precise measure of contract management capacity (CMC), this study finds that higher CMC significantly enhances contract management efficiency within green public procurement. The relationship is likely driven by a mechanism in which greater CMC facilitates the development of higher-quality contracts from the outset of the procurement process, as well as more effective subsequent supplier monitoring. Additionally, the analysis reveals that larger organizations, on average, demonstrate higher contract management efficiency—probably because they are better positioned to support specialization in contract management functions. The findings underline the importance of public organizations investing in CMC—such as hiring an adequate number of procurement officers—in order to improve management efficiency. By employing an improved measure of CMC and simultaneously controlling for a range of potential confounders, the study provides a more precise estimate of the effect of CMC than has previously been reported in the procurement/contracting literature.