Public dimensions of private contracting: the institutional ordering of trans-sectoral exchange in the NHS

Abstract

Socio-legal studies of the role of legal institutions in ordering contracting behaviour in both commercial and government sectors are in broad agreement that exchange is effected by a variety of legal, extra-legal and economic norms and modes of enforcement. The present study evaluates the adequacy of current socio-legal analyses of the use, function and
relevance of legal institutions in contracting practice in the particular trans-sectoral context of NIHS purchasing of cleaning, catering, and computing services involving a regional health authority in the North of England. Rejecting an instrumentalist conception of the relationship between law and social action, the thesis analyses the static and dynamic dimensions of order in these transactions with reference to an institutionalist theoretical model distinguishing: first, institutional environment (formal structure); second, institutional arrangements (relational structure); and third, the processes through which these institutional levels are mediated and negotiated. The case studies demonstrate in depth how the NHS policy-regulatory context affected the form and degree of performance and risk planning; how the planning of contract contents was oriented to both rights-in-law and the business deal; how different co-operative outcomes resulted from the use, displacement
and supplementation of contract in the governance of the transactions; and how decisionmaking in regard to the various uses and non-uses of contract was guided by common understandings ('norms about norms') about the institutional environment and governance of institutional arrangements. Two types of contractual orientation with different governance implications are distinguished: first, circumstances where contracting was regarded as part of NHS administration, and where the contract was supplemented mainly by administrative hierarchical norms; and second, where contract management occurred more independently of hierarchical influences, and where the contract was supplemented by norms more akin to those of ordinary commercial dealing. Generally, the key factor accounting for the quality of the newly established exchange relationships in the case studies is shown to be the influence of the NHS as a public purchasing organisation on the
institutional environment of trans-sectoral exchange and on the institutional arrangements made within it.