Towards The Development of a Governance System for Central Purchasing Body Collaboration and Performance

Abstract

This article explores the relationship between local authorities (mainly municipal organisations) and a central purchasing body (CPB). It critiques, from an agency theory perspective, the difficulties in aligning socio-economic goals of multiple municipal organisations with the pursuit of procurement goals by the CPB. The aim of this study is to explore which solutions, (governance mechanisms) for agency problems within a Dutch municipality–CPB relationship, are critical in aligning socio-economic goals within a collaborative public procurement (CPP) setting. The quantitative analysis of data from a questionnaire was used to conduct an explorative factor analysis (EFA). The questionnaire was issued to all municipalities in the Netherlands. Grounded on the EFA, the underlying factors within five categories of governance mechanisms for agency problems were recognised. Besides supporting the existing theory, this study provides additional knowledge in the field of agency theory and collaborative public procurement (CPP). The study resulted in the development of a comprehensive measurement scale to conduct research based on agency theory within the context of CPP governance and specifically in the area of central purchasing bodies. The results of this study are applicable in practise on an administrative and management level. Municipal organisations that initiate and/or govern a central purchasing body can take the results of this study into account to develop new standards on the further development of the CPB. At a managerial level, this study provides useful insight for decision-makers in municipal organisations to improve the way in which a CPB executes collective tenders at hand and determine if the joint approach delivers the best results in terms of their procurement objectives.