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ABSTRACT. Local governments are often forced to purchase expertise for non-recurring analyses, such as rate setting for water and sewer services, because it is not cost-effective for these governments to maintain such expertise in-house or because independent analyses are preferred by watch-dog agencies or mandated by state statutes. However, like many ostensibly value-neutral analytical studies, these studies inevitably entail policy choices of which elected policy makers may not be aware. External analysts may not be aware of idiosyncratic factors, and they apply boilerplate perspectives that may not be responsive to local preferences. These perspectives limit policy options, although they may appear to be value-neutral. Policy makers must take an active role in these analytical studies in order to ensure that local preferences and specific factors are considered. Citizen committees comprised of residents with the necessary expertise, or experts from local colleges and universities may be able to provide the necessary oversight.
INTRODUCTION
Local governments, like most organizations, must often turn to markets to secure the technical, analytical, and substantive expertise demanded by particular projects that are undertaken only periodically. The idea is that it is more economically efficient to purchase such expertise only when it is needed, rather than maintain it within the organization where it may go untapped for extended periods. This is often the case with management consulting, software engineering, or financial analyses for bond issues. Short-term contracts negotiated through open markets allow organizations to purchase project-specific expertise at the lowest costs that markets will bear. However, long-term contracts in the form of employment contracts to secure in-house expertise may provide the organization with personnel with greater knowledge of the targeted and tangential policy areas as they manifest themselves in the organization's particular economic, cultural, and political history. At least potentially, the efficiencies to be realized through short-term contracts with external firms may be offset by the gains in the effectiveness of the targeted programs and responsiveness to local policy preferences yielded by long-term contracts with internal employees.
This paper reviews the development and implementation of a water and sewer rate study undertaken by a private firm under contract with a Florida coastal community of about 40,000 persons during the late 1990s. Much of this review is the product of a contract...