Perhaps no public policy issue has been so politicized as the merits of small government versus large. Governors in many states have “downsized” to cut public spending, reduce dependence on government services, and expose the public sector to private market forces.

As a result, contracting for social services has become an open market, where state and county social service agencies – at the behest of state legislatures – cultivate bids from nonprofit agencies to perform services previously the...

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