Franchising has long been recognised by economists as a method of improving efficiency in the provision of goods and services in situations where (for a variety of reasons) it is not possible to establish a competitive market. Basically the idea is that in sectors where it is not feasible to have competition in the market place (with all the associated incentives to efficient performance) then it may nevertheless be possible to have competition for the market. A good example is provided by the regional ITV companies. Only a single company is allowed to operate in each part of the country but the incumbent is given a licence for only a fixed period of time. At the end of the franchise period the Independent Broadcasting Authority invites tenders and assesses whether the licence should be awarded to an alternative company. The threat of losing the licence provides an incentive to the companies to maintain a high quality performance. Recently the government has started to implement policies which extend this principle to many of the services carried out by local authorities and by health authorities. The results of putting these services out to competitive tender have proved to be controversial with proponents claiming significant improvements in efficiency and critics claiming a substantial worsening in service quality. The project will investigate empirically the effect of putting services out to tender and will carry out comparisons with authorities where services have not tendered. The study will provide recommendations on how to make tendering effective, in particular in relation to contract specification, the organisation of the tendering process and the monitoring of contractors' performance.