All was written earlier in this section assumed that all output specifications are simple to monitor, clearly defined in the contract, and easy to verify by a third party (court or arbitrator) in case of disagreement/litigation. Under this condition, the acquisition of service at the root of the PPP can be seen as an acquisition of standardized supply, which is reasonable to pursue with a detailed contract specification and competitive tendering (Albano et al., 2006a; Bajari and Tadelis, 2006).
In any kind of service, however, there are qualitative aspects or tasks that are too costly or simply impossible to specify in a contract so that they can be monitored and verified by third parties. For example, it is very hard to specify a contractually usable standard for how 'good' is food provided in a canteen or how 'smart' are the doctors and nurses providing hospital services. Tasks with poorly measurable or verifiable quality dimension, if bundled in the same contract with other easily measurable tasks, may lead an opportunistic provider to underperform on these non-measurable tasks to cut cost and maximize profits. If only the main contract is there regulating the service, this may take place without any consequence for the supplier (in terms of deduction) because the fall in quality cannot be verified by who is in charge of enforcing the contract.
These types of tasks -sometimes very important- cannot be regulated by any of the contractual forms discussed earlier. Other forms of incentives should be adopted. First, in some cases it is advisable to 'unbundle' the PPP by removing tasks of this type from the main PPP contract, and have them regulated separately (Kerr, 1975; Holmstrom and Milgrom, 1991).
Second, customer satisfaction surveys run by a third independent party could be run regularly, and deductions for poor quality should depend on the level of customer satisfaction achieved (Albano et al. 2006a).
More generally, to ensure an overall high quality level of service the public sector agency in charge of the procurement contract can use past performance information (PPI) as selection criteria in new tenders (Kelman, 1990). The public sector could set up a system of private sector performance evaluation on a national basis, as done in the US for standard procurement, requiring public sector agents in charge of each PPP operate a recurrent evaluation of private-sector party performance, centered on results from independent customer satisfaction surveys. The database would then be made available to other public sector agents that are selecting private partners for related projects, and these should be required to substantially penalize poorly performing private partners in the new tendering process (US DISA, 2003).
Past performance information may both be verifiable and non-verifiable or 'soft' (like 'satisfaction indicators'). Particularly for the second type of PPI these schemes rely on the public sector agencies being accountable, as it may be difficult to verify whether the information they provided are entirely truthful. To reduce dependence on public sector officials accountability, collection of 'soft' information may be delegated to independent third parties, firms specialized in customer satisfaction surveys, and may involved a large number of anonymous interviews to users.
This system would act as a high quality 'reputation' or 'brand' acts and sustains high quality in standard markets (Calzolari and Spagnolo, 2006). For firms also active on the private market, the incentive power of customer satisfaction surveys and past performance evaluations could be further increased by making their results easily accessible to the public (Dellarocas et al., 2006). The well performing firms will then be able to increase their deserved reputation for high quality, while the badly performing firms will be publicly unveiled and avoided by future public and private customers. This 'certification role' could further strengthen incentives for the provision of overall high quality.
Of course, if poorly observable tasks or quality dimension are dominant in a planned acquisition, then the acquisition is not suitable for an output oriented PPP, and will be much better handled through an input oriented cost-plus contract awarded through negotiations (Bajari and Tadelis, 2006).
Relation between price mechanism and payment mechanism