Successful delivery of public service depends on how the relationships are forged by the actors (organizations) involved in service provision in a given socioeconomic and political context. By applying Agency Theory to the accountability features of service transaction and Activity Theory as a tool to define relationships, I have demonstrated that the public sector (District Governments) exhibits a more liberal attitude towards relationships with community based organizations (Water Users' Committees) in the provision of rural drinking water, while being more formal in relationships with the technical service providers (NGOs). The resolution of the dilemma regarding whether to choose trust-based or more formal contractual relationships with community and service providers in service provision, depends on how effectively the public sector builds their capacity to monitor, supervise and enforce the terms of the service provision relationship. The study of the application of accountability features in the service delivery transaction helps us to understand how a government organization structures its relationships with community organizations and with others, by using either a social or a market approach. The research also reveals that it is difficult to assign accountability in the collaborative network type of service provision, particularly for the provision of public goods and services, which demands a greater level of formal accountability to legitimize the functioning of the government
