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Delivering public services through contract_competing approaches to the governance of complexity

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These are the slides of the presentation we gave at the Contract Theory Workshop held in Bristol in June 2019. They present an outline of our current work on the governance of public service delivery through public, private and hybrid institutions.

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Delivering public services through contract_competing approaches to the governance of complexity

  1. 1. bristol.ac.uk Delivering public services through contract: competing approaches to the governance of complexity Nina Boeger & Albert Sanchez-Graells Contract Theory Workshop University of Bristol, 21 June 2019
  2. 2. bristol.ac.uk Motivation On-going discussion on meltdown of the UK’s outsourcing model, the Government’s strategy to press ahead in the ‘Outsourcing Playbook’ (2019) and Labour’s re-nationalisation manifesto are heavily influenced by (irreconcilable) normative positions We have different such views, but see a value in clarifying a common analytical framework and not chasing ‘Nirvana solutions’
  3. 3. bristol.ac.uk Paper We seek to establish a common analytical framework based on transaction cost economics and governance literature Main aim is to stress issues surrounding non-contractibility and its governance
  4. 4. bristol.ac.uk Functional approach We set out the basic (simplified) governance models We critically assess the existing outsourcing model of contractualised (private) delivery of public service and explain the main reasons underpinning its failure We explore three alternative corrective strategies: one based on public governance, a hybrid solution and one based on a different approach to private governance
  5. 5. bristol.ac.uk Our conceptual models It is important to stress that contractualisation privatises not solely the delivery of the public service, but also its governance Each model implies different governance tools and limitations Public governance Private governance Public delivery (in-house) Regulated private delivery (e.g. licensing) Private delivery (outsourcing)
  6. 6. bristol.ac.uk Existing contractualised outsourcing model Uncertainty and incomplete contracting Rigidity in public contracts Exploitation and strategic behavior Public sector (in)capability Market structure and (lack of) competition Financialised corporate governance
  7. 7. bristol.ac.uk Alternative strategies If/given that the model is failing, what can be done? (1) Move (back) in-house (2) Add a regulatory layer (3) Modify private governance: corporate gov supplementing contract (‘selective’ tendering) Public governance Private governance Private delivery (outsourcing) Option 3 Option 1 Option 2
  8. 8. bristol.ac.uk Public governance: moving in-house Efficiency and incentive structures Accountability and governance Investment in public sector capacity and in information-recording mechanisms Design of public ownership solution Transition process (and its cost)
  9. 9. bristol.ac.uk Hybrid governance: imposing (quasi) prudential regulation Transaction cost issues—the permanence of non-contractibility and the problem of open-textured principles-based regulation Regulatory capture and strategic dependence due to public service demands
  10. 10. bristol.ac.uk Private governance : aligning incentives via corp gov’nce Efficiency & aligned incentives - ‘win-win’? Accountability Transition and selective tendering Design of corporate form(s) Long-term effects
  11. 11. bristol.ac.uk Tentative conclusion No magic bullet Need to re-orient current debates towards seeking to gain a better understanding of the reasons justifying a change of model Need to invest in public sector capability and rolling out ‘institutional memory’ mechanisms to ensure possibility of transition across models where warranted
  12. 12. bristol.ac.uk Thank you for your attention & stay in touch nina.boeger@bristol.ac.uk a.sanchez-graells@bristol.ac.uk @asanchezgraells

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