Outsourcing-For and Against
Rose Verspaandonk
Politics and Public Administration Group
26 June 2001
Contents
Major
Issues
Introduction
Scope of Outsourcing by the Commonwealth
Government
The Global Context
The Debate about Outsourcing
Arguments used to Defend and Criticise
Outsourcing
Other Argument in Defence of
Outsourcing
Other Arguments Raising Concerns about
Outsourcing
Conclusion
Endnotes
Major
Issues
Over the last decade there has been a
substantial shift in the Commonwealth Government's approach to
service provision. Whether a service is provided by
government or to government, there is an increasing
likelihood that a non-government organisation will play a role.
'Outsourcing' is the term used to describe the situation where a
government agency enters into a contract with an outside supplier
to provide goods or services that had previously been provided
internally. It is not synonymous with 'contracting' or 'competitive
tendering' because it also implies that in-house bids have been
discouraged or disallowed. However, in attempting to measure
outsourcing, we are, to some extent, reliant on information about
government contracting. It has been estimated that approximately
100 000 Commonwealth Government contracts valued at
$10 000 or more are in operation at any point in time and that
the dollar value of contracting rose by four per cent in
1999-2000.
Australia joins other Anglo-American countries
in this trend. The United States, the United Kingdom, New Zealand
and Canada are also increasingly reliant on the private and
voluntary sectors for the provision of services-possibly due to our
relatively low levels of taxation, leading to greater budgetary
pressure, or perhaps to a more general willingness to converge the
public and private sectors.
As the Commonwealth's experience with
outsourcing grows, it is becoming apparent that this approach can
fundamentally change the character of service delivery. For this
reason, its implications-both positive and negative-warrant serious
attention from policy-makers. Parliamentary committees have shown a
strong interest in this issue and this paper refers to some of
their findings.
The purpose of this paper is to provide an
introduction to the major arguments that are used to support and
criticise outsourcing. Their relevance will, of course, vary
according to the service being outsourced, and how well the
contract is managed. It is also important to note that there is
disagreement among commentators and policy makers regarding each of
these arguments.
Four important arguments used to defend
outsourcing can also be used to criticise it. These relate to
efficiency, quality, accountability and the strength of civil
society.
Other reasons invoked to support outsourcing
include the following:
-
- it assists agencies to focus on core business, and
-
- opportunities for industry development may be enhanced.
Other reasons invoked to criticise outsourcing
include the following:
-
- the effectiveness of the Australian Public Service Values and
Code of Conduct may be undermined
-
- outsourcing may enhance the potential for corruption, and
-
- some services may be unsuited to outsourcing for economic,
ethical or other reasons.
This paper supports the view that outsourcing
raises important questions for policymakers. For example, how can
governments harness the benefits of outsourcing while eliminating
or ameliorating the problems, and are there situations in which
outsourcing is an undesirable option? One possible response is to
increase the use of contracting within the public sector,
thereby securing efficiency gains while avoiding some of the
potential problems associated with outsourcing.
It also contends that citizens and taxpayers
would benefit from the establishment of a comprehensive framework
for managing service delivery which ensured that:
-
- decisions to outsource were made with reference to a broadly
accepted set of principles
-
- appropriate safeguards protected the rights of citizens,
and
-
- the public service demonstrated a high level of expertise in
contract management.
Introduction
Outsourcing has been defined by the Industry
Commission(1) as:
an arrangement whereby a contracting agency
enters into a contract with a supplier from outside that agency for
the provision of goods and/or services which typically have
previously been provided internally-not necessarily involving
competitive bids.(2)
These goods or services may be delivered
to government (e.g. information technology
services)(3) or on behalf of government (e.g.
employment services).(4) Outsourcing is not unique to
the public sector. Companies also outsource a range of services,
including information technology, recruitment, payroll and
cleaning.(5) While this paper refers to outsourcing in
general, it is important to remember that outsourced activities
vary significantly in scope, complexity and implications.
Outsourcing is related to, but not the same as, the sale of
government assets and the use of private funding for
government-initiated infrastructure projects. The term should not
be used synonymously with 'contracting' or 'competitive tendering'
because, in a public sector context, outsourcing implies that the
service used to be provided by the government, and also that
in-house bids have not been encouraged or allowed. These terms are
used in this paper only when directly referring to studies of
contracting or competitive tendering.
Outsourcing is a potent symbol of contemporary
Australian governance. First, it is a component of the
microeconomic reform agenda that was initiated by the Hawke and
Keating Governments and continued by the Howard
Government.(6) This agenda emphasises a reduced role for
government in such areas as industry protection, regulation and the
provision of services. Policies have included tariff reform,
financial deregulation, corporatisation, privatisation and the
extension of the 'user pays' principle. It also promotes the public
sector's adoption of private sector practices and emphasises the
pursuit of greater public sector efficiency.(7) Second,
it is consistent with the public service's growing emphasis on
securing identified results.(8) Third, it complements
the Howard Government's philosophy of promoting partnership with
charitable and private sector organisations.(9)
The Hawke, Keating and Howard Governments, as
well as State and Territory governments, have expanded the use of
outsourcing into new, and sometimes sensitive, areas. Examples
include ambulance communications (Victoria), information technology
(South Australia and the Commonwealth), detention centres (the
Commonwealth) and defence support services (the Commonwealth). The
expansion of outsourcing has led some commentators to raise
concerns about its potentially detrimental effects on clients and
taxpayers.(10)
The purpose of this paper is to introduce the
reader to the arguments employed to support outsourcing, as well as
the arguments used to criticise it. Some examples have been
provided to illustrate these arguments.(11) The paper
does not weigh up the competing arguments, nor does it draw
conclusions about the desirability of outsourcing. However it does
conclude that there is scope to protect the interests of clients
and taxpayers more effectively through the development of greater
expertise and appropriate safeguards.
The debate over whether to outsource a
government service is complicated by the critical issue of contract
management-that is, how well the public service handles the tender
process, drafting of the contract and oversight of the contractor.
This paper presents the arguments for and against outsourcing on
the basis that sound contract management practices are
applied.(12) However, there is some evidence to suggest
that the public service needs to improve its contract management
skills if it is to maximise the benefits of
outsourcing.(13)
Scope of Outsourcing by the
Commonwealth Government
Value of
Contracting
The use of outsourcing by Australian governments
is not new.(14) However, its level and scope are growing
markedly. When the Industry Commission released its report,
Competitive Tendering and Contracting by Public Sector
Agencies in 1996, it noted that gazetted service contracts let
by the Commonwealth budget sector had increased fourfold between
1991-92 and 1994-95.(15) The Commission estimated that
the Commonwealth public sector would contract approximately
$8 billion of services in 1996.(16)
A more recent official figure is not available.
However, since 1996 the Howard Government has undertaken
significant outsourcing of information technology (IT) services
(estimated to be worth $1.2 to 1.3 billion over five years) and
employment services (approximately $3 billion over
three years). In May 2000, the Minister for Finance and
Administration announced that the Department of Finance and
Administration and the Office of Asset Sales and IT Outsourcing
would jointly implement the market testing of Commonwealth
activities and services, commencing with corporate
services.(17) Some agencies, such as the Department of
Finance and Administration, have already outsourced some corporate
services. Even policy advice is not exclusively provided in-house.
For example, in 1997 and 1998, several private sector organisations
provided the Minister for Employment, Workplace Relations and Small
Business, with advice regarding waterfront reform.(18)
In May 2000, a senior representative of the Department of Finance
and Administration estimated that approximately 100 000
contracts valued at $10 000 or more would be in operation at
any one point in time.(19) That Department's annual
report for 1999-2000 estimated that the dollar value of contracting
by the Commonwealth rose by four per cent that
year.(20)
Core Versus Non-Core
Business
At the Commonwealth level, non-core business is
more likely to be outsourced than core business.(21)
However, employment services have been outsourced, although it is
clear that their provision is part of the core business of the
Department of Employment, Workplace Relations and Small Business.
Similarly, the management of detention centres could also be
considered to constitute core business.
The trend towards outsourcing core government
functions has intensified the debate about the desirability of
outsourcing because the nature of government service delivery, and
therefore citizenship, is perceived to be at stake. Questions of
accountability and the potential erosion of the Public Service
Values and Code of Conduct are two important issues which derive
much of their significance from the sensitivity of the services
being outsourced.
Another issue yet to be resolved is how (and by
whom) core business is defined. While office cleaning might clearly
constitute non-core business, IT outsourcing raises more complex
questions, particularly for science agencies.(22) It is
possible that one of the legacies of the whole-of-government IT
outsourcing program will be greater autonomy for agencies in
determining whether an activity should be classified as core or
non-core for the purpose of deciding whether to outsource.
The
Global Context
Australia is not alone in expanding its use of
outsourcing. A 1997 report by the OECD(23) documented a
range of case studies, including:
-
- Denmark contracting out hospital cleaning services
-
- Iceland contracting out residential treatment homes for
children with behavioural and emotional problems
-
- the Dutch Tax and Customs Administration contracting out
printing services
-
- New Zealand contracting out audit functions
-
- United Kingdom Inland Revenue contracting out information
technology services, and
-
- the Indianapolis Airport Authority (USA) contracting out the
management of the airport.
Anglo-American democracies, in particular, have
enthusiastically adopted outsourcing. This may be due to their
relatively low levels of taxation, leading to greater budgetary
pressure, or perhaps to a more general willingness to converge the
public and private sectors. The United Kingdom was an early
convert, with the introduction of compulsory competitive tendering
for local government services (with provision for in-house bids) in
1980 and the subsequent contracting of other functions. However,
New Zealand(24) has been portrayed as implementing a
particularly comprehensive contracting agenda. The federal
structures of the United States,(25)
Canada(26) and Australia make these countries'
approaches more difficult to characterise. However, all three have
increased their use of outsourcing since the 1980s. For example, in
2000, the United States Federal Government purchased more than
$87 billion in services, a 24 per cent increase (in
real terms) from 1990.(27) It is difficult to find
information on outsourcing in Canada and it is possible that
Canadian governments have adopted the approach less
enthusiastically than their counterparts in other Anglo-American
democracies. However, a 1994 overview by the Treasury Board
Secretariat indicated that the annual growth rate of contracting
for the Federal Government had been significant, particularly in
areas such as translation and interpretation services, dental
services, consultancies and welfare services.
The Debate about
Outsourcing
Outsourcing is an issue that generates
controversy in several different contexts:
-
- to some extent, outsourcing is an issue that divides the major
parties. Although the Hawke and Keating Governments expanded the
use of outsourcing, it is identified more strongly with the
Coalition. The Australian Labor Party has distanced itself from the
Coalition's approach by announcing that, under a Beazley
Government, outsourcing would be subject to a public interest test
and in-house bids would be facilitated(28)
-
- outsourcing can divide the government of the day and
parliamentary committees (including some members of the governing
parties). The concerns of committees often revolve around
accountability provisions (see discussion under 'Accountability' in
the following section)
-
- commentators (e.g. academics and journalists) disagree about
the merits of outsourcing, and
-
- there is disagreement between groups with a direct interest in
the issue (e.g. public sector unions, who stand to lose members,
and the private sector, which stands to make profits).
At stake are values and interests. Values might
include the importance of accountability and the efficient use of
public resources. Decisions about outsourcing can set different
values in competition, forcing difficult choices to be made and
introducing ideological considerations. Examples of interests at
stake include value for money (taxpayers and the government), the
maintenance of public sector jobs (public sector unions), profit
(private sector), expanding role in society (voluntary sector),
autonomy (executive government), scrutiny of the executive (the
Opposition, parliamentary committees, the Auditor-General, the
Ombudsman and the media) and service quality (clients).
This paper focuses on arguments over which there
is some basic common ground-that is, people generally agree that
efficiency, high quality and accountability are good things, even
if they disagree about whether outsourcing enhances them. Therefore
it does not discuss issues over which there is fundamental
conflict, such as whether outsourcing is harmful because it reduces
public sector employment, or whether it is good because it enhances
the growth of the private sector relative to the public sector.
Similarly, the paper focuses on arguments that relate to the public
interest rather than to sectional interests (such as the rights and
welfare of public sector employees).
The arguments that follow can be viewed in two
ways. They can be understood as the 'ammunition' of those who argue
for and against outsourcing in general terms. Alternatively, they
can be viewed as factors which may need to be considered when
individual outsourcing proposals are raised. The purpose of this
paper is to introduce the reader to the main arguments in this
debate. This has involved simplifying complex issues and presenting
them relatively uncritically.
Arguments used to Defend
and Criticise Outsourcing
Four critical issues-efficiency, quality,
accountability and the strength of civil society-are invoked as
arguments both supporting and criticising outsourcing.
Efficiency Gains and Cost
Savings
Efficiency gains and subsequent cost savings are
commonly cited as reasons for outsourcing. For example, the IT
outsourcing program was promoted as a means of saving approximately
$1 billion over seven years.(29) While much of the
literature supports the view that outsourcing is likely to result
in cost savings, it also identifies a number of factors that may
impact on the existence or extent of such savings. There is no
single answer to the question of whether outsourcing saves money.
This is because of differences between situations, the range of
factors that need to be considered, and measurement issues, all of
which are discussed below.
Supporting the mainstream view, the Industry
Commission argued in 1996 that competitive tendering and
contracting (CTC):(30)
can and generally does reduce the ongoing costs
of agencies' service provision. Seventy-five per cent of
surveyed Australian and overseas empirical studies found that CTC
reduced the ongoing costs of service provision: savings ranged from
10 to 30 per cent in over half of the services
studied.(31)
The Commission went on to argue that, although
there was limited knowledge of the costs associated with
transition, contract management and internal management,
contracting would still generally provide net savings for the
Commonwealth.(32) A survey by CTC Consulting found
savings under outsourcing in fourteen of the sixteen categories
investigated.(33) Professor John Quiggin, of the
Australian National University, agreed that outsourcing is likely
to result in cost savings, but argued that they are likely to be
relatively small. Thus he concluded that 'CTC processes should not
be applied in a manner that conflicts with higher priority
policies'.(34)
According to Monash University researcher Dr
Graeme Hodge's 2000 report, Privatisation: An international
review of performance, contracting (whether to a private or
public sector organisation) offers significant cost savings. He
notes that:
There was no general tendency for private
provision to be any more cost-effective than public provision of
services under contract.(35)
Hodge's findings raise the possibility that
efficiency gains from contracting may be due more to the discipline
imposed by the enforcement of a written agreement than to the
efficiency of the private sector. If this is correct, then one way
to capture the efficiency benefits of contracting while avoiding
the potential problems discussed below, could be to make greater
use of purchaser-provider relationships within the public
sector.(36)
As the following factors demonstrate, cost
savings from outsourcing are not a foregone conclusion. Like the
other issues discussed in this paper, efficiency gains are variable
and need to be determined on a case by case basis.
Differences between
Situations
Cost savings vary depending on the service being
outsourced. Graeme Hodge's 1996 study, Contracting Out
Government Services: A Review of International Evidence found
that contracting delivered an average cost reduction of around
9-14 per cent. Some services (e.g. cleaning) delivered
significant gains, while others (e.g. corporate services) did not.
The review found no difference between the effectiveness of
contracting through the private or public sectors. It also found
that the changed environment could lead to efficiency improvements
in areas that had not been outsourced:
Results for agency costs in areas adjacent to
those areas actually contracting services showed effect sizes of
around two thirds that of those areas contracting out. It was
concluded that although these areas were not themselves actually
contracting out services, the threat of competition and the
acquisition of new financial performance knowledge itself also led
to real performance improvements.(37)
The Australian National University's Professor
Richard Mulgan, a commentator on issues relating to government
outsourcing, outlines his overall 'rules of thumb' thus:
Savings are most likely from contracting out
where the required service can be easily specified and monitored,
and where a competitive market of potential suppliers exists
independent of government patronage. Cleaning, catering and rubbish
services are standout successes world-wide. Conversely, if the
service is complex and requires constant quality control, savings
tend to be eaten up by monitoring costs. If there are few
alternative suppliers, governments can easily become captive to
monopolistic exploitation.
Wider economic effects also need to be
considered: will a decision to outsource stimulate local economic
activity and develop local skills? Or will the contract be awarded
to an overseas company which will import its own expertise and
repatriate the profits?(38)
Range of Factors for
Consideration
Cost savings can vary significantly depending on
the circumstances. Several factors need to be considered in
determining whether it will be more cost-effective than in-house
provision. These include the following:
-
- the benefits of flow-on effects to the rest of the community in
those cases where outsourcing enhances the efficiency of the public
sector. Businesses that purchase government services may save
money, and citizens may enjoy improved services and/or lower taxes.
Labour-saving efficiency gains will make labour available for other
productive activity, although costs associated with unemployment
may need to be offset against this benefit(39)
-
- the cost of managing the contract. This cost varies, but Hodge
refers to estimates placing it at approximately
two per cent of the value of the
contract(40)
-
- the risk of money being lost if a contractor goes out of
business. For example, $600 000 in advance payments to the
agency, Job Power, was reported to have been exposed to loss after
the employment agency became unviable(41)
-
- the possible loss of taxation revenue resulting from payments
being made to contractors (with relatively great opportunities for
tax evasion) instead of public servants (with relatively small
opportunities for tax evasion)(42)
-
- the cost of unemployment assistance in those situations where
displaced workers are unlikely to find new employment. For example,
Hodge refers to a 1995 study in the United Kingdom which calculated
that local savings of 16.4 million were outweighed by national
unemployment costs of 24.4 million. However, he also refers to a
United States Department of Defense study which found that
employment displacement costs were very slight compared with the
department's estimated savings, and(43)
-
- the potential costs resulting from the inflexibility of a
contract. One of the advantages of outsourcing is that the
purchaser's requirements are specified in the contract and the
contractor is required to deliver them for an agreed price.
However, this can entail reduced flexibility for the purchaser. If
an unanticipated service is required, the government may have no
option but to purchase that service from the contractor, who will
enjoy monopoly status.(44) There is also the potential
for an incumbent contractor to 'capture' an agency's future
business if the latter does not retain the expertise to assess its
requirements.
Measurement
Issues
Different measurement methodologies may result
in disagreement over the extent of savings generated by
outsourcing. The Auditor-General's report into IT outsourcing
documents such a disagreement between the Auditor-General and the
Department of Finance and Administration.(45) Similarly,
ScreenSound's claims that IT outsourcing has been more expensive
than in-house provision have been disputed by the Office of Asset
Sales and IT Outsourcing.(46)
Quality
It has been argued that non-government providers
may deliver a superior level of service. For example, the former
Commonwealth Department of Health and Family Services described
contractors as having the potential to be innovative, flexible and
responsive. Direct government provision was said to have a tendency
to:
provide a 'one-size-fits-all' service regardless
of the needs of specific communities or
individuals.(47)
The submission went on to say that contracting
could:
provide greater flexibility in terms of the
scale of operations, employment arrangements, the mix of industry
players involved, the service delivery approaches including the
quantity and mix of services supplied, the range of expertise,
geographic spread, and the time frame of operation.
Non-government organisations, it can be argued,
bring a different approach to client service. For example, Samuel
Gregg from the Centre for Independent Studies has argued that:
the Federal Government should be commended for
recognising that the state is not always the best organisation to
help the needy, but also for acknowledging that religious bodies
are among the few organisations that can provide the disadvantaged
with more than just material assistance.(48)
Outsourcing may also provide clients with a
choice of service providers. For example, the Job Network enables
job seekers to select an agency to assist them. As well as
potentially enhancing quality through competition between
providers, a greater range of service delivery options may mean
that clients find a provider that suits their particular
requirements.
The evidence on this issue is
inconclusive(49) and quality is also invoked as a reason
not to outsource. A parliamentary committee inquiring into
outsourcing of welfare services heard evidence that the cost of
tender preparation had 'forced many small agencies to divert
resources away from the provision of services', and that continuity
of service could also be compromised.(50) A study of the
welfare sector by Dr Ann Nevile from the Australian National
University also raised concerns that competitive tendering might
result in reduced service quality if:
the level of collaboration and learning between
government and non-government organisations (and between
non-government organisations) continues to decline and
administrative costs continue to rise.(51)
Even the spectre of financial penalties for poor
service does not necessarily ensure high standards. Poor
information technology service delivery to the Department of
Communications and the Arts is reported to have cost the department
about $3 million and resulted in a penalty of almost
$900 000 being levied on the contractor.(52)
Another aspect of the quality issue is the wider
role that government service provision may play in a community.
While a particular outsourced service may continue to be delivered,
associated benefits (such as regional employment) that may have
accompanied government provision of the service may be
eroded.(53)
In evaluating quality levels under outsourcing,
care must be taken to distinguish between contract failure and
market failure. A problem may indicate poor contract management
(e.g. selection and monitoring of a provider) rather than
demonstrate the unsuitability of outsourcing that service. For
example, a prison riot under private management does not
necessarily demonstrate that prison management should not be
outsourced.(54)
Accountability
In this context, accountability refers to the
capacity of clients and citizens to secure an explanation and,
where appropriate, redress for actions taken by contractors on
behalf of the government. While some types of accountability
(ministerial and managerial) can be said to be maintained or
enhanced by outsourcing, other types (the capacity for scrutiny and
redress) may be significantly undermined.(55)
According to the Minister for Finance and
Administration, ministerial responsibility is not diminished by the
use of contractors. He noted that:
At the end of the day agencies remain
accountable to the Government, to the Parliament through their
Minister; and to their clients, whatever method of service delivery
is used.(56)
This view appears to be supported by the
experience of the Minister for Immigration and Multicultural
Affairs. Concerns about the quality of service provided by
privately managed detention centres have been raised, and responded
to, in Parliament.(57)
Contracting may enhance managerial control. For
example, by requiring a contracting agency to specify clearly the
service to be delivered and the allocation of responsibilities, it
is easy to identify the cause of any failure.(58)
Similarly, Professor Mulgan argues that:
Managerial accountability is increased where
detailed contractual provisions allow ministers or government
officials to exercise more effective control over contractors than
they do over subordinates in their own
departments.(59)
However, he goes on to note that other aspects
of accountability (e.g. investigations by the Auditor-General and
the Ombudsman) may suffer from outsourcing. Therefore, for
sensitive services (e.g. detention centre management), he suggests
that relatively strict accountability requirements be included in
contracts.(60)
Concerns about accountability revolve around two
questions.
Will Citizens have Access to
Information about How their Money has Been Spent?
Scrutiny of expenditure by the Executive may be
undertaken directly by citizens, or on their behalf by
parliamentarians, the Auditor-General, the Ombudsman or the media.
Because this is such a critical component of democratic practice, a
framework has been developed to facilitate such scrutiny. The
framework includes the investigatory powers of parliamentary
committees, the Auditor-General and the Ombudsman; Freedom of
Information legislation; annual reports; and parliamentary
questions, with or without notice. However, some commentators are
critical of this framework's capacity to deliver effective scrutiny
of outsourced expenditure. The Commonwealth Auditor-General has
commented that:
As a result of contracting out to the private
sector, the flow of information available to assess performance and
satisfy accountability requirements has, on the whole, been
reduced.(61)
One issue that has captured attention is the
effect of commercial-in-confidence contractual provisions on
scrutiny. This has been criticised by parliamentary committees and
the Auditor-General. The Senate Finance and Public Administration
References Committee has commented that:
At almost every estimates hearing, information
is denied senators on the grounds that it is commercially
confidential. Without recourse to an independent arbiter acceptable
to both sides, this results in an impasse unsatisfactory to
all.(62)
The same Committee argued that:
Once a contract has been awarded, the bulk of
its provisions should be in the public domain.
As for those matters that are commercially
confidential:
The need for confidentiality for even those
limited aspects should not exist at the outside beyond the life of
the contract and the onus should be on the contractor to argue for
confidentiality at any level.(63)
The Auditor-General revisited this issue in
2001, recommending measures that would open contracts to greater
scrutiny. He also discussed the more liberal approach taken by the
United States, Victoria and the Australian Capital Territory.
(64)
Another issue is access to contractors' premises
by the Auditor-General. The Auditor-General can enter Commonwealth
premises in order to examine documents. However, this right of
access does not automatically apply to the premises of
contractors.(65) The Joint Committee of Public Accounts
and Audit raised this issue in 1999. The Committee recommended that
the Auditor-General should have access to:
the premises of a contractor for the purpose of
inspecting and copying documentation and records directly related
to a Commonwealth contract, and to inspect any Commonwealth assets
held on the premises of the contractor.(66)
In 1998, the Senate Finance and Public
Administration References Committee had also voiced its support for
this view, recommending:
as a bare minimum, that standard contract
clauses, tailored as necessary by specific clauses to reflect the
particular circumstances of each contract, be used as the means of
providing audit access to relevant third party information and
records.(67)
Will Clients have Access to
Redress for the Actions (or Inactions) of
Contractors?
Administrative safeguards apply to services
delivered directly by the Commonwealth Government. A dissatisfied
client can take a grievance to the Ombudsman, an administrative
review tribunal or the courts.(68) Rights of access to
information are provided under the Freedom of Information Act
1982.
These remedies are not always available when a
contractor delivers the service on behalf of the
government.(69) Privately initiated legal action may be
possible, but some remedies are restricted to situations where
there is a contract between the contractor and the
recipient.(70) Access to tribunals is generally less
expensive than access to courts. Therefore, legal action under
contract law is also likely to be more expensive than under
administrative law, depending on whether the latter is initiated in
a court or a tribunal.
Strength of Civil
Society
Civil society is the independent realm of
activity and debate that plays an important role in fostering
discussion and nurturing values. It also provides citizens with
alternative perspectives from those promoted by political parties.
It includes such organisations as trade unions, churches,
businesses, voluntary associations and the media. Here also,
outsourcing could be argued to strengthen or undermine civil
society.
It can therefore be argued that the inclusion of
not-for-profit organisations in government service delivery can
strengthen civil society-by empowering non-government actors,
decentralising service provision and encouraging community
ownership of local problems and their solutions.(71) It
has been argued that in New Zealand:
Many voluntary sector service providers saw an
opportunity to develop and deliver programmes in more innovative
and responsive ways with Maori groups in particular seeing a chance
to deliver services by Maori, for Maori.(72)
However, it can also be argued that civil
society may be weakened if the independence of organisations is
compromised as a result of close ties with
governments.(73) A stark, and fictitious, example would
be if a media outlet failed to criticise government policies
effectively because its parent company enjoyed a close commercial
relationship with the government. While there appears to be no
evidence to suggest that charities have modified their advocacy
role as a result of entering government contracts, this remains a
possibility that needs to be considered.(74)
Other Argument in
Defence of Outsourcing
Proponents of outsourcing have advanced a number
of reasons for its adoption. Early defences of outsourcing often
emphasised cost savings and the enhanced capacity to focus on core
business. While these reasons are still given, outsourcing is now
also promoted for a wider range of reasons, some of which have
already been discussed. The significance of this broader rationale
was underlined by Prime Minister Howard when he described the
development of the employment services market as 'a unique social
experiment'.(75)
Focus
on Core business
The outsourcing of non-core functions (e.g.
corporate services) has been promoted on the grounds that it
assists the agency to focus on its core business. In 1997, the
Minister for Finance and Administration promoted the outsourcing of
IT services partly on the basis that:
Governments should get out of what is not core
business for government.(76)
Essentially, this argument states that
government agencies should focus on matters requiring their direct
attention (e.g. policy and program development).(77) By
shedding functions such as corporate services, they may be able to
streamline their organisations and save money.
Industry Development
A potential benefit of outsourcing can be its
impact on local industry development. The Industry Commission
argued that competitive tendering and contracting could provide
opportunities for firms to:
expand the scale and scope of their activities,
to increase their knowledge and skill base, and to gain experience
which may help in entering export markets.(78)
The Government has highlighted the benefits of
IT outsourcing for the local IT industry. For example, the Minister
for Finance and Administration and the Minister for Communications,
Information Technology and the Arts observed that approximately
120 small to medium enterprises were involved in the
Australian Taxation Office's IT contract with EDS Australia. The
Ministers concluded that the IT outsourcing initiative contributed
to:
the growth of Australian IT industry, increasing
international competitiveness, and providing jobs and increased
business opportunities, including in regional
Australia.(79)
Other Arguments Raising Concerns about
Outsourcing
Parliamentarians and commentators have raised
several other concerns about outsourcing. These are discussed
below.
Potential Erosion of Australian Public Service
Values and Code of Conduct
Government employees are bound by the Public
Service Values and Code of Conduct enshrined in the Public
Service Act 1999 (see box for values). In discussing these
values, the Minister assisting the Prime Minister for the Public
Service, The Hon. Dr David Kemp, noted that:
The Australian Public Service is defined by its
Values. They are an essential underpinning to high performance in
organisations and are central to the public interest aspect of
public sector employment. They are a manifestation of the
democratic society that we serve and they reflect the expectations
of that society.(80)
APS Values
|
The Australian Public Service:
|
|
is apolitical, performing its functions in an
impartial and professional manner
|
|
is a public service in which employment
decisions are based on merit
|
|
provides a workplace that is free from
discrimination and recognises and utilises the diversity of the
Australian community it serves
|
|
has the highest ethical standards
|
|
is openly accountable for its actions, within
the framework of Ministerial responsibility to the Government, the
Parliament and the Australian public
|
|
is responsive to the Government in providing
frank, honest, comprehensive, accurate and timely advice and in
implementing the Government's policies and programs
|
|
delivers services fairly, effectively,
impartially and courteously to the Australian public and is
sensitive to the diversity of the Australian public
|
|
has leadership of the highest quality
|
|
establishes workplace relations that value
communication, consultation, co-operation and input from employees
on matters that affect their workplace
|
|
provides a fair, flexible, safe and rewarding
workplace
|
|
focuses on achieving results and managing
performance
|
|
promotes equity in employment
|
|
provides a reasonable opportunity to all
eligible members of the community to apply for APS employment
|
|
is a career-based service to enhance the
effectiveness and cohesion of Australia's democratic system of
government, and
|
|
provides a fair system of review of decisions
taken in respect of employees.
|
Non-government contractors are not necessarily
required to uphold these standards. For example, religious
organisations (including those that are members of the Job Network)
enjoy some exemptions from the operation of federal
anti-discrimination law. The reported difficulties experienced by
the Human Rights and Equal Opportunities Commission in preparing
relevant guidelines that are acceptable to religious organisations
underlines the sensitivity of this issue.(81)
It is not clear why different service and
employment standards should apply to public and private sector
organisations that engage in similar work on behalf of the
Commonwealth. If the upholding of these values contributes to
better service delivery or an appropriate employment framework for
those employed with public money, then why should the same
standards not apply when the service is delivered by a
contractor?
Potential for Corruption
The transparency and purity of tender processes
and contract oversight are critical in preventing perceptions of
corruption. Because outsourcing establishes a legitimate framework
in which public money can contribute to private sector profit,
there is a risk that it could be abused by Ministers or bureaucrats
to reward businesses for favours such as political donations or
lucrative future employment opportunities.(82) The
employment of former United States military personnel by defence
firms has prompted concern that procurement decisions might be
tainted by the self-interested actions of government
employees.(83)
Some
Services Inappropriate for Outsourcing
Some services may be too sensitive to be
outsourced. Examples of contentious issues include the
following:
-
- the outsourcing of the management of prisons and detention
centres for asylum seekers has raised concerns about the treatment
and rehabilitation of clients and the safety of staff and the
community. Publicly managed prisons have not been free of
criticism. However, some commentators argue that accountability
problems and the need to generate a profit make it less likely that
the public interest will be served under private
management(84)
-
- the Kennett Government in Victoria faced public anger when it
outsourced some responsibilities of the Victorian Auditor-General,
and(85)
-
- The Review of the Whole of Government Information
Technology Outsourcing Initiative noted the sensitivities
attached to the IT needs of agencies such as the Bureau of
Meteorology and the Commonwealth Scientific and Industrial Research
Organisation and recommended that outsourcing should only proceed
'subject to careful decision on what, if any, elements should be
outsourced'.(86)
Some government activities may be unsuited to
outsourcing for other reasons. It has been argued that the
Australian Defence Force (ADF) faces significant staff morale and
retention problems, partly because of the impact of outsourcing.
The Defence Review 2000 Community Consultation Team reported
that:
The Commercial Support Program (CSP)-the
outsourcing of support functions-was singled out as a major
contributor to low retention rates. There was concern that the CSP
has led to the de-skilling of Defence. This outcome was not logical
in a technology-based force.(87)
The Consultation Team also reported that, apart
from business groups:
many people considered that the outsourcing of
support functions had been taken too far and was impacting
negatively on the operational capabilities of the Defence
Force.(88)
Outsourcing may raise particular sensitivities
for an organisation such as the ADF due to its unique role,
structure and history. It is important that such sensitivities are
given appropriate consideration.
Conclusion
This Current Issues Brief has sought to present
the major arguments employed to support, as well as criticise, the
use of outsourcing by the Commonwealth Government.
Clearly, these arguments will have varying
degrees of relevance depending on the service to be outsourced. In
some situations, effective contract management may be sufficient to
protect the public interest. Other circumstances may require an
enhanced accountability framework. Some services may be unsuited to
outsourcing for reasons of sensitivity, or because they can be
provided more efficiently and effectively from within the public
sector. Under direction from Congress, the Comptroller-General of
the United States has convened the Commercial Activities Panel:
to gather views on the principles and policies
that should govern decisions concerning whether particular
functions should be performed by the public sector or the private
sector.(89)
The panel is due to report in May 2002 and its
findings may be of interest to Australian policy-makers.
There is evidence to support the argument that,
where outsourcing is used, it should be undertaken within a
comprehensive, and thoughtfully devised, framework of safeguards.
Such a framework would attempt to resolve (or at least ameliorate)
the problems identified, while capturing the majority of the
benefits offered by outsourcing. It might include:
-
- an extension of administrative law to contractors
-
- ethical and accountability requirements similar to those
applying to the public service
-
- restrictions on the employment of former senior public
officials by companies that had benefited from the decisions of
those officials, and
-
- demonstrated expertise in contract management by relevant
staff.
Such a framework is likely to reduce the
potential cost savings generated by outsourcing. Ultimately,
therefore, policy makers may need to choose between competing
priorities, such as cost savings, accountability, individual
rights, service quality and ethics.
Many factors need to be considered in
determining whether outsourcing is appropriate. This paper has
introduced some of these factors in a general context, but each
situation needs to be examined on its own merits. The issue of
outsourcing has become politicised, although it is an area where
multi-party endorsement of a coherent set of principles would be
valuable. Regardless of which party wins the 2001 election, it may
be useful for a range of parliamentarians to collaborate on
developing a public interest test for outsourcing. By incorporating
the views of Government, Opposition, minor parties and
independents, and front- and back-benchers, they may be able to
establish a framework that is respected by all sides of politics as
well as the wider community.
Endnotes
-
- The Industry Commission has since been subsumed into the
Productivity Commission, which was formed in 1998.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne, 1996, p. xix.
The report is available at www.pc.gov.au. Consistent with this
definition, this paper will not consider the merits of replacing
grants to community organisations with contracts.
- For an account of the outsourcing of information technology
services, see Rose Verspaandonk, 'The whole-of-government IT
outsourcing initiative' (Electronic Brief on the Internet,
available at http://www.aph.gov.au/library/intguide/pol/it_outsourcing.htm)
- There are some important differences between services provided
to government agencies and those provided on their behalf. However,
several of the issues raised apply to both types of outsourcing.
The potential sensitivity of outsourcing services to government was
underlined by the debate about the outsourcing of information
technology services. See Rose Verspaandonk, 'The
whole-of-government IT outsourcing initiative' (Electronic Brief on
the Internet, available at http://www.aph.gov.au/library/intguide/pol/it_outsourcing.htm)
for information about this debate.
- In determining whether to outsource, the private sector is
subject to different constraints from the public sector. For
example, when the Commonwealth Bank of Australia outsourced its
information technology requirements to EDS Australia, it reinforced
the partnership by buying a 35 per cent stake in the
latter. See the Commonwealth Bank's media release of 26 September
1997 at www.commbank.com.au.
- For a useful account of this agenda, see ch. 3, 'The
Politics of Restructuring' in Owen E. Hughes, Australian
Politics, Third Edition, Macmillan, South Yarra, 1998.
- For a chronological account of Australian public management
initiatives, see Rose Verspaandonk, 'Changes in the Australian
Public Service 1975-2000', Chronology no. 1,
Department of the Parliamentary Library, 2000-2001 (available at
http://www.aph.gov.au/library/pubs/chron/2000-01/01chr01.htm).
- Agencies are required to achieve specified outputs in the
pursuit of specified outcomes.
- For example, see the Prime Minister's speech to the Melbourne
Press Club on 22 November 2000 (available at www.pm.gov.au).
- For example, Marie Coleman, 'Dubious value of outsourcing',
Canberra Times, 10 November 2000, and Chris Tolhurst,
'Sometimes it's better to do the job in house', Australian
Financial Review, 6 September 2000.
- While these examples illustrate a range of situations
and considerations, they do not prove the desirability or otherwise
of outsourcing.
- See the Organisation for Economic Cooperation and Development's
policy brief, Best Practice Guidelines for Contracting Out
Government Services for a concise outline of these practices.
The brief is available at http://www.oecd.org//puma/pubs/index.htm.
See also the Australian National Audit Office's Contract
Management Better Practice Guide and the Commonwealth
Auditor-General, 'Some issues in contract management in the public
sector', speech delivered to the Australian Corporate Lawyers
Association and Australian Institute of Administrative Law
conference, Canberra, 26 July 2000. Both are available at
http://www.anao.gov.au.
- Problems with the outsourcing of the Commonwealth's information
technology provision illustrate this point. See also JCPAA,
Report 379: Contract Management in the Australian Public
Service,
Commonwealth of Australia, Canberra, 2000. Both
are available at www.aph.gov.au
While sound contract management is critical for
maximising all of the benefits of outsourcing, it is particularly
important in securing quality. Because cost is an important
consideration in awarding a contract, there is a possibility that
the winning tender will have underestimated the real cost of
delivering the service to a high standard. In such a situation, it
is important that the contract specifications leave no room for
dispute.
- For examples and discussion, see Kylie McIntosh, Jason Shauness
and Roger Wettenhall, Contracting Out in Australia: An
Indicative History, Centre for Research in Public Management,
University of Canberra, Canberra, 1997. For an account of
Commonwealth and State/Territory initiatives up to 1996, see Simon
Domberger and Christine Hall, 'Contracting for public services: A
review of Antipodean experience', Public Administration,
Spring 1996.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne, 1996, p. 74.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne, 1996, p. 3.
- Minister for Finance and Administration, Media Release, 9 May
2000, available at
www.dofa.gov.au/media.
- The Hon. Peter Reith MP, House of Representatives,
Debates, 15 July 1998, Answer to Question on Notice.
- Senate Finance and Public Administration References Committee,
Hansard, 12 May 2000.
- Department of Finance and Administration, Annual Report
1999-2000, Commonwealth of Australia, Canberra, 2000,
p. 33.
- In May 2000, Minister Fahey announced the implementation of
'market testing of Commonwealth activities and services, commencing
with corporate services.' (media release, 9 May 2000, available
at
www.dofa.gov.au/media).
- See for example, Selina Mitchell, 'Outsourcing risks
trivialised: CSIRO', The Australian, 17 November 2000.
- OECD, Contracting out government services: best practice
guidelines and case studies, Public Management Occasional
Papers no. 20, 1997.
- See Jonathan Boston (ed.), The state under contract,
Bridget Williams Books, Wellington, 1995 for an account of the New
Zealand experience.
- An influential book in the United States was David Osborne and
Ted Gaebler's Reinventing Government: How the entrepreneurial
spirit is transforming the public sector, Addison-Wesley,
Reading, Massachusetts, 1992. For a critical account of the United
States approach, see Nicholas Henry, 'The contracting conundrum in
the United States: or, do we really understand privatization?' in
Ali Farazmand (ed.), Privatization or public enterprise reform?
International case studies with implications for public
management, Greenwood Press, Westport, USA, 2001.
- For example, regional Canadian governments have undertaken
outsourcing of some social welfare services to the not-for-profit
sector. For a discussion of initiatives in Ontario, see Philip de
L. Panet and Michael J. Trebilcock, 'Contracting out social
services', Canadian Public Administration, Spring 1998.
- United States General Accounting Office, 'Contract management:
trends and challenges in acquiring services' (statement by David E.
Cooper to the subcommittee on Technology and Procurement Policy,
Committee on Government Reform, House of Representatives, 22 May
2001), p. 1. Years refer to fiscal years and dollars are US
dollars.
- Senator John Faulkner, 'Re-invigorating Commonwealth Public
Administration', speech delivered at the National Convention
Centre, Canberra, 22 March 2001.
According to the Australian Democrats' Issue
Sheet '98, Finance and Taxation (available at www.democrats.org.au), the party
opposes contracting out 'of essential government services where
this will lead to less accountability, higher costs to the public
or a lowering of standards and access'.
- John Fahey MP, media release, 7 November 1997, available at
www.dofa.gov.au/media.
- The Industry Commission's findings referred to competitive
tendering and contracting (CTC), rather than outsourcing. CTC is a
more general term that can be used to include the competitive
provision of services in-house. In this paper, 'CTC' is used when
referring directly to comments by the Industry Commission.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne 1996, p. 11.
- ibid.
- CTC Consulting, Government Outsourcing: What has been
learnt? March 1999, p. 11. Factors affecting savings
included the type of activity, the method of contractor selection
and contract size.
- John Quiggin, 'Competitive Tendering and Contracting in the
Australian Public Sector', Australian Journal of Public
Administration, September 1996, p. 56. The survey by CTC
Consulting in 1999 (see footnote 33) found that savings could range
from 46.4 per cent (for cleaning) to minus 8.6 per cent (for
information technology).
- Graeme Hodge, Privatisation: An international review of
performance, Westview Press, Boulder Colorado, 2000,
p. 119. This view is supported by the success of in-house bids
in the United Kingdom. See F. Leslie Seidle, Rethinking the
delivery of public services to citizens, The Institute for
Research in Public Policy, Montreal, 1995, p. 44.
- Centrelink is an example of a public sector organisation that
delivers services on behalf of other government agencies.
- Graeme Hodge, Contracting Out Government Services: A Review
of International Evidence, Montech Pty Ltd, Melbourne, 1996,
p. 54.
- Richard Mulgan, 'Accountability the key to successful
outsourcing', Canberra Times, 20 January 2001.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne 1996, p. 21.
- Graeme Hodge, Privatisation: An international review of
performance, Westview Press, Buolder Colorado, 2000,
p. 125.
- Laura Tingle, 'Job agency failure to cost $600 000',
The Sydney Morning Herald, 14 October 2000.
- John Quiggin, 'Competitive Tendering and Contracting in the
Australian Public Sector', Australian Journal of Public
Administration, September 1996, p. 52.
- Graeme Hodge, Privatisation: An international review of
performance, Westview Press, Boulder Colorado, 2000,
p. 110. According to Hodge, few reports on this issue were
available.
- In-house provision may also be 'uncompetitive' in that other
providers cannot bid for a new service. However, there is no scope
for monopoly exploitation if the service must be provided within
the existing budget or at a price determined by the purchaser.
Rather than all of the power being held by the supplier,
significant power is held by the purchaser.
- Auditor-General, Implementation of Whole-of-Government
Information Technology Infrastructure Consolidation and Outsourcing
Initiative, Audit Report no. 9, 2000-01, Canberra, 2000,
ch. 7.
- See ScreenSound's submission to the Senate Finance and Public
Administration Committee's inquiry into IT Outsourcing (http://www.aph.gov.au/senate/committee/fapa_ctte/index.htm).
- Submission, quoted in House of Representatives Standing
Committee on Family and Community Affairs, What Price
Competition? Report on the Competitive Tendering of Welfare Service
Delivery, Commonwealth of Australia, 1998, p. 27.
- Samuel Gregg, 'Welfare churches risk their souls', The
Australian, 15 August 2000.
- Hodge comes to this conclusion after examining a number of
international studies on this issue. Graeme Hodge,
Privatisation: An international review of performance,
Westview Press, Boulder Colorado, 2000, p. 131.
- House of Representatives Standing Committee on Family and
Community Affairs, What Price Competition? Report on the
Competitive Tendering of Welfare Service Delivery,
Commonwealth of Australia, 1998, pp. 27-8. The report is
available at www.aph.gov.au.
- Ann Nevile, 'The implementation of competitive tendering in the
Australian social welfare sector', Just Policy, April
2000, p. 23.
- Selina Mitchell, 'IT department fines contractor $900 000
for shortfall', Australian, 18 January 2001.
- John Quiggin, 'Competitive Tendering and Contracting in the
Australian Public Sector', Australian Journal of Public
Administration, September 1996, p. 53.
- For further discussion of this issue, see Simon Domberger and
Paul Jensen, 'Contracting out by the public sector: Theory,
evidence, prospects', Oxford Review of Economic Policy,
vol. 13, no. 4, 1997.
- See Administrative Review Council, The Contracting Out of
Government Services: Report to the Attorney-General,
Commonwealth of Australia, Canberra, 1998, for a more detailed
discussion of these issues, including recommendations.
- The Hon. John Fahey, 'Competitive Tendering and Contracting
(CTC) in the APS: Challenges and Opportunities', speech at the
Hyatt Hotel, Canberra, 25 March 1998.
- For example, the use of tear gas by Australasian Correctional
Management was raised in a Senate Estimates hearing on 30 May 2001.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne, 1996,
pp. 5-6.
- Richard Mulgan, 'Accountability the key to successful
outsourcing', Canberra Times, 20 January 2001.
- ibid.
- Commonwealth Auditor-General, 'Some issues in contract
management in the public sector', presentation to the Australian
Corporate Lawyers Association and Australian Institute of
Administrative Law conference on outsourcing, Canberra, 26 July
2000.
- Senate Finance and Public Administration References Committee,
Inquiry into the Mechanism for Providing Accountability to the
Senate in Relation to Government Contracts, Commonwealth of
Australia, Canberra, 2000, p. 5. The report is available at
www.aph.gov.au.
- Senate Finance and Public Administration References Committee,
Contracting Out of Government Services: Second Report,
Commonwealth of Australia, Canberra, 1998, p. 40. The report
is available at
www.aph.gov.au.
- Commonwealth Auditor-General, The use of confidentiality
provisions in Commonwealth contracts, Audit Report
no. 38, 2000-01, AusInfo, Canberra, 2001.
- The Auditor-General's United States counterpart has access to
records, including those of subcontractors, for contracts of at
least $10 000 (Senate Finance and Public Administration
References Committee, Contracting Out of Government Services:
Second Report, Commonwealth of Australia, Canberra, 1998,
p. 40).
- Joint Committee of Public Accounts and Audit, Report 368:
Review of Audit Report No. 34, 1997-98, New Submarine
Project, Commonwealth of Australia, Canberra, 1999,
Recommendation 5. The report is available
at www.aph.gov.au.
- Senate Finance and Public Administration References Committee,
Contracting Out of Government Services: Second Report,
Commonwealth of Australia, Canberra, 1998, p. 41.
- For an outline of the administrative law framework, see
Administrative Review Council, The Contracting Out of
Government Services: Issues Paper, AGPS, Canberra, 1997.
- In his 1999-2000 Annual Report, the Commonwealth Ombudsman
noted that the current jurisdictional arrangements with respect to
contracting can 'lead to some inconsistencies, and to some members
of the public being denied immediate access to the independent and
impartial service' offered by his office.
- For a more detailed discussion of this issue see Administrative
Review Council, The Contracting Out of Government Services:
Issues Paper, AGPS, Canberra, 1997.
- For a Canadian perspective on contracting with not-for-profit
organisations in the social services sector, see Philip de L. Panet
and Michael J. Trebilcock, 'Contracting-out social services',
Canadian Public Administration, Spring 1998.
- Linda Taylor, 'Unanticipated consequences of contracting out',
Public Sector, December 2000, p. 19.
- Reverend Tim Costello has explained his 'survival' as a critic
of former Victorian Premier Jeff Kennett thus: 'He couldn't call
the boss and have me sacked.' (Seamus Bradley, 'The highest stake',
The Age, 22 December 2000).
- For examples of opposing arguments on the merits of churches
providing employment services, see William Brennan, 'Our quango
which art in employment', The Sydney Morning Herald, 6
January, 2000, and Gordon Moyes, 'Christians with the patience of
job-finders', The Australian, 7 January 2000.
- Statement on Ministerial Arrangements, 19 December
2000.
- The Hon. John Fahey MP, Background Briefing, 13 July
1997. The transcript of the program is available at www.abc.net.au.
- For discussion of the distinction between core and non-core
business, see Richard Mulgan, 'Identifying the "Core" Public
Service', Canberra Bulletin of Public Administration,
February 1998.
- Industry Commission, Competitive Tendering and Contracting
by Public Sector Agencies, AGPS, Melbourne 1996, p. 19.
However, the Commission also noted that the specific use of
procurement to pursue industry development objectives could
undermine firms' competitive advantage.
- Minister for Communications, Information Technology and the
Arts and the Minister for Finance and Administration, Joint Media
Release, 22 November 2000, available at www.dofa.gov.au/media.
- David Kemp MP, 'A New Act for a New Century', Address to mark
the commencement of the Public Service Act 1999, Canberra, 2
December 1999. The speech is available at www.psmpc.gov.au.
- Laura Tingle, 'Cabinet under pressure on job guidelines',
Sydney Morning Herald, 21 September 2000.
- For further discussion of this issue, and recommendations, see
Patricia Ranald, The Contracting Commonwealth: Serving citizens
or customers? Public accountability, service quality and equity
issues in the contracting and competitive tendering of government
services, Public Sector Research Centre, University of New
South Wales, Sydney, 1997. Hodge also discusses this issue (Graeme
Hodge, Privatisation: An international review of
performance, Westview Press, Boulder Colorado, 2000,
pp. 142-4).
- For discussion of this issue, see Nicholas Henry, 'The
contracting conundrum in the United States: Or, do we really
understand privatization?' in Ali Farazmand (ed.),
Privatization or public enterprise reform? International case
studies with implications for public management, Greenwood
Press, Westport, USA, 2001.
- Brian Toohey, 'Privatisation holds us captive', The West
Australian, 27 November 2000, Kristine Gough, 'Private jails a
'failure', The Australian, 29 November 2000, and Elisabeth
Wynhausen, 'Profits from behind bars: private prisons on trial',
The Australian, 4 December 2000.
- Rose Verspaandonk, 'The Independence of the Auditor-General',
Research Note no. 16, Department of the Parliamentary
Library, 2000-01, available athttp://www.aph.gov.au/library/pubs/rn/2000-01/01RN16.htm.
- Richard Humphry, Review of the Whole of Government
Information Technology Outsourcing Initiative, Commonwealth of
Australia, Canberra, 2000, Recommendation 9. The report is
available at www.dofa.gov.au/humphryreview.
- Defence Review 2000 Community Consultation Team, Australian
Perspectives on Defence: Report of the Community Consultation
Team, Commonwealth of Australia, September 2000, p. 17.
- ibid.
- General Accounting Office media release, 22 May 2001 (available
at www.gao.gov under 'Commercial
Activities Panel'. Further information on the panel is available at
this site.).