Privatization and Contracting Out

1
Privatization and Contracting Out

• A Survey of the Literature

2
Dismantling the StateMadsen Pirie

• The arguments in favor of Dismantling the State
• Ideological or rational 
• Problem areas of public sector performance
• Production, Labor, Consumer, Administrative
• The Deficiencies of Public Sector Reform
• Efficiency, waste and budget control
• Evaluation of Techniques of Privatization

3
Privatization as the key to Better Government
E.S. Savas

• Comparison of Savas and Pirie
• Arguments for Privatization
• Ideological
• size of government
• Pragmatic
• normative, too big
• Commercial
• generate private sector development
• Populist
• empowerment, choice, and community based
  activities

4
Privatization as the key to Better Government
E.S. Savas

• Keynesian vs. Neo-Orthodoxy
• Arguments about exclusion
• Private goods vs. toll goods vs. collective goods
  vs. common pool goods (bottled water, water,
  river, streets)
• Worthy goodsin a social sense
• health and education

5
Privatization as the key to Better Government
E.S. Savas

• Services
• GovernmentTaxes
• GovernmentFees, or tolls
• Government Vending
• Contracting
• Intergovernmental or interdepartmental agreements
• Franchises and Monopolies
• Subsidies
• Assessment of the Privatization Arguments

6
Private ProvisionContractingGabriel Roth

• Private Sector
• Indigenous vs. Foreign (or Pariah)
• Contracting vs. Grants
• Sub-contracting and sub-grants Blurring the
  lines
• Making the Choice
• Contracting and Non-profits
• Issues of privilege
• Debate about transaction costs
• Cost recovery vs. subsidies

7
Reinventing Government David Osborne and Ted
Gaebler

• Steering Rather Than Rowing
• Entrepreneurial Government
• Earning as well as spending--charging fees and
  selling goods and services
• Weberian Bureauracy
• Bankrupt?
• Third sector vs. Private sector
• Use of Non-governmental organizations

8
Reinventing Government David Osborne and Ted
Gaebler

• Community Based Government
• Subsidiarity
• People as citizens or consumers
• Is there a difference?
• TQMadd on to consumers
• Government agencies compete with themselves

9
Reinventing Government David Osborne and Ted
Gaebler

• Mission vs. Rules based government
• NASA and the MoonOutput based government
• Incremental vs. Zero Based (or targeted) budgets
• Decentralization
• The Circle Rounds

10
Corruptionthe Real Problem?Robert Klitgaard

• Corruption as functional and cultural
• Causes of corruption
• Poverty vs. ethnicity
• The Ethical Issues in a society of poverty
• Obligation to family vs. obligation to society
• The starving children problem
• Are there benefits from corruption?
• Getting things done means paying for it

11
Corruptionthe Real Problem?Robert Klitgaard

• Rent Seeking
• Charges higher than market price
• Corruption
• Too much government or too much privatization

12
Corruptionthe Real Problem?Robert Klitgaard

• Corruption
• Graft
• Bribery
• Nepotism
• Kickbacks
• Insider bidding (wired)
• Can and should corruption be controlled?

13
The Spirit and Intent of RSSAs and PASAs

• Within a USDA / USAID Parnership

14
Historical Perspective

• USDA and President Trumans Point Four Program
• administered the agricultural training and
  technical assistance programs
• 1950, Technical Cooperation Administration (TCA)
  created
• Predecessor to USAID

15
Historical Perspective

• 1955, International Cooperation Administration
  (ICA)
• All foreign economic development efforts were
  consolidated
• USDA expertise and institutional resources were
  still critically needed
• As a result, ICA and USDA drew up a major
  agreement to facilitate cooperation in technical
  assistance, training, and information
  dissemination

16
Historical Perspective

• Passage of the Foreign Assistance Act of 1961 and
  the creation of USAID
• A new General Agreement in 1966 laid the
  framework for cooperative relationships
• USAID recognized "the unique personnel
  resources, capabilities and experience of the
  Department
• sought to use this expertise through cooperation
• USDA recognized "...its responsibility, within
  its authority, to contribute toward U.S. foreign
  policy by participation in foreign assistance
  programs"

17
Historical Perspective

• General Agreement between USDA and USAID
• Based on the premise of a partnership between
  USDA and USAID
• emphasis on joint planning, coordination and
  consultation
• The agreement is not like a contract
• establishes operational guidelines and a spirit
  of cooperation to link the institutional
  resources of two government agencies in
  accomplishing U.S. foreign assistance goals

18
Historical Perspective

• General Agreement between USDA and USAID
• Agreement affirmed new partnership mechanisms to
  access USDA expertise
• Participating Agency Service Agreements (PASAs)
• Resources Support Services Agreements (RSSAs)

19
Authorizations for PASAs and RSSAs

• Sections 621(a) and 632(b) of the Foreign
  Assistance Act
• Enables USAID officers to secure "technical
  assistance...in the field of education, health,
  housing, or agriculture..." by utilizing "to the
  fullest extent practicable, the facilities and
  resources of the Federal agency or agencies with
  primary responsibilities for domestic programs in
  such fields..."

20
Authorizations for PASAs and RSSAs

• Amendment to Section 621of the Foreign Assistance
  Act
• Participating Agency resources must be
  particularly or uniquely suitable for technical
  assistance
• Are not competitive with private enterprise and
• Can be made available without interfering with
  domestic programs

21
Authorizations for PASAs and RSSAs

• Economy Act
• Requires both the Secretary of Agriculture to
  certify that assisting USAID is in the best
  interest of the Government and USAID's
  Administrator to ascertain that "the ordered
  goods or services cannot be provided as
  conveniently or as cheaply by a commercial
  enterprise."

22
Authorizations for PASAs and RSSAs

• Office of Management and Budgets (OMB) Circular
  A-76
• USAID can enter into PASAs or RSSAs with USDA
  only if the following conditions are met
• USDA resources and expertise are used for
  technical assistance
• USDA can provide technical assistance better than
  USAID, the private sector or another Federal
  agency
• USDA has a formal program for managing excess
  personnel capacity that allows staff to provide
  assistance under RSSAs and PASAs and
• USDA services are not competitive with private
  enterprise.

23
Authorizations for PASAs and RSSAs

• Office of Management and Budgets (OMB) Circular
  A-76
• Before a RSSA or PASA can be approved and issued,
  a detailed justification must be provided on
  USDA's unique suitability, and all other A-76
  requirements must be met

24
Spirit and Intent Responsibilities in
Implementing PASAs and RSSAs

• USAIDs Handbook 12
• Defines PASAs as agreements with other Federal
  agencies for specific services or support tied to
  a specific project goal and performed within a
  definite time frame

25
Spirit and Intent Responsibilities in
Implementing PASAs and RSSAs

• PASAs
• Normally issued by Missions for support outside
  the U.S., but can be used to carry out a specific
  goal or goals of an AID/W project

26
Spirit and Intent Responsibilities in
Implementing PASAs and RSSAs

• RSSAs
• Agreements funded in AID/W for continuing general
  support assistance, usually provided in an AID/W
  office, and have no specific, readily measurable
  goals to be accomplished within a set time period
• In the 1990's, most USDA/USAID agreements have
  been RSSAs

27
Spirit and Intent Responsibilities in
Implementing PASAs and RSSAs

• Intent and Spirit of PASAs and RSSAs
• Strengthen the partnership between USAID and USDA
  by fully utilizing Departmental competence,
  resources and experience and exchanging critical
  information and knowledge to benefit both agencies

28
Spirit and Intent Responsibilities in
Implementing PASAs and RSSAs

• Staff Responsibilities
• RSSA and PASA staff should have a clear
  understanding of USDA's unique capabilities as
  the world's largest source of technical expertise
  n agriculture, natural resources management, and
  related areas
• RSSA staff should cooperate and interact with
  USDA agency employees having mutual interests
  whenever possible

29
Spirit and Intent Responsibilities in
Implementing PASAs and RSSAs

• Staff Responsibilities
• Sharing RSSA knowledge with Departmental
  officials can positively impact U.S. agriculture
  and USDA goals
• can ultimately advance development efforts

30
RSSA Human Resources

• USDA hiring for RSSA positions
• Recruits from Departmental agencies and
  land-grant university network first, drawing on
  its unique pool of expert resources nationwide
• When USDA makes decision, USAID is asked to concur

31
RSSA Human Resources

• USDA hiring for RSSA positions
• Once appointed, RSSA employees receive technical
  advice and guidance from their USAID Project
  Officer, but their official supervisor is at USDA
• RSSA performance appraisals are determined by the
  USDA supervisor
• With input from USAID Project Officer
• RSSA employees' annual work plans should also be
  developed consistent with USDA policies and
  objectives

32
In Summary

• Through collaboration and cooperation, benefits
  will continue for U.S. foreign assistance as
  information and knowledge flows from USDA to
  USAID
• Equally important - benefits will flow from USAID
  to the Department
• RSSA employees play a crucial role in
  facilitating this exchange and are key to
  sustaining the long-standing partnership between
  the two agencies