executive summary
19 pdg Partnership for Democratic Governance
Contracting out and capacity development Contracting out is a complex undertaking which requires strong capacity – within both government and the non-state sector – in order to be successful. The first step for anyone deciding whether or not to contract is to assess this capacity in three areas: 1. individual human skills and resources; 2. organisational structures and processes; and 3. the enabling environment of policy, laws and rules.
Contracting out is not a replacement for internal and country-led capacity development. Failure to develop government capacity for delivering services, whether overseeing delivery or providing them directly, may eventually undermine the legitimacy of the state in the eyes of its population and its accountability towards its citizens. What should be done if this evaluation reveals that the state has insufficient capacity to contract out in all three of these areas? If capacity is weak at all levels, the government should bring in a procurement agent to act on its behalf to manage the acquisition of services and products until government capacity has improved, as was done in Afghanistan and Liberia. However, using a procurement agent can be risky: for example, the agent may act as though it were immune from political and judicial oversight, or conflicts of interest may arise if the agent becomes very closely involved in shaping contracts and then participates in procurements. The government will need new legislation or other
pdg Partnership for Democratic Governance
tools to establish a solid basis for government procurement and to closely monitor the agent’s performance – this again raises questions of capacity, but technical assistance can be of help. While the use of a procurement agent can fill the immediate capacity gaps facing a country, the state needs a strategy to manage the transition from dependence on external resources to long-term sustainability. This transition is vital to the post-conflict restoration of service delivery, and it also enhances state building and reduces fragility. Contracting out can be used as a tool both to provide services and to develop the necessary capacities for contracting out. These functions can be contracted for separately, or capacity development can be built into the same contracts that provide for short to medium-term service delivery. The contract should require the contractor to help develop the capacity of certain government institutions and/ or employees. Such an approach has been taken for customs development in Mozambique and for Sierra Leone’s National Revenue Authority.
Capacity development is a continuous process, which is best achieved by introducing actions gradually across a number of areas: recruitment of staff, provision of technical assistance, the progressive assumption of roles by government, and the assessment of progress against benchmarks. There are no quick fixes, particularly in a fragile state.
OECD PDG HANDBOOK ON CONTRACTING OUT GOVERNMENT FUNCTIONS AND SERVICES IN POST-CONFLICT AND FRAGILE SITUATIONS © OECD 2010