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1. THE SCOPE OF CONTRACTING OUT IN FRAGILE STATES pdg Partnership for Democratic Governance
Some state functions are considered to constitute state sovereignty and cannot therefore be performed by a non-state entity. These include providing security and safety within the state’s borders, managing international relations, engaging in diplomacy,pdg gathering intelligence, and defending the Partnership nation. These functions are highly political, and are for Democratic essentialGovernance for state sovereignty in that they allow the state to be accepted into the international system of states. Governments are likely to be very reluctant to contract out these functions. The only option might be to contract specific expertise to support government delivery. Similarly, there are policy-making aspects of state functions and services that may be inadvisable to contract out to a third party. These include setting the policy framework, and making decisions about functions or services. Contracting out policy making does occur in fragile states, but it is usually limited to providing support and advice in assessing policy options, developing policies and setting service standards. In principle, the responsibility for making decisions cannot and should not be devolved to a non-state entity. For example, whilst the state may contract out some aspects of budget design, it should not contract out decisions about budgetary allocations or priority setting. These are public decisions that should be made by public (elected) officials because they go to the heart of the “social contract” between state and citizen (OECD, 2008). More broadly, government may closely guard the internal administration of certain functions at the heart of the machinery of government and which may impinge on state sovereignty. This is particularly the case for public financial management, legal services and the management of natural resources. Contracting out internal aspects of these functions can be risky because it can provide privileged access to government information. A further risk is that it gives contractors monopoly control over aspects of internal administration. Nevertheless, discrete tasks for performing these functions are often
contracted out in fragile states; examples include procurement (Afghanistan, Southern Sudan), customs (Angola, Box 1.5; and Mozambique), tax collection (Sierra Leone), public financial management (Afghanistan, Liberia) and accounting and auditing (Southern Sudan). The intention of these contracting-out arrangements has often been to set up systems, train and develop staff so as to enable the service to eventually be handed back to the state. Case Study 2 illustrates this for contracting out core functions in Afghanistan. Contracting out the delivery of functions and services is likely to have less impact on the sovereignty and internal functioning of the state. The delivery of state functions includes the actual implementation and operation of the function at the interface with citizens (either as consumers or beneficiaries). Thus, for the provision of basic services, delivery involves operating and managing the services as opposed to setting the policy framework. This does not impinge directly on the state’s own internal administration and frequently allows government to exploit competition between rival contractors. This is commonly practised in fragile states for basic social services (particularly healthcare, but also some aspects of education and welfare); infrastructure (water supply, sanitation and refuse disposal, roads, energy, telecommunications); business development; agricultural extension services; and some aspects of security and justice (police administration, legal aid, and maintenance of court houses, police stations and prisons). Examples include contracting out the delivery of health provision (in Liberia, the Democratic Republic of the Congo, Afghanistan, Southern Sudan and Rwanda), and public utilities and waste management in Gaza. Table 1.2 summarises the scope for contracting out policy making, internal administration, and service delivery.
OECD PDG HANDBOOK ON CONTRACTING OUT GOVERNMENT FUNCTIONS AND SERVICES IN POST-CONFLICT AND FRAGILE SITUATIONS © OECD 2010