2. Managing incentives and risks
53 pdg Partnership for Democratic Governance
The views of service recipients The views of the general population – those receiving the services – are often neglected in fragile environments, either because of the difficulty of soliciting them when an urgent decision needs to be taken, or because their opinions are not considered sufficiently important to be taken into account. Nonetheless, the attitude of service recipients towards third-party service delivery may affect the ultimate success of the contracting out process. Service recipients may welcome non-state delivery of government services because it: • Ensures critically needed services where none were previously available, particularly in postconflict situations.
• Improves the state’s effectiveness, increases service delivery, and thus improves people’s well being. • Enables services to be provided by a preferred agency (for example, when health and education pdg services can be delivered by a religious institution Partnership that reflects and practices widely-held community for Democratic Governance beliefs). On the other hand, people may reject non-state delivery of government services if providers’ values are not aligned with their own, particularly their religious or ethnic affiliation. They may also reject service providers which they consider to have been imposed upon them, or which they suspect may charge for services which were previously free.
2.2. The political and technical risks of contracting out There are two main types of risk involved if government and/or donors proceed with contracting out without having assessed the prevailing incentives/ technical capacities properly: political and technical risks. If inadequately dealt with, these can significantly reduce the success of the contracting out process. Political risk arises when the incentives for contracting out have not been adequately assessed, and a decision to contract out is taken without sufficient support or understanding amongst the key stakeholders. This could include circumstances in which there is: • Limited government buy-in: Contracting out will mainly be sponsored by donors when there is limited government ownership, either because government does not consider the function a priority, or because it is not convinced it should be contracted out. As a result, although government may agree to the donors’ proposals, it may not
be committed enough to implement it or it may continue with parallel initiatives. Both actions will undermine the success of contracting out. • Lack of consensus within government: some government stakeholders are committed to contracting out (the “reformers”) and using donor funding, some withhold support (the “fence sitters”), while others actively seek to undermine the process (the “opposers”). If the reformers carry less weight within government than the fence sitters and the opposers, then the success of the contracting out process is likely to be limited. Nevertheless, positions may change in situations of crisis where stakeholders are forced to rethink the service delivery model (e.g. this occurred after the Haiti earthquake of 2010). • Rapid turnover of key decision-makers in government: this can mean that policy making is unstable – a decision to contract out today could be reversed tomorrow.
OECD PDG HANDBOOK ON CONTRACTING OUT GOVERNMENT FUNCTIONS AND SERVICES IN POST-CONFLICT AND FRAGILE SITUATIONS © OECD 2010