MN4235/MN5035 University of St Andrews 1 Contracting for public servicess Competition and partnerships

MN4235/MN5035 University of St Andrews2 Government by Contract Three functions: n Policy function n Buyer function n Contractor function Also contracts between policy and provider functions and service users

MN4235/MN5035 University of St Andrews3 Key Questions n Should there be competition between contractors to provide services? n Should these contractors be in the private, public or voluntary sectors? n Is the appropriate role for public sector organisations that of the enabling organisation?

MN4235/MN5035 University of St Andrews4 Ways of introducing the discipline of the market place n Internal markets n (Compulsory) competitive tendering n Privatisation

MN4235/MN5035 University of St Andrews5 Public sector markets Designed by administrative rules: n Supplier power n Buyer power n Access to markets n Market growth potential n Nature of contracts

MN4235/MN5035 University of St Andrews6 Executive agencies (Flynn) n Monopoly supplier n Monopsony buyer n Transactions infrequent n Buyer a lot of knowledge about sellers and operation and costs n Block contracts

MN4235/MN5035 University of St Andrews7 Former NHS internal market example GP budget holders District purchasing agents Private patients Demand for hospital services Supply of hospital services Directly managed hospitals Self- governing hospitals Private hospitals

MN4235/MN5035 University of St Andrews8 Competitive Tendering - Market testing Long history of contracting in public sector: n Building works n ‘Housekeeping’ services - catering, cleaning n Larger services - eg refuse collection n Core services - finance, personnel, etc

MN4235/MN5035 University of St Andrews9 The enabling organisation Advantages and disadvantages of contracting out?

MN4235/MN5035 University of St Andrews10 Privatisation n Done little to enhance competition (Cullis and Jones) n Policy popular due to subsidised shares and tax reductions n Transfer to private monopolies due to successful industry lobbying n Subsequent need for regulation

MN4235/MN5035 University of St Andrews11 Other ways of involving the private sector n As contractors n As funders (PFI) n As partners (PPP)

MN4235/MN5035 University of St Andrews12 Are partnerships the future? Hierarchies Competition Networks/ partnerships

MN4235/MN5035 University of St Andrews13 Four basic ways of controlling public management (Hood) Contrived randomness Oversight/ Review Competition Mutuality Shift from NW/SE to NE/SW to NE/SE