Privatization and Contracting Out A Survey of the Literature

Privatization and Contracting Out

A Survey of the Literature

Dismantling the State:Madsen 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

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


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 goods—in a social sense health and education


Services Government—Taxes Government—Fees, or tolls Government Vending Contracting Intergovernmental or interdepartmental agreements Franchises and Monopolies Subsidies

Assessment of the Privatization Arguments

Private Provision—Contracting:Gabriel 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

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


Community Based Government Subsidiarity

People as citizens or consumers Is there a difference? TQM—add on to consumers

Government agencies compete with themselves


Mission vs. Rules based government: NASA and the Moon—Output based government

Incremental vs. Zero Based (or targeted) budgets

Decentralization The Circle Rounds

Corruption—the 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


“Rent Seeking” Charges higher than market price

Corruption Too much government or too much privatization


Corruption: Graft Bribery Nepotism Kickbacks Insider bidding (wired)

Can and should corruption be controlled?

The Spirit and Intent of RSSAs and PASAs

Within a USDA / USAID Parnership

Historical Perspective

USDA and President Truman’s “Point Four” Program

administered the agricultural training and technical assistance programs

1950, Technical Cooperation Administration (TCA) created

Predecessor to USAID


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


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"


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


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)

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..."


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


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."


Office of Management and Budget’s (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.


Office of Management and Budget’s (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

“Spirit and Intent” & Responsibilities in Implementing PASAs and RSSAs

USAID’s 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


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


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


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


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


Staff Responsibilities Sharing RSSA knowledge with Departmental officials

can positively impact U.S. agriculture and USDA goals

can ultimately advance development efforts

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

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

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

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Privatization and Contracting Out A Survey of the Literature