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Contracting Out Government Services: Administrative Impediments

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Practice Advice on Program and Service Delivery 

Contracting Out Government Services: Internal Impediments (OECD) 

Summary Advice: The OECD recommends securing top management involvement in the decisions-making on contracting out  of government services,  and stresses on the importance of maintaining consultations and sharing information with staff members.

Main Points: Contracting out government services is one of the principal market-type mechanisms applied in OECD member countries, it leads to efficiency gains, while maintaining or increasing service quality levels. Top management involvement and staff support are one of the key factors leading to successful contracting out of government services.

As far as top management involvement is concerned, the OECD recommends the following practices:

  • Integrating contracting out with overall corporate strategy of the organisation. It requires the active leadership of top management if it is to achieve full potential. the ownership and oversight of the contracting out exercise should therefore rest with the very top of the organisation.
  • Contacting out should not involve a mechanistic consideration of existing tasks or processes. Rather, it should be used as an opportunity to re-evaluate both the rationale for existing tasks and the processes used to carry them out.
  • Contracting out can lead to tensions within organisations. There may also be resistance to contracting out by some in the organisation. Active top management involvement is essential in preventing, or resolving, these internal impediments.

As far as staff involvement is concerned, the OECD suggests:

  • Recognising that contracting out is not only a financial and performance issue, but also a people issue. It is essential to demonstrate a high degree of sensitivity in this area.
  • Recognising that staff are inevitably concerned by contracting out. These concerns are caused in large part by the uncertainty that the contracting out exercise can create for them. While the process requires proper analysis, it must proceed rapidly in order to minimise any period of uncertainty for staff.
  • It is of primary importance to consult staff immediately when an activity is being considered for contracting out, to deal with them honestly and frankly, and to keep them informed at every step of the way, both individually and as a group.
  • Relevant trade unions should be consulted immediately when an activity is being considered for contracting out and keep up to date on developments. 

Source: OECD (1997). OECD, “Best Practice Guidelines For Contracting Out Government Services",  Public Management Services, PUMA Policy Brief, OECD Publishing at: . Last accessed February 28th, 2013.

Page Created By: Khilola B. Zakhidova. The content presented on this page is drawn directly from the source(s) cited above, and consists of direct quotations or close paraphrases. This material does not necessarily reflect the official view of the publishing organization.

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