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Contracting Out Core Government Functions and Services in Post-Conflict and Fragile Situations
On the 8-9 June in Tunis, the Partnership for Democratic Governance held a conference on “Contracting Out Core Government Services and Functions in Fragile and Post-Conflict Situations”. This event was co-hosted by the African Development Bank and benefitted from a financial support from Japan.
The conference gathered around 80 participants from a wide range of development aid stakeholders: OECD members (Canada, EC, Japan, US, UK, Poland, Turkey), non-DAC donors (Brazil and Chile), international organizations (UNDP, UNICEF, UNECA, ADB), NGOs and the private sector. Fifteen partner countries from Africa and Asia were represented at senior level, including the Minister of Finance for Timor-Leste and the Minister of Health for Liberia.
The objective of the conference was to examine how the contracting-out of government functions and services in fragile states can be compatible with local capacity development and state building. The debate was greeted with enthusiasm by all participants, with discussions concentrating on innovative practice.
Keynote speaker for the conference was Professor Paul Collier, of Oxford University, who addressed participants on the need for new and innovative thinking on these issues. He called for the developing countries, civil society and donors to re-visit the typical western European model of full service delivery through state ministries, exploring a range of options including independent service authorities for managing, assessing and regulating diverse actors.
Participants agreed that the preliminary conclusions of the conference, as well as questions where participants expressed differing views should be further explored and elaborated to lead to practical policy guidance.
Key issues and questions which emerged at the conference, and which will be further elaborated by PDG analysis, research and expert group guidance, can be divided into the following categories:
Areas of Consensus
There was strong agreement over the following points:
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Contracting out government functions and services should be preceded by a thorough assessment of existing national capacity. Where possible, joint ventures with local constructors (for example, road construction and maintenance in Papua New Guinea) should be preferred.
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Contracting-out requires a clear contractual agreement stipulating duration, services delivered and accountability mechanisms.
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While intersectoral learning is useful, specificities of different public sectors must be recognized. For example, in the security and justice sector contracting-out has a very different impact than in the health or infrastructure sector. It is also fundamental to know and to respect the limits of contracting-out: decision-making processes cannot be contracted out and must always lie within the government.
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The regulatory role of the government is key; therefore regulation and management capacities should be one main focus for donors’ well-sequenced support.
Future Questions
There was significant debate and interrogation on the following points:
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What should be the appropriate timing and sequencing of contracting-out arrangements? How long does it take to exit? While much attention must be paid to country context, what lessons can be drawn to promote good practice? Discussants explored whether capacity building functions should be clearly defined from the start of all contracts or undertaken as a sequenced activity further along in the process. A number of participants argued that operational and capacity building contracts should be divided into two different kinds of contracts.
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While it was agreed that Governments (even the most fragile) should be the ones to decide on contracting-out needs, even when those contracts are donor-funded, the weak capacity of many such governments presents a “chicken and egg” dilemma which is not addressed in international documents like the Paris Declaration. In other words, a fragile state does not usually have the capacity to regulate and manage the contracting-out, although this is a pre-requisite for a successful contracting-out arrangement. South Sudan’s experience in contracting out its core fiduciary functions is a case in point which illustrates how weak management capacity for contracting out can have a negative impact on statebuilding and that reversing this trend is a long and difficult process.
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Are there new and innovative models of service delivery which need to be explored and which can be owned and managed by government but where services can be delivered by a broad range of actors (for example, the Independent Service Authority model outlined by Paul Collier)?
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Can better results be achieved through South-South Cooperation? The experience of Afghanistan (with respect to its contracting-out arrangements with India) and the Democratic Republic of Congo (with Mozambique) seem to suggest that South-South arrangements are more successful than North-South arrangements. What role can the Diaspora play? Positive examples came from the DRC and Timor Leste.
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As a way forward, greater focus could be given to the lessons from the broader contracting literature, rather than taking a sectoral or development approach. Specific questions here include: how can the outputs be specified? What is the appropriate allocation of risk between parties? How enforceable is the contract in practice?
Next steps
In terms of next steps, an oral report on the conference will be provided to the Steering Group on 19 June. The PDG AU will draft a summary of the proceedings which will be published on the PDG’s website (the PDG Online Collaborative Platform) along with other materials to promote on-line discussion and assistance. Over the summer, the PDG AU will work to refine and build on the four case studies commissioned for the conference. Other cases may be added. For example, during the conference, the Democratic Republic of Congo invited the PDG to investigate contracting-out possibilities as the decentralization process progressed in DRC.
The PDG Advisory Unit plans to carry forward this work, including through a follow-up experts meeting in October 2009 in Paris. In addition to practical policy and contract design guidance, the PDG Steering Group might like to explore where there is a need for contract templates or to further define the PDG’s role as a clearing house and neutral broker to governments with very weak capacity.
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