Berlin - 2005

Greetings from the Chairman of the Asia-Pacific Panel
Prof. Dr. Hiromitsu Kataoka *

Contracting-out is based upon the conviction that a collaboration and cooperation across the boundary of the public and private sectors are necessary for the effective and efficient supply and delivery of a collective good.

We used to think that some kind of activities must be confined to the public sector, if they were to serve the public interest. We have to reformulate the public interest, however, if a collaboration and cooperation across the boundary are of any meaning.

Since the dawn of the modern age, we have made a clear distinction between the public sector as identified with the state and the private sector as identified with society. Jean Bodin defined the public interest as a common concern taken care of by the state, the sphere of activities of which was called the public sector. It was thought that it prevailed over the private sector in which each person pursued one’s own private interest to satisfy one’s own wants.

But Bodinian concept was challenged soon by Adam Smith and others who insisted it was nothing more or less than the aggregated private interests which led to a natural harmony through invisible hands. Thus the relation of the state and society was reversed in favor of the latter.

Since then, we have swung between the two concepts radically. The welfare state symbolized the expansion of the public sector in which common goods must be produced and delivered exclusively. The tide has changed around 1980s, when U.S. President Reagan and British Prime Minister Thatcher inaugurated the radical administrative reforms coincidentally. Contracting-out attracted the attentions of the reformers as a means to downsize the public sector substantially.

Contracting-out seems to survive the recent ostensible recede of the tide of privatization, however. But the further use of contracting-out needs the reformulation of the two classical concepts of the public interest based upon the division of the state and society which has already lost its relevance any more.

The administrative state which accompanied the welfare state negated that distinction by involving the active state in social affairs in one sense or another. We can not reverse the trend, whatever efforts we devote to privatization. But there is another reason for the reformulation of the concept of the public interest.

We can not make a clear distinction between the public and the private, for a human being has an individual as well as social existence at once. As an individual being, a person has a personal sphere in which she or he prepares for, and enjoys the fruit of, human development with the full of human dignity. In order to develop personally, however, she or he must come out from the personal sphere and join the public sphere to interact and cooperate with others.

Otherwise she or he can not achieve anything meaningful for herself or himself as well as for other fellow human beings. In the public sphere she or he must appeal her or his authentic desires and seeks collaboration and cooperation with others by seeking a common cause. In the process of collaboration and cooperation, the private and the public are merged into the one, not separate from each other. They are the two sides if the same coin. They are on a par with each other without prevailing over the other.

This fact of a human existence sets the firm base for the full-fledged collaboration and cooperation across the boundary of the public and private sectors with the additional actors from the civic or voluntary sector.

In Ancient China, publicness and privateness were not a matter of the state or an institution, but a matter of a set of a mind of an individual. Publicness as fairness and impartiality was strongly suggested to control the set of the mind of an individual to prevail over privateness as wantness and rapaciousness inherent in his own mind. An individual so disciplined was expected to be an effective agent of the social control to affect the social groups surrounding him in a concentric circle in the direction of publicness.

But it does not matter whether publicness or privateness takes a preced4ence over the other. For both are rooted in the nature of a human existence at the same time. A private desire to make a human development makes it inevitable to interact and collaborate with others in the public sphere. The public interaction and collaboration lead back to a human development which must be enjoyed personally in a personal or private sphere.

The collaboration and cooperation across the boundary of the public and private sectors are not only an effective and efficient way of producing and delivering a public good, but also a sure way of enhancing a human development and enriching a human existence by interacting with people of the different sectors in a wider circle and exchanging variant and numerous experiences in the different sectors.

A contract is a means to give an effect to a collaboration and cooperation with mutual understanding, respect and involvement as well as benevolence and fairness.


* Hiromitsu Kataoka is the former president of The Okuma School of Public Management, Waseda University in Japan. He also served as a member of the IIAS Executive Committee. He is the chairman of the Japan Committee on the Study of NPM, which organizes the Asia-Pacific Panel.


ASIA-PACIFIC PANEL ON PUBLIC ADMINISTRATION

Time and Date
4: 30 pm ? 6: 30 pm 22 September 2005

Venue　　 Berlin, GERMANY
Conference site Maritim proArte-Hotel Berlin Hall 1, Section A

Theme
Contracting-out in Local Governments:
Its Outcomes and Future Challenges

Introductory Note
Prof. Yuko Kaneko, University of Yamagata, Japan

The radical public sector reform programs of the 1980s that began in the UK, the USA, Australia and New Zealand have since fostered a wave of reform in developed, developing and transitional countries. Currently, the governments of many countries, both developed and developing, are once again reviewing the roles of civil service, local authorities and public enterprises. Many functions previously performed by public sector organizations are being privatized; the remaining public corporations are now required to compete with private firms or to make profits. Local authorities are presently urged to tender for work in competition with private suppliers. Public sector organizations are in the process of managerial revolution in service production and delivery as characterized in many countries under the heading of “New Public Management (NPM).” The philosophy of NPM has been cited repeatedly by various scholars in public administration and they have included as the core element of NPM, greater competition through contracting out and quasi-market and consumer choice.

In the Asia-Pacific, some countries are voluntarily and others are coercively adopting NPM approach in reforming the governments and public sector organizations. They are attempting NPM reform initiatives especially in restructuring public-private relationships. For example, Japan carried out the drastic reform of the central government in 2001. Some NPM characteristics can be seen in the reform measures. Introduction of the “Incorporated Administrative Agency System” and downsizing government organization and operation through aggressive contracting-out are the examples of the reform measures which have certain NPM characteristics.

Contracting out arrangement is one of the widely adopted approaches for introducing private market disciplines into public administration. We define contracting-out as such an arrangement that government transfers supply or operation of a function to a contractor for a specified period of time, but without relinquishing program responsibility or accountability. Actual application of contracting out approach varies between countries while the contracting out arrangements are often observed in the local level, where most of the public services are provided and a large portion of government funds is spent.

With the above context, the Asia Pacific Panel will focus this time, the contracting out undertakings at the local level in the Asia-Pacific countries. It will explore the various application practices of contracting-outs under the different social and economic circumstances within the region.

In Japan, the local governments are now promoting contracting-out public tasks based on their administrative reform programs. The management of information systems, collection of garbage, management of public facilities as well as meal providing activities at public schools and hospitals are contracted out to the private contractors. However, there spread some unnerving feeling among the civil service. How far this contracting-out will be advanced? According to some review of British practice, the contracting-out model does not always work; the market is not always able to provide the desired competition; contracting-out reduced not only the spending on certain public services but also the standards of these services. Moreover, some critics suggested that contracting-out may hurt the accountability of the government.

In this panel, at first three experts from the Asian countries will present how local governments in their countries implement contracting out public functions and analyze what are the current outcomes and shortcomings of such undertaking. Then, they will point out the limits of contracting-out and will raise the future challenge in exploiting “contracting-out” for better public-private relationship. After the presentation from the three Asian experts, two discussants from countries with rich experiences of contracting-out will submit the experiences of their practices in contracting out public functions in locals governments and compare them with the Asian practices. They will also make comments on the limits of contracting-out and future challenges.

The Asia Pacific Panel will generate valuable information on some of the Asian countries experiences of “contracting out” as well as those of other regions. Through the comparative analysis of the outcomes and shortcomings of “contracting outs”, the limits of contracting outs will be identified. Paying due consideration of the limits, the future challenges will be deliberated in utilizing contracting out methods for more responsive, accountable and efficient government.


Panelist

Paper presenters
Prof. DONG Lisheng
Chinese Academy of Social Sciences, CHINA

Prof. R. B. JAIN
Indian Institute of Public Administration, INDIA

Prof. Yuko KANEKO
University of Yamagata, JAPAN


Discussants
Prof. Hellmut WOLLMANN
Humboldt-Universitat zu Berlin, GERMANY

Dr. Peter A. WATT
University of Birmingham, UNITED KINGDOM


Chairperson
Prof. Hiromitsu KATAOKA, Waseda University, JAPAN

Vice-Chairperson
Prof. Itoko SUZUKI, Ritsumeikan Asia-Pacific University, JAPAN



Organization of the Panel
16:30-16:40 Introductory remarks by Prof. Kataoka

16:40-17:25 Presentation by three speakers

17:25-17:55 Comments by two discussants

17:55-18:25 Discussion

18:25- Conclusion by the Chairperson


Funding Agency
EROPA Local Government Center, JAPAN


Organizers
Japan Committee for the Study of NPM,
Kataoka Research Institute
3-12-20, Mejiro, Toshimaku, Tokyo
171-0031 JAPAN


International Institute of Administrative Sciences
Rue Defacqz 1, Box 11, B-1000
BRUSSELS, BELGIUM