Outsourcing Working

Outsourcing Working

Maintaining accountability, including transparency of process and review of decision-making, remains a major challenge in government use of outsourcing, according to Australia’s senior public servant.

The Secretary to the Department of the Prime Minister and Cabinet Dr Peter Shergold says the level and scope of outsourcing by Australian Governments is growing markedly. Since 1996 the Commonwealth Government has undertaken significant outsourcing of information technology services (estimated to be worth $1.2 to $1.3 billion over five years), labour market programs (approximately $3 billion over three years) and the delivery of new apprenticeships (approximately $340 million over four years).

And Dr Shergold, speaking at the 2003 Administrative Law Forum, said in many cases outsourcing has proved more effective than keeping services in-house. Dr Shergold concedes what he has begun to call ‘the democratisation of public administration’ — the massive increase in the number of providers of policy advice and services to the government and for the government — is not universally welcomed. Many remain cautious about the challenges of delivery of government programmes under contract.

“Our commitment to ensuring effective implementation of government policy is now more — not less — important as a result of the increasing number of government programmes that are contract managed rather than directly delivered by the APS,” he says. “One of the main challenges for administrative law is to maintain accountability, including transparency of process and review of decision-making, in the new world of competitive delivery of government services.”

Dr Shergold says he applauds the need to test the delivery of government services in the market and to contract manage private and community enterprise when appropriate to overcome inefficiencies, rather than programmes directly. But the public interest does not end when agencies develop a model of contracted service delivery that meets the criterion of efficiency, effectiveness and best practice.

“We also need to ensure that arrangements are such as to ensure transparency and accountability in outsourcing arrangements for the delivery of public policy.”

The challenge outsourcing poses for public administration has been the subject of several reports, including the Administrative Review Council’s (ARC) Contracting out of Government Services which concluded that “the contracting out of government services should not result in a loss or diminution of government accountability or the ability of members of the public to seek redress where they have been affected by the actions of a contractor delivering a government service”.

The ARC recommended the preservation of accountability and avenues of redress through a mix of public and private law mechanisms, to allow government agencies and contractors to retain the flexibility they require in arranging their relationships. Dr Shergold professes to be “delighted” that the government has recently agreed, in response to a request by the Joint Parliamentary Committee on Public Accounts and Audit, that the Ombudsman should have jurisdiction to investigate actions of those Commonwealth contractors providing goods and services to the public.

“It is an important and appropriate commitment,” he says. “Such scrutiny will help to ensure that an outside agency is able to deliver government services to all Australians fairly and with probity.”

Meanwhile Dr Shergold said the need to keep file notes and retain records in a world of real-time policy development has become more, not less, important.

The use of automated decision-making or ‘rule-based expert’ systems is being currently examined by an ARC inquiry which is testing the operation of these rule-based systems against administrative law values.

But Dr Shergold says while expert legal systems have some distinct advantages, their use also raises challenges.

“For example, it would be inappropriate for an expert system to incorporate rules that narrow the discretion available to a decision-maker under a piece of legislation. Careful system design is crucial. The perceived saving in costs and other benefits offered by an expert system must not remove discretion from the administrative decision-making process in its desire to make the ‘legislation fit the system’.”

“…We must also be wary of allowing the use of expert systems to diminish the skills of decision-makers. There is a danger of turning our decision-makers into data processors or electronic clerks. Corporate knowledge may be lost if there is an over-reliance on experts systems in decision-making.”

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