Commissioning Public Value: The Role of Civil Servants

ETHOS Issue 12, June 2013

In many ways the role of democratic governments in sovereign nations remains bounded by tradition and practice. On the basis of a successful election outcome, governments claim a mandate to set political direction, subject to the ongoing need to win legislative approval (and, of course, to withstand media scrutiny). They establish revenue and expenditure parameters within which they frame budgets. Through legislation they regulate civic conduct, although the laws they enact are open to judicial review and, increasingly, subject to international agreements. Every few years they face the court of public opinion at the ballot box.

What has changed in recent years is the manner in which public policies are implemented. Today, governments rely on a variety of institutions, and not just their civil services, to deliver programmes.¹ In effect they look to a mixed “public economy” to provide defence and ensure order, raise revenue, build and maintain public infrastructure and provide financial assistance and services to citizens.²

Too often, the willingness of governments to embrace market mechanisms is portrayed as representing the emergence of a “contract state” or the “privatisation” of the public domain, driven by a “neoliberal” agenda. This hostile characterisation narrows and simplifies the transformative process that is underway.

What is actually occurring is that governments are commissioning the implementation of the outcomes they seek. The process of selection, often referred to as market testing, contemplates the entry of competitive providers. It encourages incumbent public sector agencies to focus on performance. The emphasis is on contestability.

What Commissioning Really Means for Government

Commissioning does not preordain outcomes. In many instances, governments will continue to rely upon civil servants to dispense justice, maintain security, collect taxes, issue passports and deliver citizen payments. On other occasions, delivery may be undertaken more effectively by third-party agents. With the construction of major infrastructure, the focus is increasingly on sharing cost and risk through varieties of public-private partnership. With the delivery of human services, success frequently involves the engagement of not-for-profit institutions (schools, hospitals and community organisations), both faith-based and secular. The creation of an “evidence base” for policy is now often undertaken by universities, think-tanks or consultancy companies, although public sector research agencies continue to play a significant role.

Governments, and in particular their civil services, need to take a more strategic and holistic approach to commissioning. Not infrequently decision-making focuses on the merits of outsourcing — that’s not the best approach. The starting point should be to decide, on the basis of price and quality, what is the most effective way to design programmes, deliver services, fund policy initiatives and evaluate outcomes. Procurement, in the broadest sense, should be driven by a continuing process of commissioning and recommissioning the goals of government.

It should not be assumed that civil services are necessarily the best institutions for delivering government policy. Their bureaucratic structures are often inflexible and process-driven. The vertical hierarchies and horizontal demarcations of officialdom tend to undermine public sector capability. The skill, expertise and creative impulse of front-line managers, for example, is rarely harnessed in the design of programmes: in fact, their creative energy is too often directed to finding work-arounds to the prescriptive guidelines under which they work. Similarly, the silos of authority continue to act as obstacles to joined-up government approaches to delivering holistic citizen-centric services. Moreover, while civil servants tend to be highly proficient at articulating the benefits of a policy intervention, they are often less willing or able to identify the regulatory costs imposed on those who are subject to it.

In short, there is a danger if civil servants wield monopoly power. Governments need to choose the mix of public, private and social service sector delivery that can contribute most effectively to the creation of public value. The task should be approached with strategic intent. Assumptions need to be tested. Context and circumstance rather than ideological persuasion should determine the most effective channel by which to implement the ambitions of government.

The key is for all those involved in the design and delivery of government policies to recognise that they are partners. If the relationship between “purchasers” and “providers” is defined solely by contractual obligation, the likely result will be a self-defeating emphasis on the micromanagement of process compliance rather than an agreement on a joint approach to outcome-based performance. A rigid approach will stifle the innovation that should be the hallmark of contestability. It will limit the search for new approaches. It will fail to create choice and diversity for citizens. Commissioning must be understood as far more than the exercise of purchasing services in the market: rather it is about inspiring more effective and creative governance arrangements.

Commissioning: Advantages and Opportunities

New opportunities are emerging. Governments are increasingly recognising the value of engaging community-based organisations in the design of programmes, rather than just encouraging them to tender for their delivery. More flexible ways are being found to achieve outcomes. In Australia, place-based solutions are being devised for the provision of services in ways which can respond flexibly to the distinctive needs of particular communities — whether it is regions, neighbourhoods, school zones, hospital authority areas or remote Indigenous settlements.

Around the world, funding pressures are acute. That is not just a consequence of economic volatility. Most governments are now finding that the expectations of citizens are rising faster than their capacity to deliver. It is becoming ever harder for governments to balance expenditure with revenue. Consequently, there is growing interest in the potential to harness social finance (from the philanthropic or private sectors) to help fund public initiatives.

In Australia, for instance, the New South Wales government is introducing “social benefit bonds” to scale-up not-for-profit innovation by allowing social service organisations to attract private sector funds.³ Such new financial instruments enable mission-driven social enterprises to pay a return to investors on the basis of sharing any reduction in public costs with government. It is an approach which is particularly valuable in trialling preventative interventions which can reduce the need for crisis management later — such as lowering the likelihood of released prisoners re-offending or reducing the need for out-of-home care for vulnerable children by helping parents cope more effectively.

Commissioning can also benefit from applying the insights of behavioural economics to the delivery of public services. This requires not just improving the quality and accessibility of information made available to citizens but changing the context within which they exercise discretion. In Australia, there is increasing focus on allowing disadvantaged individuals (such as those with a disability, suffering from mental illness or becoming frail with age) to be directly involved in the choice and management of the services that they need to fully engage in the community.

“Consumer-directed care”, we are discovering, means that those in need are likely to treat public money as their own rather than belonging to the government. As a result, they make spending decisions far more wisely and the incentive for fraud is lessened. Placing citizens in control reduces the antisocial and self-destructive behaviours that often mark the learned helplessness of marginalised welfare recipients. Individualised budgets represent an investment in citizen empowerment.

A New Facilitative Role for Public Servants

Do such collaborative approaches to public policy diminish the role and status of public services? Not a bit. Civil servants remain at the heart of governance. The transformation is that instead of designing and delivering public policy alone and directly, they increasingly have to focus on how best to generate and intermediate cross-sectoral relationships in order to implement most effectively the ambitions of government. They are central to the commissioning process.

Some tasks should continue to be undertaken by a professional public administration. Many can be performed by outside suppliers. Nevertheless, the ability to provide confidential advice to successive governments — and the obligation to be answerable and accountable for the expenditure of public funds — means that civil servants are likely to remain at the centre of political decision-making. The question is how effectively they can perform their role.

Civil service leadership skills need to be redirected to the important task of facilitation. This requires the ability to exercise strategic judgement on which modes of creating public value work best. It calls for the capacity to assess objectively what expertise, from which sectors, and in what forms, should be steered towards the achievement of government objectives.

Civil servants have to develop the skills to listen empathically, to stand in the shoes of other stakeholders, to negotiate carefully and to remain focused on results. Collaboration demands a much more sophisticated skill set than consultation or coordination. The creation and maintenance of partnerships requires trust, respect, intuition and emotional intelligence.

At the same time, civil servants need to bring to discussions of policy formulation and implementation their inside understanding of the governance structures which distinguish decision-making in the public arena. They must bring to any cross-sectoral arrangement their intimate knowledge of governance processes.

Civil servants need also to be able to manage risk prudently rather than avoid it. They need to take responsibility for the introduction and careful evaluation of pilots, trials and demonstration projects. Performance metrics have to be designed which can audit and measure the returns on public investments. Failure needs to be contemplated and, when it happens, learned from as quickly as possible. It is central to the pursuit of public innovation.

There is a need not to reduce the power of public services but to redirect it. Civil servants should take pride in their position at the centre of the “co-production” and “co-management” of public policy. As the commissioners of government policy implementation, they are, in a real sense, the architects of a flexible and innovative design and delivery system. It is a crucial role to which to aspire.⁴

NOTES

1. In fact there is a long history of governments commissioning the delivery of public policy. Much of the responsibility for the transportation of convicts to the American and Australian colonies in the eighteenth and nineteenth centuries was, for example, contracted out by the British government to private providers.
2. For a more detailed assessment of “the public economy”, see Gary L. Sturgess, Diversity and Contestability in the Public Service Economy (Sydney: New South Wales Business Chamber, 2012) and ‘Double Government’ : The Art of Commissioning Public Services, November 2012, http://www.anzsog.edu.au/media/upload/publication/107_Sturgess-oration-November-2012.pdf
3. http://www.treasury.nsw.gov.au/site_plan/social_benefit_bonds
4. A broader assessment of my views on the future for civil services can be found within Shergold, Peter, “Reform of the Australian Public Service” in State of the Nation: Aspects of Australian Public Policy, Don Markwell, et al., eds (Victoria: Connor Court, 2013).