Contracting Out Government Functions and Services: Lessons from Post-Conflict and Fragile Situations. Wendy B. Abramson Washington, DC, 21 June 2011
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1 Contracting Out Government Functions and Services: Lessons from Post-Conflict and Fragile Situations Wendy B. Abramson Washington, DC, 21 June 2011
2 13:25 14:00: Background on the Handbook Objectives of this Presentation Why was the Handbook developed? When would the Handbook be used? What is the structure of the Handbook? What is the Handbook and what is it not? When should this Handbook be used and by whom? What are the main lessons gleaned from the Handbook?
3 The Handbook - Background How was the idea for the Handbook conceived and what was the process for developing the Handbook? Research: compilation of experiences and development of Scoping Paper, sector-specific case studies Regional Conference in Tunis June Dissemination, analysis and lessons from country and sector-specific experiences identified a gap in guidance on contracting out Conformation of Expert Advisory Group Development of Handbook Design of approach and content for Handbook Draft, discuss, vet, and finalize Handbook
4 What is the Handbook? What is the Handbook? A road map for pros and cons of contracting out A guide for developing and formalizing partnerships for use of contractual tools and modalities for delivery of services An operational manual for informed decision-making A reference tool for informed dialogue on contracting out What is the Handbook NOT? A legal document A technical manual or blueprint
5 How can the Handbook and Contracting Out be used? How can it be used? To strengthen performance of Government To provide necessary functions, services to the citizens of a nation To formalize relationships for delivery of public goods, services and functions To instill confidence and trust in the State
6 Structure and Content of the Handbook A step-by-step guide to: Analyze types of contexts, sectors and variables that must be in place for contracting out Identify contract options (management, services, works & supplies); Analyze and understand incentives and risks; Assess environmental, political, institutional and individual capacity; understand and navigate the procurement process; Implement legal aspects and design, monitor and enforce contracts Contains annexes with resources including: glossary, professional and legal aide, contract templates and guidance, contract types, degrees of contract formality, case studies
7 When should the Handbook be used? Under what circumstances could the Handbook be used? Gaps in public services, goods and functions Delivery of public services (eg: education, health, sanitation) Performance of functions (eg: financial, commercial, tax collection and customs, justice) Weak capacity of Government Underperformance, negligence, corruption Conditionality of International Financing Institutions In emergency situations (eg: natural disasters) Lack of confidence in Government After war or civil unrest to regain confidence in the State
8 A word of caution What should be kept in mind when contracting out government services and functions? Important for Government to Retain Stewardship and Oversight Develop capacity to set Policy and Regulate
9 Who are the Intended Users of the Handbook? Who should use the Handbook? Policy makers from host country Governments Field practitioners and managers from host country Gov. International Community International Organizations Multi lateral and bi-lateral agencies World Bank, Inter-American Development Bank, International Financial Institutions Diplomatic community Private foundations
10 14:00-15:00 Contracting Out in the LAC Region: Objectives of the presentation Understand the rationale and institutional arrangements for contracting out and their similarity in fragile states and stable countries Discuss rapid service delivery expansion versus long-term public sector capacity development Discuss approaches taken in select countries in the health sector in LAC based on issues identified in the handbook Understand how the Handbook can be used by policymakers and donors in LAC
11 Rationale for contracting out in Fragile States and Developing countries: example of the Health Sector Essential functions and services are procured because of Weak infrastructure, lack of functioning health facilities High out of pocket health expenditures Low socio-economic status of general population Poorly performing public health services and weak health workforce Lack of confidence in Government High levels of health and social inequities Gaps in access, disparities between the haves and the have nots Transition from emergency or relief model to development model (during war or natural disaster) Definition and division of State functions (steering, oversight, regulation, policy, financing) vs. service delivery
12 Institutional arrangements for contracting out Fragile States and Developing countries Loans, grants, basket funds, pooled funds, sector-wide approach (SWAp) funds, national budget National government driven and led, donor led, hybrid With stakeholder engagement and consensus, under State law, through donor mandate or conditionality Informal verbal agreements, written agreements or contracts, performance-based contracts
13 Types of Contracts: Examples from the Health Sector in LAC Region Three general types of Contracts: Partner government executes contract; funds from national budget (eg: Bolivia, Colombia, Costa Rica, El Salvador, Nicaragua, Guatemala) Partner government executes the contract; funding from multilateral organisations, bilateral donors, foundations or other external funding sources (eg: Guatemala) External funding entities (ie: donors) executes, finances, and manages the contract for services, in close collaboration with the end users and/or partner government (eg: Haiti)
14 Rapid service delivery vs long-term public sector capacity development Three country cases from the health sector in LAC Guatemala: post conflict and long-term vision for PPP; GOG and IDB driven and financed (loans and national budget) Haiti: weak government capacity, infrastructure; donor driven and financed (grants) Colombia: vision for long-term health systems strengthening, reforms and universal insurance coverage; GOC driven and financed (national and local gov t budgets)
15 Examples from the Health Sector: Guatemala, Haiti, Colombia Guatemala: post conflict and long-term vision for new health care delivery system; GOG and IDB driven and financed (loans and national budget) Haiti: weak government capacity, infrastructure and human resource pool; political and social unrest; donor (USAID) driven and financed (grants) Colombia: vision for long-term health systems strengthening, reforms and universal insurance coverage; GOC driven and financed (national and local gov t budgets)
16 Guatemala Rationale: To meet health coverage extension mandates of the 1996 Peace Accords To increase access to health services given the huge disparities between Spanish-speaking urban and large indigenous rural population To use civil society as a part of a long-term coverage extension strategy Institutional arrangement: Initial three-year IDB loan 1997; finances managed by IDB, implemented by MOH Loan disbursement conditionality - Article 24 of 1997 Health Code and Public Administration Law authorizes signature of agreements with NGOs Donor grants, loans - basket funding with MOH national funds Moved from informal agreements to Performance-Based Contracts How this affects state-building: Initial opposition from medical syndicates Public contracting law fosters institutionalisation and legitimacy Capacity building vs. service delivery: Capacity-building at all levels of public system Full scale automated M&E system created to enable quarterly reporting Model is now fully sustainable and part of Ministry system, funded through national budget
17 Haiti Rationale: To increase access to basic health services To compensate for weak public sector service delivery Institutional arrangement: Donor driven with initial three-year USAID small pilot 1999, gradual scale up US contractor manages and disburses funds Vertical relationship between US contractor and NGOs to provide basic health services. Expenditure-based to Output Based Healthcare (Performance-Based Contracts) Affect on State-building: Little as the vision is to strengthen NGO capacity Capacity building vs. service delivery: Technical assistance to NGO for price setting, identify unit costs, revenues and utilization Assistance with plans for revenue generation through non health services
18 Colombia Rationale: To decrease public spending and increase efficiency To expanded coverage and improve quality of care Institutional arrangements: Radical reform of health system: Competitive insurance Scheme (previous gov monopoly) Law 80: the Public Administration General Statute on Government Contracting; and Law 100: universal coverage, improve efficiency, and quality assurance MOH Decentralized financing and purchasing (Department and Municipality) MOH National level: steering, oversight, regulation Affect on State-building: Opposition groups resistant, contracting a threat to labor stability Now an intentional support for an open market and a culture of contracting Capacity building vs. service delivery: Large private health care market Intentional focus on building capacity of local government to purchase
19 Conclusions With assistance, governments can effectively design, manage and monitor contracts. Contracting out is a tool to achieve public sector objectives. Lessons from fragile settings can be applied in more stable environments. The Handbook on Contracting Out Government Functions and Services in Post Conflict and Fragile States is 100% applicable to policy-makers and donors in stable nations.
20 Lessons learned High level government leadership, political will and stakeholder involvement are critical for success. An assessment of the political and legal environment and private market important when deciding to contract for and design contracts is important. Contracting out should be a true partnership between public and private sectors. Starting on small scale with a limited geographic area or a few services or tasks and building up to scale is best.
21 Lessons Learned Information systems and record keeping, along with contract oversight and evaluation are often difficult hurdles to overcome. Strong managers are important - both the purchaser and provider in order to see results. Management contracting works best when there is an already basic functioning health infrastructure base. Contracting out and in particular, Performance-Based Contracting is an iterative process, where there is much learning along the way.
22 Conclusions With assistance, governments can effectively design, manage and monitor contracts. Contracting out is a tool to achieve public sector objectives. Lessons from fragile settings can be applied in more stable environments. The Handbook on Contracting Out Government Functions and Services in Post Conflict and Fragile States is 100% applicable to policy-makers and donors in stable nations.
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