Transcript Slide 1
Accountability and Governance:
Persistent Questions, New
Challenges
Paul L. Posner
George Mason University
November 11, 2007
Consequences of Accountability
Weaknesses
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Rampant corruption
Fiscal windfalls to principals and agents
Rent seeking
Undermining rule of law and predictability
necessary for investment
• Sustaining and widening disparities
• Inhibiting capacity to learn and adapt to
governmental performance shortfalls
• Frustrating greater public involvement in
governance
Investment Climate Survey (World
Bank 2006)
Bangladesh
South Asia
All nations
Reg. consistency
78%
52%
47%
Econ/reg certainty
44%
23%
30%
Expectation for
gifts
86%
44%
22%
Corruption as
major
58%
25%
30%
Confidence in
judiciary
17%
48%
57%
Crime, theft as
obstacle
39%
15%
20%
Accountability: The Elusive
Concept
• The Building Blocks of Accountability
– Legal compliance
– Financial controls and stewardship
– Program efficiency
– Program effectiveness
• Evolution of focus
Accountability: Multiple Principals
• Organizational
• Political – voters, parties, elected
representatives
• Legal
• Auditors and reviewers
• Professions
Accountability Foundations
• Management capacity
• Information on finances and performance
• Incentives
– Internalized public responsibility
– Sanctions for violating laws
– Inducements
• Transparency
– Report cards
– Freedom of information
Accountability Institutions
• Checks and balances within governments
– Executive-legislative relationships
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Independent judiciary
Party system
Strong interest groups, NGO’s
Competitive, free media
Independent audit institutions
Congressional Oversight Tools
and Strategies
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Hearings
Investigations
Support agencies audits/evaluations
Authorizations and reauthorizations
Approval of nominations
Transaction approval/veto
Budget and appropriations
Organization of executive agencies
Executive management reforms
Reports
Roles of the GAO
• A support agency for the Congress
– Reports and testimonies addressed to congressional
members and committees
– Institutional knowledge
• Oversight of executive agencies
– Recommendations to agency heads
– Rulings on procurements and spending
• Public reporting promotes transparency and
accountability
• Inspectors General
Resources of GAO
• Independence of Comptroller General reinforced
by 15 year term
• Organized by 14 substantive teams and 11 field
offices
• 3200 professional staff in numerous disciplines
• Access to data held by executive agencies,
contractors, states
• Processes reinforce independence and
neutrality
Accountability Barriers
• Traditions of informal rule and governance
arrangements
• Lack of trust and continuous relationships
among the key principals
• Weak management capacity
• Underdeveloped pluralistic institutions
• Absence of professional foundations for rule of
law
• Wide disparities in economic resources
• Low expectations for public services
Accountability: Reforming
Governmental Institutions
• Enhancing the quality of the public service
• Improving level of information collected by
government officials
• Promoting greater transparency in sharing
information
• Fortifying and creating independent institutions
to monitor and check performance
• Clarifying goals and rules applying to programs
Accountability: The Shift from
Government to Governance
• Establishing healthy NGO’s and free, open
media
• Promoting more effective monitoring
– Police patrol oversight
– Fire alarm oversight
• Expanding the range of providers to
decentralize service delivery
• Relying on private partners to provide
resources and deliver services
2500
2,000
2000
1,500
1500
1,000
1000
500
500
0
0
1950
1955
1960
1965
1970
1975
1980
Federal Civilian Employees
1985
1990
1995
2000
Total Federal Outlays
Note:
Executive branch civilian employees excluding postal service.
Source:
Office of Management and Budget.
2005
Billions of FY 2000 Dollars
Thousands of Civilian Employees
2,500
Shift in Public Management
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From program/agency to tools and actors
From hierarchies to networks
From public vs. private to partnerships
From command/control to negotiation
From management skills to “enablement”
From internal controls to design
Government
Spend
Direct Services
Grants-in-Aid
Leases
Procurement & Contracts
Transfer Payments to Individuals
Government Credit & Insurance
Revenues
Corrective Taxes & Fees
Tax Expenditures
User Fees & Charges
Vouchers
Regulate
Social & Economic Regulation
Permit Trading
Information, Training & Advise
Non-Government
Rebuilding Involves Networking Among
Sectors: Government Stakeholders in
Louisiana
FEDERAL HUD
USDA
DOC
DOD
VA
SBA
DHS
EPA
TREAS
DOI
DOE
DOT
HHS
DOJ
STATE
Louisiana
Governor
LOCAL
19 affected parishes
22
Executive
Departments
Boards/
Commissions
Councils/
Programs
64
Parish
Governments
Office of the Federal
Coordinator for Gulf
Coast Rebuilding
Louisiana
Recovery
Authority
Louisiana
Speaks
Orleans
Unified
Neighborhood
Planning
13 Task Forces/
Recovery teams
State and Local Fragmentation
Unique Accountability
Challenges
• Accountability to multiple constituencies
– Multiple actors empowered to bargain
• Third parties enjoy leverage
– Political resources
– Voluntary participation
– Monopolies over beneficiaries
– Information asymmetries
• Complex implementation chains
Privatization Pressures
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Supplant monopolies with competition
Increase financing for public initiatives
Improve technical capacity
Promote greater flexibility
Public-Private Roles and Tools
Delivery/
Finance
Public Finance
Private Finance
Public Delivery
Direct
Government
User Fees
Private Delivery Contract
Vouchers
PPP’s
Internal
Managerial
Reforms
Market based
regulatory
approaches
QuasiGovernmental
organizations
Contracting
for specific
Services/
products
Traditional Direct
Government
Tax credits
and vouchers
Public-Private
Partnerships
Divestiture
Devolution
Fully
Private
Benefits from Outsourcing
• Savings considerable when using
competition
• Economies of scale
• Expanded access to expertise and
technology
• Improved public sector performance when
public service competes with private firms
Public Private Partnerships for
Assets
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B = Build
D = Design
F = Finance
L = Lease
M = Maintain
O = Operate
P = Purchase
T = Transfer
• DB – contracts with
public for design and
construction
• FDBOM – private role in
all phases
• BOT – private transfer to
public
• PMO – sale from public
to private
• LDO – private lease of
public facilities
• LO/LPO – public
lease/public leasepurchase
Public-Private Partnerships
• Classic PPP – Design, build, operate and
maintain over many years
• Different from traditional outsourcing
– Long term nature of contract
– Private responsibility for multiple phases
– Relationship between public and private collaborative,
not arms length
– Competition limited due to large up front capital
necessary
– Budgetary treatment annualized rather than up front
PPP’s: Rewards and Risks
• Private Sector Brings Capabilities
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Financing
Capitalize underutilized assets
Technical expertise
Market efficiencies
Transfer of demand and supply risk to private sector
• Risks from Private Participation
– Public values and support
– Budgetary control and loss of revenue streams
– Contingent Liabilities for shifts in market demand, political
changes, disasters and other contingencies
– Oversight and Accountability
– Truncated Competition
Requisites for Successful PublicPrivate Partnerships
• Consistent political support
• Effective legal frameworks
• Competent government negotiations of terms
and conditions
• Competition among potential partners
• Performance based contracts
• Explicit risk allocations
• Guaranteed revenue stream for private firms
• Support from broader publics
Privatization Concerns
• Lack of competition reduces rationale for private
over public
– Exclusivity at outset- sole source
– Overdependence over time – indispensable
• Accountability and principal agent issues
• Cost shifting and cherry picking
• Inherently governmental functions
– Public ensures we get right things done
– Private ensures we do them right
• Transparency – assigning credit and blame
New Dimensions for Accountability
• Tool Choice – is contract most appropriate
tool for the job?
• Design – are contracts designed to shift
risk to private or public sector?
• Nature of network – how can government
choose “principled agents”?
• Oversight – can government effectively
specify and monitor private performance
and resolve problems?