Local Public-Services Provision under Public–Private Partnerships: Contractual Design and Contracting Parties Incentives

When deciding to resort to a PPP contract for the provision of a local public service, local governments have to consider the demand risk allocation between the contracting parties. In this article, I investigate the effects of demand risk allocation on the accountability of procuring authorities regarding consumers changing demand, as well as on the cost-reducing effort incentives of the private public-service provider. I show that contracts in which the private provider bears demand risk motivate more the public authority from responding to customer needs. This is due to the fact that consumers are empowered when the private provider bears demand risk, that is, they have the possibility to oust the private provider in case of non-satisfaction with the service provision, which provides procuring authorities with more credibility in side-trading and then more incentives to be responsive. As a consequence, I show that there is a lower matching with consumers’ preferences over time when demand risk is on the public authority rather than on the private provider, and this is corroborated in the light of two famous case studies. However, contracts in which the private provider does not bear demand risk motivate more the private provider from investing in cost-reducing efforts. I highlight then a tradeoff in the allocation of demand risk between productive and allocative efficiency. The striking policy implication of this article for local governments would be that the current trend towards a greater resort to contracts where private providers bear little or no demand risk may not be optimal. Local governments should impose demand risk on private providers within PPP contracts when they expect that consumers’ preferences over the service provision will change over time.     

The Not So Good,the Bad and the Ugly: Over Twelve Years of PPP in Ireland

Public–private partnerships have been adopted extensively in Ireland for over 12 years. This article analyses the practice of PPP procurement at the level of local government. It adopts economic and governance perspectives on PPP which highlight challenges with procurement under PPP such as complexity, uncertainty, hold-up, transparency and accountability. These perspectives provide a basis for an analysis of three cases of PPP procurement. Two cases from the water services sector illuminate problems arising from the complexity of value for money assessment at the ex ante contracting stage. These cases were also characterised by governance problems stemming from central government's role as policy advocate and steward of public funds. The case of PPP to deliver social housing also demonstrated the challenges of procurement under conditions of economic uncertainty and difficulties with achieving appropriate levels of risk transfer. All three cases demonstrate the value of stakeholder consultation in terms of meeting the governance challenges faced when adopting PPP.     

The introduction of public–private partnerships in the Netherlands as a case of institutional bricolage: The evolution of an Anglo‐Saxon transplant in a Rhineland context

In this contribution, the introduction of contractual public–private partnerships (PPPs) in the Netherlands, more specifically the use of Design, Build, Finance, Maintenance, and Operations (DBFMO) contracts in Dutch infrastructure management, is analysed using a specific strand within the policy transfer and institutional transplantation literature: that of ‘institutional bricolage’. This perspective states that policy transplants come to fit their new institutional context stepwise. This contribution reconstructs the adoption process by which the Anglo‐Saxon‐inspired PPP practice is incorporated into the traditional ‘Rhinelandic’ practice of infrastructure management in the Netherlands, identifying four waves of PPP initiatives. It concludes that these waves and the difficulties that emerge in them stem from an ongoing struggle between actor coalitions, one aiming to preserve the transplant in its original shape, and others making attempts at bricolage. Shifts in power relations explain the progress and outcomes of the process of institutional transplantation.     

MIXED COMPANIES AND LOCAL GOVERNANCE: NO MAN CAN SERVE TWO MASTERS

This article looks at the use of institutionalized public–private partnership (PPP) arrangements by local governments for the delivery of different types of infrastructure. It starts by analyzing the mixed company model from a theoretical point of view, in particular the potential for internal regulation and the achievement of a relational agreement. Then, after discussing the practicalities of crafting this type of governance structure, four Portuguese case studies are examined. The empirical evidence on mixed companies operating in the water, waste, transportation, and education sectors shows that the extreme complexity involved in the whole life‐cycle management of these companies usually leads to a poor protection of the public interest.     

Public–Private Partnership in Tunisia: Enfidha Airport Assessment of an Infrastructure Achievement

One of the largest recent private-sector investments and the first airport private-sector concession in the Maghreb is Enfidha Airport, a key factor in the success of the Tunisian Government’s public–private partnership (PPP) strategy. However, since Tunisia’s Jasmine Revolution, political and social turmoil is sweeping the country and worsening the economic indicators. This article aims to assess this PPP infrastructure, allowing us to determine if it is profitable in the long term and contributes therefore to the economic growth. The case study reveals the key role of the economic, social, and political environment in Tunisia, the dawn of the Arab Spring.     

The Nature of Contracting Hazards in Public–Private Partnerships—Evidence from Ireland

The use of public–private partnerships (PPP) for the procurement of infrastructure and related services can be a complex and challenging process. This article adopts a transaction cost regulation perspective to examine two PPP cases from Ireland that encountered significant obstacles to successful procurement. It finds that both procurements met hazards including uncertainty about the viability of the bids and opportunistic behavior by preferred bidders that held quasi-monopoly positions. The public nature of both cases provided a fertile ground for opportunistic behavior by political opponents and other “interested” parties. The analysis shows how the governance of PPPs is shaped by the attributes of the transactions and the interaction of economic and political hazards that create transaction costs.     

Political transitions and commissions of inquiry: the politicisation of accountability in Ghana

Abstract

What role does a commission of inquiry (COI) play in delivering accountability? In theory, when the public delegates power to political leaders to formulate and implement policies, they seek political accountability in return. Using Ghana as a case study, this study examines how the operations of COIs may deliver accountability. Principal–agent theories of accountability and African conceptions of legitimacy are incomplete on their own and need to be integrated into an explanation of political accountability that takes into consideration political transitions and the role of COIs in delivering a minimalist form of accountability. This study argues that a COI is an instrument of regime legitimatisation. The demands by citizens for political accountability in Ghana correlate with political transitions. Accompanying each power alternation was a different model of political accountability. To understand the predominant applications of accountability, we emphasise the politicisation of accountability.     

Changing Forms of Accountability in Education? A Case Study of LEAs in Wales

Political mechanisms of accountability were marginalized by Conservative government reforms during the 1980s and 1990s which sought a more market-oriented approach within the public sector in order to enhance ‘consumerism’. In education, parents were given more choice between schools and were provided with more information on school performance. The promotion of market accountability has involved a reduction in the powers of local education authorities (LEAs) which had been central to the operation of political accountability. However, whilst market-based forms of accountability were firmly enhanced in principle by the legislation, to what extent have the forms of accountability operating within LEAs changed in practice? Interviews with Chief Officers and the Chair of the Education Committee are used to identify changing perceptions and practices of accountability in LEAs in Wales. The findings indicate that although local politicians and officials have been forced to operate within the legislative framework of market accountability, they have sought to impede its successful implementation. The policy community in Wales facilitated the LEAs’ capacity to respond in this way. The market-based reforms conflicted with fundamental values held in Wales, which remain those of professional accountability.     

Managing Public Accountability: How Public Managers Manage Public Accountability

Accountability is of growing importance in contemporary governance. The academic literature on public accountability is fraught with concerned analyses, suggesting that accountability is a problematic issue for public managers. This article investigates how public managers experience accountability and how they cope with accountability. The analysis highlights a number of ways in which public managers do indeed “suffer” from accountability, although, conversely, most of the respondents were able to identify strategic coping mechanisms with which apparently problematic accountability requirements can be converted into practically useful procedures.     

THEORIZING AND EXPLAINING VOLUNTARY ACCOUNTABILITY

Public organizations are not only subject to statutory obligations to give account, but they also commit themselves voluntarily to additional accountability practices. What motivates the organizations to do so? After all, such practices are costly to the organizations in a number of ways. This study argues that public organizations opt for voluntary accountability for two main reasons: they regard it as an appropriate practice and they respond to perceived legislative threats. Building on these explanations, hypotheses are formulated on the variation in the degree to which organizations voluntarily render account. These hypotheses are tested using new data on voluntary accountability of 103 independent agencies in the Netherlands. The study finds that more voluntary account is rendered by agencies which deal with more salient policy issues, by agencies which depend on public funds, and by agencies with more staff. Agencies without legal personality render less voluntary account.     

Public value creation and appropriation mechanisms in public–private partnerships: How does it play a role?

Scholars have extensively investigated public value creation and appropriation concerning public services delivered strictly by the government and public–private arrangements, such as public–private partnerships (PPPs). However, such studies often focus on value for money and economic performance criteria. This study examines how public value can be created and appropriated in PPP settings and how public value mechanisms can influence these phenomena. Considering that the literature lacks an integrated and structured analytical framework to assess such phenomena, this conceptual article addresses four mainstream PPP topics regarding public value mechanisms (information sharing, public and private capabilities, risk governance, and stakeholder orientation), which can be associated with PPPs' public value creation (destruction) and appropriation (misappropriation). Thus, this article highlights a need to evaluate PPPs in terms of public value creation beyond the economic performance criteria and fills the literature gap by proposing a public value creation and appropriation framework.     

SCRUTINIZE ME,PLEASE! THE DRIVERS,MANIFESTATIONS AND IMPLICATIONS OF ACCOUNTABILITY‐SEEKING BEHAVIOUR

Voluntary accountability, where people and organizations willingly subject themselves to scrutiny, seems counterintuitive. The common understanding is that increased accountability has negative consequences for the accountor; and so why would anyone voluntarily seek accountability when it is not required? Current explanations hold that external pressures can explain accountability‐seeking behaviour, and the proponents are not convinced by the argument that it is beneficial to the accountor. In contrast, this study finds that accountability often serves the accountor's interests. A six‐part typology of accountor‐beneficial motivations is developed, the empirical adequacy of which is tested through extensive case studies. The results show that public accountability can be a means rather than a burden in the hands of political executive leaders. These findings challenge the conventional principal–agent understanding of accountability and suggest that the study of the poorly understood practice of democratic accountability would benefit from a more leader‐centric perspective.     

From Discourses to Policy: Analyzing the Creation of an Accountability Discourse in Colombia

This article analyses the construction of a public discourse about accountability in Colombia. The article maps the different interpretations that actors make of political ideas related to accountability and their change over a period of 13 years (1991–2014). The article has an interpretive framework and uses content and discourse analysis techniques to identify meanings different actors give to the concept of “accountability” and changes in these meanings. It identifies an academic discourse on accountability, as well as external actors’ discourses that influenced the construction of a public and official discourse in Colombia. It concludes by identifying the effect of this process of building consensus about meaning on the resulting public policy.     

Mediating multiple accountabilities: variation in formal and perceived accountability among international and domestic actors in the health sector in Peru

Based on a comparative case study of bilateral and multilateral donors, this article examines individual and institutional accountabilities among donor officers, implementing agencies, government officials and intended beneficiaries. It explores how multiple accountability demands interact, the extent to which they conflict, and how development actors mediate among them when they do. Institutionally there was substantial alignment of objectives and little goal conflict between international donors and the state; however, there was poor harmonisation across the many donors and numerous projects they were pursuing. There was greater variation within rather than between bilateral and multilateral donor chains, with perceived accountability differing more based on individuals’ positions within their organisation than by the type of organisation for whom they worked. Most informants cited multiple entities to whom they felt accountable. They more frequently acknowledged outward accountability when there existed formal accountability mechanisms, although intended beneficiary groups were conceptualised in different ways.     

PUBLIC PRIVATE PARTNERSHIPS: ADDED VALUE BY ORGANIZATIONAL FORM OR MANAGEMENT?

The central idea of public private partnerships (PPPs) is that added value can be achieved from greater co‐operation between public and private actors. In general, the literature speaks of PPPs in which public and private actors develop a more or less sustainable co‐operation through which they realize products, services, or policies together, share risks, and develop an organizational form to arrange this. The assumption is that a higher degree of PPP leads to more and better outcomes because public and private actors combine their knowledge and resources. One can find a wide array of organizational forms in which this co‐operation is organized and the literature pays a great deal of attention to these forms. But is this organizational form really so important, or are the intensity and type of managerial strategies more important for the outcomes? Based on a large survey of individuals involved in Dutch environmental projects, we show that although the degree of PPP correlates positively with the outcomes of projects, this correlation disappears when we include in the analysis the number of managerial strategies employed. The organizational form does not have significant impact on outcomes and the conclusion we draw is that scholars and practitioners of public private partnerships should pay greater attention to the managerial efforts necessary to develop and implement PPPs.     

An exploration of citizens' professionalism in coproducing social care services

Citizens' involvement in public service delivery challenges the principles of professionalism as such citizens are amateurs. However, there is little evidence of the (non)integration of these principles by citizen coproducers and how this affects professionalism in public service delivery. This article focuses on two principles of professionalism: expertise and accountability. The theoretical framework further reviews the coproduction literature on what can be expected of citizens with regard to these principles and elaborates on the concept of amateurism. The concepts of professionalism and amateurism form the framework for the analysis of citizen coproducers' identity. Empirically, this paper presents two case studies of social services in the European context. The results show that these citizen coproducers to a certain extent create a professional identity, tend to stay away from integrating accountability, and introduce elements of amateurism. The presence and guidance of public servants in coproduction can ensure accountability and streamline amateurism.     

Does Power Corrupt? An Empirical Study of Power,Accountability, and Performance Triangle in Public Administration

Foundational work in public administration has considered the relationship between administrative power, accountability, and performance in public organizations. Even with the vast literature addressing power, accountability, and performance, scholars are still theorizing on how they influence one another. This study proposes and empirically tests a theoretical model of the relationships between each of these three constructs. Data are analyzed from an original survey of a national sample of US local government public administrators—city managers. Using structural equation modeling, results show that there are positive relationships between power and accountability, power and performance, and accountability and performance. The article discusses theoretical and practical implications of these findings.     

THE PRACTICE OF CONTRACTING IN PUBLIC PRIVATE PARTNERSHIPS: TRANSACTION COSTS AND RELATIONAL CONTRACTING IN THE IRISH SCHOOLS SECTOR

This paper explores the practice of contracting in public private partnerships (PPP). Focusing on the first Irish PPP to provide secondary schools, it draws on perspectives from transaction cost economics and socio‐legal theory. It finds that the ex ante contractual setting was undermined by pushing forward with the PPP before conducting an adequate level of project appraisal. It explores the experiences of key stakeholders in the ex post contracting stage and concludes that the conduct of contracting practice was not characterized by the shift to relational contracting expected under PPP. Whereas this approach to contractual governance did not hinder the development of broadly trusting relations between the client and contractor, this was not manifest in terms of relations between the contractor and schools. A significant degree of conflict was evident in some schools‐contractor relations, something which can be attributed to sources of transaction costs, including incomplete information, bounded rationality and uncertainty.     

Building the Education Revolution: Another Case of Australian Government Failure?

Since the 2007 federal election, the Australian government has implemented a plethora of new programs, many with dual economic and social objectives. A significant number of these initiatives have not only proved unsuccessful, but have also been criticized for their implementation and subsequent administration. This paper examines the Building Education Revolution Program, which commenced in 2009 with the objective of stimulating employment growth and improving school infrastructure, through the analytical prism of the government failure paradigm as well as the literature on “hollowing out” and decentralization. It is argued that the BER Program represents a “case study” of how governments should not pursue large-scale public expenditure programs.     

The Political Economy of Village Sanitation in South India: Capture or Poor Information?

Despite efforts to mandate and finance local governments' provision of environmental sanitation services, outcomes remain poor in the villages surveyed in the four South Indian states. The analysis indicates some key issues that appear to hinder improvements in sanitation. Local politicians tend to capture sanitary infrastructure and cleaning services for themselves, while also keeping major village roads reasonably well-served. Their decisions suggest, however, that they neither understand the health benefits of sanitation, nor the negative externalities to their own health if surrounding areas are poorly served. Our findings suggest that improving sanitary outcomes requires disseminating information on the public goods nature of their health benefits, as well as on the local government's responsibilities. It also requires putting public health regulations in place, along with measures to enable accountability in service provision.