18 March 2015

Transparency and Territoriality

'Transparency and the Performance of Outsourced Government Services' (QOIC/ANZSOG Occasional Paper No. 5, 2015) by Richard Mulgan comments
The outsourcing or contracting out of government services has increased significantly over the last quarter century, into areas that were previously considered to be core government functions. These include the provision of security for government installations, the hiring and firing of public servants, the administration of prisons, the printing of government documents, and the provision of publicly funded social services. The latest OECD survey reports that in 2011, on average across all member countries, 44% of government production costs were consumed by outsourcing, compared with 47% by government employees. On average, outsourcing represented 10% of GDP (OECD 2013). (Outsourcing, it should be remembered, does not necessarily reduce the level of government spending, only the proportion of government spending consumed by government employees.)
Though generally viewed as a source of improved efficiency and effectiveness, outsourcing has always had its critics. The empirical evidence for the cost savings arising from outsourcing has been challenged, particularly the extrapolation from a few well- documented successes such as rubbish collection and cleaning to more complex services (the so-called 20% rule (Domberger et al. 1986; Domberger et al. 1993; Hodge 1996; Hodge 1998)). Some infrastructure projects championed as delivering major savings to taxpayers have failed to do so (e.g. Bloomfield et al. 1998; Greve and Ejersbo 2002; Johnston 2010) and the value-for-money verdict on public-private partnerships (PPPs) remains mixed (Hodge 2010).
Concerns have also been raised about the broader constitutional and political effects of transferring important government functions from the public to the private arena.
Outsourcing has been seen as potentially undermining important democratic values such as accountability and transparency and the wider pursuit of the public interest (Taggart 1993; Minow 2003; Hodge and Coghill 2007).
Government transparency, the subject of this paper, can be valued both for reasons of democratic principle and also instrumentally, as a means of improving the efficiency and effectiveness of government performance (Heald 2006). The paper focuses on the latter, instrumental concerns. It examines whether restrictions on government transparency sometimes associated with outsourcing can be shown to impair the quality of government performance in relation to efficiency and effectiveness and, conversely, whether greater transparency of government outsourcing will lead to better performance.
In this context, it is sometimes useful to distinguish different levels or degrees of government transparency, ranging from ‘internal transparency’, which refers to transparency within the contracting relationship, particularly access by government officials to information held by private contractors; through ‘limited public transparency’, including confidential access by agents of public accountability, such as independent auditors or reviewers, without full public disclosure; to full public transparency which implies availability to any members of the public. While full public disclosure is often the most desirable form of transparency, the lesser stages may be beneficial, both in themselves and as stepping stones to wider publicity.
The paper begins by briefly identifying the main types of outsourcing contract before giving an overview of the main restrictions on transparency caused by moving from in-house provision of public services to outsourcing from private contractors. It then examines arguments and evidence suggesting that lack of transparency relating to various aspects of the contracting process can have a harmful effect on government performance and that, by the same token, increased transparency can lead to positive improvements. Discussion centres on three aspects of outsourcing; value-for-money efficiency, effectiveness of performance, and publicity of performance information. Finally, a number of lessons are drawn out for both government and public managers on how to increase the extent of transparency, and thereby the quality of outsourced performance (see Boxes 1 and 2).
Box 1: Transparency in Outsourcing: Lessons for Governments
Lesson 1: List online details of all government contracts above a certain value (with minimum threshold set at around $10,000).
Lesson 2: Strictly define commercial-in-confidence criteria and provide independent audit of government agency compliance with criteria.
Lesson 3: Maximise access of government auditors to design and implementation of outsourcing contracts.
Lesson 4: Require all major government contracts to adopt open-book accounting among contracting parties.
Lesson 5: Provide access for administrative monitors such as ombudsmen to private contractors delivering services to the public.
Lesson 6: Facilitate Freedom of Information access to information held by private contractors that is relevant to the provision of a publicly funded service.
Box 2: Transparency in Outsourcing: Lessons for Public Managers
Lesson 1: Recognise that public access to information about outsourcing is generally in the public interest.
Lesson 2: Recognise that value-for-money estimates of outsourcing proposals are always analytically contestable and subject to manipulation by vested interests.
Lesson 3: Recognise the value of ongoing consultation not only with contractors but also with affected stakeholders and communities.
Lesson 4: Recognise the value of publishing appropriate performance information.
The relevant evidence is often not conclusive and calls for judgment in weighing its significance. There have been a number of general empirical studies on the relative costs of outsourcing, generalising from reasonably-sized samples of individual cases, for example the research that demonstrated the reduced costs of outsourcing certain easily specified functions (Hodge 1996, 1998). More recently, PPPs have attracted considerable academic attention in relation to their costs (Hodge 2010). But these studies do not directly address the issue of transparency. For example, there is no research formally contrasting the costs or effectiveness of a large number of outsourcing arrangements differentiated by varying degrees of transparency. Indeed, the number and complexity of transparency mechanisms and the limited number of comparable examples make such multivariate research impracticable.
Instead, evidence in this area relies on the analysis and interpretation of individual cases or small sets of cases from which reasonable inferences may be drawn. Some of the case studies focus on the absence of transparency and the adverse effect of such a deficiency on performance, leading to a judgment that greater transparency would have improved performance. Others are more positive in emphasis, seeking to show examples of where the presence of transparency mechanisms has contributed to superior performance. Overall, this evidence can be seen to support a conclusion that improved transparency leads to improved performance. But it is a conclusion that depends more on the qualitative interpretation and judgment of individual cases than on any hard quantitative data.
'The Un-Territoriality of Data' by Jennifer C. Daskal in Yale Law Journal (2015/2016 Forthcoming) comments
(American University - Washington College of Law) has posted ) on SSRN. Here is the abstract: Territoriality looms large in our jurisprudence, particularly as it relates to the government’s authority to search and seize. Fourth Amendment rights turn on whether the search or seizure takes place territorially or extraterritorially; the government’s surveillance authorities depend on whether the target is located within the United States or without; and courts’ warrant jurisdiction extends, with limited exceptions, only to the border’s edge. Yet the rise of electronic data challenges territoriality at its core. Territoriality, after all, depends on the ability to define the relevant “here” and “there,” and it presumes that the “here” and “there” have normative significance. The ease and speed with which data travels across borders, the seemingly arbitrary paths it takes, and the physical disconnect between where data is stored and where it is accessed, critically test these foundational premises. Why should either privacy rights or government access to sought-after evidence depend on where a document is stored at any given moment? Conversely, why should State A be permitted to unilaterally access data located in State B, simply because technology allows it to do so, without regard to State B’s rules governing law enforcement access to data held within its borders?
This article tackles these challenges. It explores the unique features of data, and highlights the ways in which data undermines long-standing assumptions about the link between data location and the rights and obligations that ought to apply. Specifically, it argues that a territorial-based Fourth Amendment fails to adequately protect “the people” it is intended to cover. On the flip side, the article warns against the kind of unilateral, extraterritorial law enforcement that electronic data encourages — in which nations compel the production of data located anywhere around the globe, without regard to the sovereign interests of other nation-states.