Contracting Out Service In Local Government

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There is nothing new about contracting out service in local government. The government has increasingly used contracting out to provide public service since the 1990s. Many project such as road maintenance, building construction has generally been carried out by private sector contractors for many years. Local council would hope to prevent excessive elimination of services to public. Local government then come out with this sensible question: how can we keep the required service at the lowest cost and satisfy our requirement for performance, quality and reliability. One option that is able to meet the requirement will be contracting out services. Contracting out with private sector would bring benefit to local council. For instance, may cost…show more content…
Local authorities have been required to subject more and more of their service to competitive tendering through the Town and Planning Act 1976 and the Local Government Act 1976. Competition play a role in reducing excessive public supply of public service (Niskanen, 1971), or in providing greater incentives for cost reduction under private property (Shleifer, 1998) and therefore reducing the cost. Besides that, competition within the private sector can helps to control cost and maintain standard. They will have to provide innovative strategies to improve services and productivity but in low price so they can obtain the contract. Moreover, increasing demand of accountability for performance also cause competition among private sector. In a competitive marketplace, if customers is not satisfied with their current provider, they can always look for goods and services of another. It is the same between local government and private sector. Competition forces competitive private sector to improve quality, cut costs while take on accountability for services. Failure to do so generally lead to removal from delivering of services or replacement of…show more content…
Monopoly of government can be prevented by a third party involvement in the service. Competition is believe will constrain excessive supply of public services and reduce the costs (Bel, Fageda and Warnerd, 2009).In a government monopoly, there is less probability of government to cut costs and improve quality of products or services. This is because government is the sole provide, as there are no substitute providers which make them have no motivations to make improvement. The accountability of service is also weakened. Therefore, by introducing of competition, participants will quickly strengthen the accountability of their performance, improve the services otherwise services will be replaced by others who will (Menell and Phelps, 2001, pg. 4). “Replacing monopoly with competition can be achieved by assigning contracts to external producers through competitive procedures or by promoting competition between governmental units” (Osborne & Gaebler, 1992, as cited in Bel et al., 2009). The third reason contracting out service can help deliver quality service is because government activity was largely restricted by the government bureaucrats and policies. They can’t operate the direct delivery of goods and services as every processes have to get approval from bureaucrats. On the other hand, private sector is

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