report chapter 3

Competitive Government

Injecting Competition into Service Delivery

Jo Vanne TrivilegioRaymund Lumangyao

Short Anecdote

1978 , Phoenix

You are going to compare the bids with your cost, aren’t you?

We’ll bid Hmm We’ll Bid too

What do you mean We’ll bid too?

We’ll bid

Why not?

Jensen

Public-Private Competition

Public

• Submitted bids 3 times but still rejected

• 4 bid was very promising but still rejected

Private

• Approved

Innovations

• Partnership teams

• Labor-management Productivity committee

New cost accounting System

• So they would know precisely how much their services cost, per household, per month.

Installed a suggestion program

• Gave employees 10 percent of the savings generated by their suggestions- up to a maximum of $2000.

Incentives

• Gave a monthly and quarterly awards to the best drivers.

1984

public

• One person-truck with mechanical arm on 32 cubic yard trucks

• Public beat them by 6 million dollars

private

• One person-truck with mechanical arm on 25 cubic yard trucks

Phoenix used competition on

• Garbage collection• Landfill operation• Custodial services• Parking lot management• Golf course management• Street sweeping• Street repair• Food and beverage concessions• Printing • security

Sectors that they handled better

public

• Ambulance service

• Street sweeping

• Mantenance of median streeps

private

All except those listed in the other box

Jim Flanagan

Where there's competition, you get better results, more cost

consciousness and superior service delivery

Competion

• “We learn from each other” - Jensen

Paradoxes of American Ideology

• Attacks private monopolies so fervently but embrace public monopolies so warmly

General Bill CreechService providers must Compete

• They keep their cost down

• Respond quickly to changing demands

• Strive Mightily to satisfy their customers

• Competition drives us to embrace innovation and strive for excellence

The advantages of Competition

The most obvious advantage of competition is greater efficiency

James Q. Wilson Bureaucracy

• Private firms deliver services more economically than public organizations

Competition forces public(or Private) monopolies to respond to

the needs of their customers

• Public monopolies that are thrust fully into competition have little choice but to please their customers

Air new zealand vs Ansett competition resulted to:

• More flights

• Cheaper flights

• Better food

• Friendlier service and virtually a zero wait for luggage

People began to see, often for the first time, that the central issue in safeguarding their own interest as consumers was not, in fact,ownership- it was competition

Competition rewards innovation, monopoly stifles it.

• “The survival of the helpful”

• “Natures incessant experimentation with mutations enables species to evolve, adapt, and survive despite drastic environment change”- Savas

• “survival of the already entrenched or the politically powerful”

Competition boost the pride and morale of public employees

The varieties of competition

Public Vs. Private Competition

• Tennessee

• Department of transportation

• New York City’s Sanitation Department

• Postal Services

Private Vs. Private Competition

• Government ask private firms to compete to produce some public services

Load Shredding

• Backing out of public provision, governments turn services over to the private market.

Procurement

• Procurement is the acquisition of goods, services or works from an outside external source. It is favourable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.

• Is another common avenue governments use to force private companies to compete

Contracting

• An agreement between two or more parties, especially one that is written and enforceable by law.

• One of the most difficult methods a public organization can choose, because writing and monitoring contracts require so much skill.

lowest responsible bid

• “quite frankly, the low bid is usually not a good bid. They’ve done it at a loss, or too low a margin, and they’re going to fail. So now we use the lowest responsible bid”-Jensen

• “always keep at least two of its garbage districts in public hands- so it will always have the capacity to compete”

Contracting was often rife with corruption

How to avoid corruption in contracting

• Bidding is truly competitive

• The competition is based on hard information about cost and quality of performance

• The contractors are monitored carefully

• A relatively non-political body is set up to perform these task

John DonahueThe Privatization Decision

When public agencies can define precisely what they want done:

1. Generate competition for the job

2. Evaluate a contractors performance

3. Replace or penalize those who fail to achieve expected performance levels

Public Vs Public Competition

• Contracting is difficult enough that governments sometimes prefer to pursue the same results by stimulating competition between their own organizations.

CREATING COMPETITION FOR INTERNAL GOVERNMENT SERVICES

Hale and Amanaji solution

• Stocking Post-it Notes

• Eliminating obsolete bureaus

• Cutting costs

• Incentives ( Forces Managers to Act)

“Competition is the permanent force for innovation that government normally lacks.”

PUBLIC EDUCATIONA CASE STUDY

Public School is a Monopoly

American Schools

1. No performance standards

2. Little competition either within the system or from the outside

Competition

• Competition breeds accountability.....

John Clubb and Terry MoePolitics, Markets and America’s

Schools

Factors influence student performance

1. The aptitude the student brought to school

2. School itself

Factors influence school performance

• Parenting Control

• Clarity of the School’s mission

• Strong Leadership

• The degree of freedom and respect offered the teachers

To develop these attributes, schools needed autonomy from external control- from administrators, unions, and school boards.

How do you provide autonomy and still hold schools accountable

• Move different system of accountability

Only in competition forces principals and teachers –constantly- to make the difficult changes necessary to meet the needs of their students.

MINESOTA EXPERIENCE

Minesota

• First state to publicly debate the issue of competition in public education.

• Ideological issues and Practical realities of competition in Public Education

Education Reforms

• Let Minnesota children attend school in any district they chose. (juniors and seniors)

• Students on the verge of dropping out don't need a lecture, the need an alternative

Perpich’s Full choice program

• Freeing students to attend school in any other district as long as the receiving district had room and the move did not harm desegrationefforts.

Kolderie

• Start innovative new schools because school choice alone wont change a closed system.

THE EQUITY ISSUE

A pure competitive market- place- an unrestricted voucher system, for instance-would be certain to produce inequitable outcomes.

Because the affluent would add money to their vouchers and buy the best education they could afford.

It is a Mistake

• Public school exist to provide education but they also exist to bring children from all walks of life together.

Competition revitalizes the system

MANAGING COMPETITION

• Competition must be carefully structured and managed.

Patient Dumping

• Profit hospitals turning away from patients who does not have insurance where they send them to overcrowded hospitals.

• This is a another form of inequity

• Competition that is structured carefully can produce more equitable results than service delivery by a public monopoly.

Competition heightened the equity if service delivery

• Public agencies were, in effect, creaming

If not carefully structured, markets that look competitive can also succumb to monopolistic power.

Competition is here to stay, regardless of what our government do.

COMPETE or DIE

Thank You