New Public Management Recommendations

Danish city and local government have had more than a decade of ambiguous experience with contracting out, competitive tendering and various additional elements of an extensive battery of "New Public Management" recommendations for public administration.

Contracting out in Danish city government has covered a wide range of sectors, including elderly care, child care, cleaning and maintenance services, road building and maintenance as well as other areas. Among the lessons learned, while contracting out may lead to greater efficiency in production, gains are often accompanied by substantial transaction costs. City government has faced difficulties in specifying requirements in sufficient detail, especially in public service sectors, as well as great monitoring costs regarding the fulfillment of contracts.

In the light of experience, attempts are presently made to rethink processes of public-private cooperation. Aarhus City Council has recently decided to conduct experiments with new forms of public-private cooperation under the headline of partnering. It is formally identical to traditional contracting out, but attempts are made to circumvent extensive requirement specifications and reduce monitoring costs.

The traditionally detailed requirement specification is replaced by a brief description of values, goals and current practices. Detailed contract monitoring through tight budget constraints and eventually through the court system is replaced by a permanent forum of (renegotiation. The key word is trust, not control. A private contractor is entrusted with the responsibility for designing processes, while the common focus is on outcome. Goal attainment and profitability are regarded complementary and of common interest of both parties.

The Technical Department prepares engagement in an extensive partnership with a private contractor in the field of sewer maintenance. The partnership will be based on renovation of the service pipes with NO-DIG solutions and will be of an amount of 0,40 - 0,67 million EUR each year for a period of up to 4 years.

The belief is that contracting with specialized business firms should add efficiency and quality to public sector output. When contracts are made on the medium and long term, it may be possible to join private and municipal interests in efficiency and goal achievement through trust and openness, rendering superfluous traditional requirement specifications and contract monitoring.