A new era perhaps, but if we look to America we see once again the US Federal Government is grappling with the question of what activities are 'inherently governmental' – which functions are so intimately connected to public interest that they can be trusted only to government employees?
Among other contracting reforms initiated by the Obama administration, the Office of Management and Budget has been asked to clarify "when governmental outsourcing for services is and is not appropriate".
Furthermore, the Department of Homeland Security has ruled that all professional service contracts exceeding $1m are to undergo additional review to ensure that they do not include functions that are inherently governmental.
To public officials and public service companies in North America, this is familiar ground. Some have traced the 'core business' debate back to the Federalist Papers, where the founding fathers argued over which functions would be appropriate for the national government to deliver.
The fact that this is still being debated more than two centuries later suggests that we might not be asking the right question. There are few governments anywhere in the world that do not involve external providers in the delivery of some public services, but how they are engaged differs markedly from one country to another.
The explanations for these differences are complex, but it is evident that cultural and historical influences play a significant part. This is apparent whenever public service companies cross from one country to another, bringing with them their traditional answers to the 'inherently governmental' question – such as happened in 2000, when the British security company Group 4 merged with the Danish emergency service provider Falck.
Falck provides around 60% of Denmark's fire services and 80% of its ambulance services, and has done since the 1920s. In the early 1990s, Group 4 was the first private company in nearly 200 years to manage a prison in the UK. Some time after the merger, a senior British executive from Group 4 Falck visited the Danish Ministry of Justice and suggested that they might consider contracting out the management of some of their prisons.
He was informed that in Denmark prison management was considered the core business of government. He responded: "That's interesting, because in Britain, we think that fire and emergency services are part of government's core business."
Quintessentially Anglo-Saxon?
Public-private partnerships are often regarded as quintessentially Anglo-Saxon. However, as we look around the world, there are numerous examples of public service markets, which indicate that British and North American governments are in fact much less comfortable about engaging with the private sector than we might imagine.
For example, the French nationalised very little of their water industry in the late 19th century, relying instead on concessionaires that developed over time into the corporate giants Lyonnaise des Eaux and Compagnie Générale des Eaux (the latter company, in turn, generating Canal+, Vivendi and Veolia).
While the British did privatise their water industry in the 1990s, they have had to work hard to challenge the French's market leadership. As another example, years after the Dutch and the Germans privatised their postal services, the British have recently abandoned a much less ambitious proposal to inject private capital into the Royal Mail. The preceding debate showed just how much postal services are still regarded by many as the business of government.
This article was first published in Ethos
