Interview: Enlightenment of NY gov't procurement of public services to China
                 English.news.cn | 2013-08-13 14:56:53 | Editor: Yang Lina

by Jiang Hanlu, Liu Fan, Yang Qi

NEW YORK, Aug. 12 (Xinhua) -- The Chinese government has vowed to purchase more public services from social organizations and ramp up the construction of high-quality infrastructure in Chinese cities.

U.S. Experts suggested that an efficient, fair and transparent procurement system is of essential importance to the establishment of a service-oriented government.

TRANSPARENCY, ACCOUNTABILITY AND RULE OF LAW

Procurement is a basic tool used by the U.S. local governments to deliver a wide range of services citizens expect and demand, such as school buses, foster care, health care, infrastructure construction and public sanitation.

New York City, the most populous metropolitan in the United States, procured more than 10.5 billion U.S. dollars in supplies, services, and construction through more than 46,000 transactions in its fiscal year of 2012, according to data from the New York City Mayor's Office of Contract Services (MOCS).

For government to provide services through nonprofit social forces, "the most important principles are those of transparency, accountability, and rule of law," Richard Callahan, department chair and associate professor of Public and Nonprofit Administration at the School of Management at University of San Francisco, told Xinhua in a recent interview.

New York City government has developed a sophisticated system of government procurement and has placed great emphasis on a competitive bidding mechanism.

MOCS data showed more than 63,000 vendors are enrolled on City bidders' lists. Eighty-eight percent of contracts in the fiscal year of 2011 showed high levels of competition, which means three or more competitors, while competition for small purchases remained strong, with 85 percent of the transactions reflecting 10 or more competitors.

In terms of the qualification of public service vendors, Charles M. Brecher, professor of Public and Health Administration at New York University's Wagner Graduate School of Public Services, said "they usually are subject to a review to make sure the people who were involved don't have any criminal records or haven't been found to involve with the company that defaulted on a contract before."

According to the MOCS, the New York City government will only award contracts to responsible contractors, meaning contractors with the technical capability and financial capacity to fully perform the requirements of the contract, as well as the business integrity to justify the award of public tax dollars.

In the United States, social organizations providing public services can be regulated by the local government, a third party and their peer social organizations. There are Controllers at city and state levels in the United States who are independently elected to be the chief fiscal and auditing officer.

Although self-regulatory mechanism has more to do with the reputation and integrity of an organization to gain a comparative edge over others, self-regulation in general is fairly small, "but it does play an important role," said David M. Van Slyke, professor at the Department of Public and International Affairs at the Maxwell School of Citizenship and Public Affairs at Syracuse University.

COMPETITIVE BIDDING

"The best practice is to have competitive bidding, so you don't give out a contract on an exclusive basis," Brecher said.

"Secondly, to have performance standards in the contracts, so you have standard when someone is doing a good job and when they are not," Brecher added.

On one hand, government procurement of public services can help citizens to get highly specialized and lower-cost services from organizations that have a great deal more expertise, David Van Slyke said.

On the other hand, it is cheaper for governments to contract out these public services to social or non-profit organizations "because you don't need to continue to carry those public personnel even once the services no longer needed," Van Slyke added.

Besides, by using non-profit organizations, "government is in some cases getting the subsidy effect," Van Slyke said. "In other words, non-profits have their own volunteers and private funds... that can be used to supplement the funding of public services through government contracts and funds."

Patrick Malyszek, president of M3 Federal Contract Practice Group, told Xinhua that "the overall result (of government procurement of public services) is tremendous because it actually took away the government, then usually taking away lots of social controls."

BACKUP AND RESERVE CAPACITIES

Brecher suggested that the Chinese government's procurement of public services should be done with detailed preparation, ranging from good vendors committed to their mission to managers within the public sector to manage contacts and set performance standards, from standards written into contracts to resources committed to monitoring, enforcing and even canceling of the contracts.

In other words, the government should have "backup capacity" and "reserve capacity," Brecher noted.

According to Brecher, backup capacity means there is competition so the government can give the contract to other competitors. If there is no competition, "there is reserve capacity within the government to take over the job itself when you have to cancel a contract," he added.

Van Slyke said the Chinese government should be aware that "contracting with community and social organizations is not an easy process. It requires substantial government investments in a legal framework, in a procurement and regulatory framework, in a competitive bidding framework."

Van Slyke noted that in some cases, "non-profit or community-based organizations become so dependent on government for its funding that there really is very little that distinguishes the non-profit from a government in terms of its own mission, focus and authentic expression of values."

"So I think this becomes a challenge both for the Chinese government, especially provincial and local governments, but also for these organizations themselves to create the right balance in terms of their need for revenue, their desire to provide services, but then having to be held accountable to government for that funding and also for the delivery of the services based on certain standards and performance measures," said Van Slyke.

Last but not least, Callahan said he believes every country has its own characteristics, so "there is no one approach that works across all types of services."

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