Making public sector services contestable does not necessarily mean they will be contracted out, and the contestability process itself can work to improve the capacity of the public sector.
On the 14th of August 2017, the NSW Government signed an agreement with Corrective Services NSW, a division of the Department of Justice, to manage the John Morony Correctional Centre (JMCC), a remand facility in Sydney’s north west.
This somewhat unusual arrangement followed a competitive tender (or ‘market-test’), in which CSNSW outperformed three short-listed providers from the private sector, and was selected by government to manage the centre.
ANZSOG staff member Professor Gary L. Sturgess, who holds the NSW Premier’s Chair of Public Service Delivery at the University of NSW, developed the framework on which the JMCC contestability model was based, and chairs a Commissioning and Contestability Advisory Board, advising David Elliott, the NSW Minister for Corrective Services.
Professor Sturgess said that the outcome of the market-test was extremely encouraging.
“This provides a framework for challenging the incumbent managers of public service agencies to do better. And it demonstrates that public sector managers can rise to the occasion when they are challenged,” Professor Sturgess said.
“Contestability is about driving improvement through potential competition, and has much broader application across the public sector than market-testing or outsourcing.
“Alongside the market-test of JMCC, the NSW Government is rolling out a broad program of benchmarking across the rest of the state prison system, in consultation with frontline management, staff and unions.”
The new arrangements for the management of JMCC include detailed performance standards which management will be required to meet. In addition to greater transparency, the government has insisted on higher standards, including more hours out of cell for prisoners, and a greater focus on rehabilitation.
The accountability regime specifically addresses the consequences of success or failure, including financial incentives: in pricing its bid, the Corrective Services NSW proposal included a contingency should they not always meet the specified standards.
Corrective Services NSW will be required to deliver its commitments under the agreement, and a private sector ‘underbidder’ has been identified, should they substantially fail.
Professor Sturgess said that the bid process itself had helped Corrective Services NSW to rethink how it could manage a long-term remand centre.
Among other innovations, they will bring maintenance services back in-house, with prisoners to perform these functions under a supervised training programme through which they will be able to secure recognised qualifications.
A letter of undertaking was signed with the Public Services Association, the union which covers NSW prisons, prior to finalisation of the agreement.
Professor Sturgess said that the prison commissioning work also pointed to a new form of engagement between the academic and practitioner communities.
“On the one hand, this involves the academic in the practical application of new approaches to public administration. In this way, it provides the opportunity for ongoing learning about the implementation of these ideas in the real world,” Professor Sturgess said.
“But it also provides a framework for applied learning, with learning and teaching taking place in a small group environment over time.”