GOVERNMENT BY CONTRACT

Vol. 19 No. 6 (June, 2009) pp.405-408

GOVERNMENT BY CONTRACT: OUTSOURCING AND AMERICAN DEMOCRACY, by Jody Freeman and Martha Minow (eds.). Cambridge, MA: Harvard University Press, 2009. 552pp. Hardcover $49.95/£36.95/€45.00. ISBN: 9780674032088.

Reviewed by Amanda Harmon Cooley, Department of Management, North Carolina A&T State University. Email: abcooley [at] ncat.edu.

In the portrait of the “flat” world, as offered by Thomas Friedman, competitive global outsourcing has seen marked increases, while becoming a controversial and sometimes contentious subject in the realms of business and industry. However, it would be naïve to think that this process of outsourcing, which seeks lower costs for products and services with limited regard to the entity that provides them, is solely exercised by private, non-governmental actors. In GOVERNMENT BY CONTRACT: OUTSOURCING AND AMERICAN DEMOCRACY, editors Jody Freeman and Martha Minow, both professors at Harvard Law School, provide a significant forum for discussing the complex issues that arise when governmental functions are no longer performed by public employees but are instead executed by private contractors. Specifically, this edited volume focuses on the United States’ practice of government outsourcing, deemed by the editors to be “government by contract.” By performing a macro-level analysis of the current unprecedented levels of outsourcing, the editors and contributors aim to answer the broader question of whether this contractual allocation of responsibility and authority can truly fit within the structure of our democratic system of governance.

The Introduction, “Reframing the Outsourcing Debates,” presents a comprehensive outline of the structure and objectives of the text. In it, Freeman and Minow argue that September 11, 2001 was a pivotal moment in the timeline of government outsourcing that unleashed a torrent of no-bid contracts and abandonment of certain standard governmental contracting procedures. Further, the editors claim that this practice extends not only widely into many diverse aspects of federal and state responsibility, but deeply as well into the nature of the contractual duties – ranging from traditionally non-governmental procurement contracts to arrangements that one could argue lie within the exclusive provenance of the government itself. The Introduction proceeds to detail the complexities of this practice, as well as the inherent risks that accompany it. Freeman and Minow then highlight the lack of transparency often found in the outsourcing process, the paucity of legislative oversight of implementation and enforcement of these contractual agreements, and the possibilities for reform that could reduce the amount of waste, fraud, and abuse that has become nearly synonymous with the term. Freeman and Minow conclude the Introduction by providing a succinct snapshot of the perspective of the volume, which frames the most salient issues: [*406]

Our current government contracting system does not work. It is largely invisible and unresponsive to the public in whose name it is undertaken. The existing rules and procedures fail to guard adequately against inefficiency, conflict of interest, and abuse. And much of the power being exercised through contracting is largely unaccountable to any regime of oversight – market, legal, or political. Yet government by contract has arrived, and it is here to stay. This fact should prompt serious and sustained public dialogue about the short- and long-term implications of outsourcing for American democracy. Offering contrasting and at times conflicting views, the contributors to this book aim to spark that dialogue in pursuit of better governance in this challenging age. (p.20)

This introductory discussion mirrors the basic structure of the text, as it is subdivided into Part One, “Recent Developments,” which provides, in part, the historical context of government outsourcing; Part Two, “Cases and Critiques,” which provides exemplars of this governmental practice and critical analysis of such exemplars; and Part Three, “Responses and Reforms,” which presents a comprehensive reformative call to action, including arguments for limits to increased regulation, use of existing tools and resources, and the insistence on constitutional limitations. Due to the length of the text, several particularly noteworthy sections will be highlighted to identify the major themes of the volume and their treatment by the various authors.

Chapter One, “Public-Private Governance: A Historical Introduction,” authored by history professor William J. Novak, provides historical contextualization of the U.S. government’s turn to privatization. Novak argues that, since colonial times, there has been a tension in the country between public and private forces for power and authority. As such, the interaction between the government and private entities is not as “new” a thing as some would assert. To support this position, Novak provides a litany of examples of the concept of public-private governance. Ultimately, he stresses that the “power of public-private governance as a technology of public action flowed from its ability to counter the twin evils of both public corruption and private coercion” (p.39). Finally, Novak asserts that public-private governance can be an effective tool for the distribution of power, so long as the focus on the primacy of public law remains unobscured.

John D. Donahue and Mathew Blum build upon the foundations established by Novak in the remaining chapters of Part One, providing specific examples of government outsourcing that range from the United States Postal Service to information technology, as well as outlining the federal framework for public-private competition. Each of these authors brings forth a perspective that is reflective of their backgrounds. In combination, their work rounds out the historical and policy environment in which outsourcing has operated and evolved. All of these efforts lay the groundwork for Part Two, “Cases and Critiques.”

Chapter Four, “Rent-a-Regulator: Design and Innovation in Environmental Decision Making,” by Miriam Seifter presents a framework to understand how governmental authority can be [*407] outsourced but in a different way than is usually thought. Seifter states her view in the following manner:

The model, which I nickname “rent-a-regulator,” transfers regulatory decision making to licensed professionals who directly serve regulated “clients.” Rather than contracting out regulatory functions or privatizing them entirely, the government licenses professionals, just as it would doctors or plumbers, to make compliance decisions pertaining to regulated parties – their paying “clients.” (p.93)

This perspective relays how outsourcing has even spread into the ways in which governments perceive their central oversight duties. The chapter also outlines instances in which government outsourcing has resulted in the sacrifice of long-term protection of the public for short-term political victories.

Chapter Five, “Outsourcing Power: Privatizing Military Efforts and the Risks to Accountability, Professionalism, and Democracy,” is authored by Martha Minow. This chapter takes on one of the most high profile recent examples of government outsourcing – private military contractors. The focus of Minow’s contribution here is on the troubling aspects of vesting non-governmental employees with positions that require a commitment to the public interest. Most disturbing is the legal loophole that these groups often fall into that leave them unaccountable to military courts or the courts of the countries in which they operate. Minow phrases it this way:

Due to impairments of legal and political oversight and defective private markets, the escalating use of private military contractors by the U.S. government poses serious jeopardy to the integrity and effectiveness of the military and to the interests of society. These interests include minimizing financial waste, maximizing military effectiveness, guarding against atrocities, and ensuring a functioning democracy. (p.123)

For Minow, the key to reforming this aspect of outsourcing is a functioning accountability system that provides oversight for contractors similar to those types of systems for governmental employees. If this reform cannot be achieved, Minow suggests eliminating these contracts until the chapter’s suggested requirements can be met.

The third part of the volume is titled “Responses and Reforms.” It is further divided into three subsections: A) “Don’t Increase Regulation”; B) “Use Existing Tools” and C) “Press Constitutional Restrictions.” The chapters of these sections provide explanations and strategies for improvement of the present system of outsourcing by ensuring economic efficiency and supporting the public aims of government. Throughout these chapters, the overriding themes of increasing accountability and transparency are emphasized. However, the authors also press the reasons why current “government by contract” fails to attain these lofty ideals. Too often, in government, greed, power, and self-preservation have trumped the noble goals of public service; this threat becomes even more acute when the acting entity only serves the people because of an independent contract.

Of particular interest in Part Three is Laura Dickinson’s Chapter Thirteen, “Public Values/Private Contract.” This [*408] chapter details aspects of international concerns that come into play in the outsourcing debate. The discussion is especially of note as many of the popular media outlets rarely address these important issues. Dickinson advocates a flexible policy and legal response to this movement. She states:

We must remember that the proper management of privatization will almost certainly require a variety of approaches, and we need not choose one to the exclusion of others. My aim here is simply to focus attention on privatization in the international realm as a crucial field of study, to call for dialogue among international and domestic scholars, advocates, and policymakers concerning appropriate responses, and to suggest that more attention be paid to the possibility of using contractual provisions to provide accountability. . . Only through such efforts will we be able to find ways to protect crucial public law values in the era of privatization that is already upon us. (p.358-359)

Overall, GOVERNMENT BY CONTRACT: OUTSOURCING AND AMERICAN DEMOCRACY provides a substantial introduction to and superb discussion of the legal, economic, social, and political aspects of government outsourcing in both domestic and international contexts. The significance of the book’s contributions will clearly resonate in academic communities concerned with these issues. However, it is less certain if the innovative ideas offered within the text will be taken up by the public policy communities that shape the legislative agendas in Washington, D.C. Of course, this is by no means a failure of the volume; rather, it is a failure of those policymakers and elected officials who do not live up to the ideals to which they so often appeal.

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