Public management & Private management : let’s moderate the debate!

Public management & Private management : let’s moderate the debate!

The subject of how industrial and commercial public services are managed is the subject of passionate debates in France. Indeed, several advocates of public management consider that the private sector has no place in the management of public services, while others accept the idea that private management can provide solutions to the challenges of our public services.

This polarization of the debate around ideological positions diverts reflections from the real issues of the management of our public services: the promotion of a political vision of public services, strategic reflection around their scope and objectives, the ability of local authorities to build specifications adapted to the needs of users, to manage their public services to achieve the objectives set, their ability to monitor and evaluate these services independently of the management mode.

It is these issues that must be at the heart of the debate, regardless of the legal structure in charge of ensuring them. Ultimately, the choice of management method should be guided above all by a political vision then translated into performance criteria that consider the satisfaction of the user and also the technical, economic, social and environmental efficiency of the service. All at the best possible value for money.

Since none of the management methods can claim absolute superiority at all times and in all places, it is, above all, necessary to ensure that legislation facilitates reversibility from one to the other, that it does not introduce unjustified distortions between them and that it tends to facilitate a free and informed choice for the public authority. For these reasons, the use of external perspectives to inform debates on management methods, objectify reflections and dispassionate debate is essential. The objective is indeed to enable the community to make an informed and rational choice in terms of how to manage the public service, devoid of any dogmatic considerations.

Putting and end to dogmatic positions : Some misconceptions about the management of public services

Delegated management is the privatization of public services

FALSE! In delegated management, the service remains public; the public authority always remains guarantor and responsible for the general interest

  • The existence of a contract between the public authority and the private operator makes it possible to specify the role of each.
  • That of the public authority is indeed that of a contracting authority. It defines the public service missions, sets the objectives and the price, controls the effectiveness of the service rendered.
  • It ensures the quality of the service, as well as the financial balance of the contract.
  • It “makes do” without “letting it happen”.

Competition weakens the public service

FALSE! Competition boosts performance and creativity

  • Public service delegation is a form of competition led by public authorities. Competition takes place upstream from the performance of the public service – it is a “competition for the market” and not a “competition in the market”.
  • It does not weaken the public service, but on the contrary encourages private companies to make efficient offers; it stimulates the professionalism of operators and promotes the emergence of optimized solutions on the technical, commercial and financial levels.
  • Each reopening of competition of a contract is also an opportunity for the public authority to question the desired level of performance of the service as well as how to improve the service offer.

The performance of the public service is a drastic reduction in costs

FALSE! Performance is a political tool that makes it possible to set global objectives, and not only financial ones

  • In France, when it comes to public services, the term “performance” is somewhat overused; it often refers to the reforms of the State that have favored a financial and accounting approach to performance (cost reduction, etc.).
  • However, performance is a multidimensional concept that is not limited to this financial dimension, instead it must make it possible to set a course for the public service. Performance in public services is, in fact, a consensus that considers the satisfaction of the user, but also the technical, economic, social and environmental efficiency of the service, in a long-term logic.
  • It is up to the public authorities to define the major economic, societal and environmental performance issues and objectives towards which the service must aim.
  • Public service companies manage their contracts in the light of ESG reporting (integrating Environmental, Social and Good Governance criteria), which is a guarantee of responsible management, alongside the monitoring of economic and financial indicators. They thus fully integrate the notion of plural performance into these overall objectives.

The price of the service is more expensive in private management

FALSE! The price of the service depends on many parameters, including the complexity of management for example

  • The cost of the service is not more expensive in private management. The use of the know-how of companies makes it possible to benefit from productivity gains and economies of scale, which allow benefits, often shared between the public authority and the operator.
  • This profit pushes the operator to meet or exceed the objectives set by the public authorities, and allows him to reinvest in research & development, the development of employees’ skills.
  • This profit also remunerates the risk-taking, because in general delegated management transfers a certain number of risks (financial risks, operating risks, etc.) to the professional operator, and sometimes entrusts him with certain investments, in the field of infrastructure, for example.

Utility operators are large groups disconnected from the reality on the ground

FALSE! The operators are multi-local companies, anchored in the territories

  • In the various sectors of delegated management, there are operators of very varied sizes ranging from international operators to small private family operators (SMEs/ mid-caps) through operators of national or regional scope.
  • Even when it belongs to a “group” of companies, each “unit” of the group remains anchored in a territory where it has acquired specificities during its history, singular characteristics from one site to another. The permanent and continuous contact between the company’s teams and the public authority encourages, over time, the development of the common culture of public service. It has also become very common for the delegating authority to require the creation of a company “dedicated” to the execution of the contract, with a local team and means, as well as separate accounting subject to regular control by the public authority.
  • Staff are recruited locally.

Public service delegation is an opaque management method

FALSE! Transparency is one of the strong points of this management method

  • Delegated management has adapted over time to enable private operators to better meet the transparency and performance requirements expected of a public service, and thus give all the keys to elected officials to manage their services.
  • The existence of a contract between the community and the private operator makes it possible to specify the role of each. Performance is measured through objective indicators set up by sector, which aim to assess the quality of public services.
  • Operators are subject to numerous reporting obligations: annexed financial models, delegate’s report, etc. all these tools allow elected officials to better understand the economy of the contract and the challenges of the service.

References

Union Nationale des Services Publics Industriels et Commerciaux. (2022). Associons le meilleur du public et du privé. UNSPIC.

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