Thank you for the opportunity.
I read and listened to the testimony before this committee, but I don't have specialized knowledge about the McKinsey case. Therefore, my remarks will necessarily be rather general in nature. I encourage the committee to study the topic of contracting in all of its many forms in future work.
In the limited time available, I propose to make a series of brief points without much elaboration.
I'll start with this point: The growing use of management consultants reflects the broader trend of intermingling of public and private roles and functions. The assumption behind this trend is that governments get the best of both worlds. They benefit from their reliance on the presumed superior knowledge and skills of commercial private firms particularly. However, we all know that this isn't a guaranteed outcome, as there can be real horror stories arising from the contracting-out process.
In my view, successful contracting requires that governments behave as smart buyers to maximize the benefits and limit the risks of reliance on the private sector.
Sweeping generalizations about the advantages, disadvantages and risks of contracting out should be avoided. There are just too many different types of contracting and many different functions that can be wholly or partially transferred to the private sector, whether that be to for-profit firms or non-profit organizations.
Not all functions of government or all program activities are good candidates for transfer to the private sector. Based on experience and research, there are some general principles that can be used to guide the contracting process. Ultimately, it is a particularistic activity best approached on a case-by-case basis.
Fundamental to that process is a determination of whether a particular task or related activity is “inherently governmental” in nature. Such a determination involves, to a greater or lesser extent, a subjective normative judgment about the appropriate role of government and an assessment of the capacity of the public service to deliver effective results.
Attempts to define what functions are inherently governmental have occurred mainly in the United States. Functions that serve “the public interest” and those that involve the exercise of subjective policy judgments—