Giving private partners wide latitude could rescue strapped governments – if it’s done right.
Recent years have been no golden age for government-business relations in the United States. The financial meltdown of 2008, and its aftermath, set the tone – and the dominant note was decidedly sour. Major private-sector institutions collapsed, and trillions of dollars were lost in a catastrophe that most commentators think could have been avoided if the parties involved – the government and businesses – had been more responsible. The ultimate bailouts – many to institutions now revealed to have been (at best) imprudent and (in most cases) deceitful – have put the nation in poor fiscal health for years to come. Canada was fortunate to escape comparatively unscathed from these events, and its citizens surely must think that the government-business nexuses in its large southern neighbour have gone severely awry. But, as is often the case, the conventional wisdom represents a combination of overreaction and tunnel vision. There have certainly been lamentable instances of public-private collaboration in recent years, but there have been many admirable successes as well.
Our recent book, Collaborative Governance: Private Roles for Public Goals in Turbulent Times, identifies an important phenomenon that has greatly enriched public performance in the U.S., as well as in other nations. But the good news about collaboration – the neglected part of the landscape – has received less notice than its promise warrants. Governments at all levels in the U.S. have increasingly called on private parties – both for-profit and non-profit – to deliver services that were formerly provided directly by governments themselves. We are not referring to traditional outsourcing, such as contracting with private companies to pick up garbage or pave roads. Outsourcing has its place (and its hazards) but we are concerned with something different. The distinctive feature of collaborative governance is the sharing of discretion between the public and private parties on a deliberate and attentive basis.
A hallmark case, noticed by any periodic visitor to New York, is the resurrection of Central Park. By the early 1990s, the park had fallen into complete disarray. The city’s park-system budget had been slashed in response to financial woes. A venture into Central Park was a tour of graffiti, litter, untended landscapes, and the not-so-occasional mugger. Through a series of negotiations among visionaries on both the public and private sides of the table, day-to-day management of the park was turned over to a non-profit group, The Central Park Conservancy. The conservancy has poured in tens of millions of dollars and tens of thousands of volunteer hours, and today the park shines. It is filled with youngsters and oldsters, ballparks and flowerbeds, and citizens walk its paths in safety and comfort late into the evening.
An equally stirring success story of collaborative governance – and a useful illustration of the distinction between collaboration and conventional contracting – was the cleanup of Rocky Flats, a highly contaminated former nuclear-weapons site, which was the responsibility of the Energy Department. Two prior contracts to deal with this contaminated wasteland had failed, and, in the mid-1990s, it was projected that the effort would take another 70 years. The Energy Department tried a new approach. It gave a new contractor, Kaiser-Hill, considerable guidance as to objectives, but a great deal of discretion on how to conduct the cleanup, along with significant incentives for controlling costs. A mere decade later – more than 50 years ahead of schedule – the site had been restored. And its cleanup had been accomplished at a cost of half a billion dollars below the allowed budget.
Canada has major industries dragging metals and petrochemicals out of the ground. Many of the sites where such processes take place, like their equivalents in the United States, are current or future environmental threats. Cleanup efforts will be required. The collaborative governance approach – giving discretion and appropriate incentives to private parties – should be considered.
The potential advantages of collaborative governance come in four parts: productivity, information, legitimacy, and resources. Both of the cases outlined above reflect the productivity advantages of private-sector organizations. The example of Central Park also shows the private sector contributing resources to public priorities.
The provision of port security shortly after 9-11 shows the advantages of capitalizing on the (often superior) information of the private sector. The Coast Guard was charged with protecting the nation’s 360 ports. Rather than proposing a national plan, it asked each individual port to utilize the knowledge of shippers, warehouse owners, truckers, etc. to help formulate plans that were distinctive to that port’s risks, geography, and distinctive cargoes. A small fishing port requires a very different type of plan than a location that brings in LNG tankers. The Coast Guard set high overall standards, and insisted that each port present a plan that met them.
Finally, we turn to the legitimacy justification for a collaborative approach. The concept of a “force multiplier” – some technological, organizational, or managerial asset that augments the effectiveness of a military unit – was old news to then secretary of state Colin Powell. As chairman of the U.S. Joint Chiefs of Staff, Powell employed such multipliers – from battlefield computers to night-vision technology – to drive Iraqi forces out of Kuwait in the 1991 Persian Gulf War.
Fast-forward 10 years. Same guy, same smart instincts, different job. Powell developed a collaborative approach to foreign aid that he termed a force multiplier for U.S. efforts to promote economic development overseas. In May 2001, he unveiled what became known as the Global Development Alliance (GDA) in congressional testimony. The goal, Powell told Congress, was to partner the U.S. Agency for International Development (USAID) with private institutions in alliances where both parties would exercise some real control. The government’s role would be analogous to that of a venture capitalist, seeking out and funding private organizations presenting plausible propositions for creating public value. The GDA would leverage public dollars with the money and energy that private collaborators could bring to bear to create “a force multiplier for our development goals.”
Why did Powell choose this collaborative approach to USAID? He intuitively grasped the idea that collaborative approaches can make public undertakings more effective, and that they can also boost their political legitimacy. Foreign assistance is chronically starved for political support. During Powell’s tenure, it was taking increasing fire from critics in Congress. Powell anticipated, correctly, that a collaborative delivery model would buy vital political support.
The GDA is now the standard approach of USAID, and it has had some salient successes. For example, hardware giant Cisco has by now trained thousands of information-technology workers in 47 developing countries. Furthermore, the creative talents behind Sesame Street, backed by big corporate donations, have been guided by USAID into co-operative agreements with education ministries to produce educational broadcasting in preschools across the world.
Let’s return to the subject of the 2008 financial collapse. The U.S. government gave private firms major responsibility for a critical public goal – assuring the transparency and security of financial markets. But granting discretion is but one element of effective collaborative governance. A second is to be attentive. The performance of collaborative arrangements must be continuously reviewed, and arrangements restructured if they get out of line. Yet no one in government admitted that they did not really understand the financial instruments that were being created, or their potential impact on financial markets. A bit of investigation would have shown that the private players were little better informed. All parties were relying on someone else to be knowledgeable. Collaborative governance had been replaced with collaborative ignorance. The world suffered the consequences.
Collaborative governance can be done well, as the positive examples in this article show, and it can be done poorly or disastrously, as it was with the financial markets in the U.S. But if it is to be applied in the right arenas, and in a productive manner, it must be studied as a distinctive mechanism – just as government agencies, private-sector corporations, and non-profit organizations are distinctive mechanisms. Public-policy problems are pressing, governmental treasuries depleted, and public workforces overtaxed. Governments will be increasingly challenged to harness private-sector capacity on terms of shared discretion. In short, they will turn to collaborative governance.