the Niti Aayog on July 2017 stating privatization of certain administrative
services have sparked interest in the recruitment of administrative personnel
based on efficiency and who posses technical knowledge such that services to the
citizen can be done more efficiently and effectively . As stated before in this
article privatization of administrative services by sub contracting has not been
prevalent feature in India but regarding other nation privatization has been
common feature in other nation (mostly countries which are capitalistic in
economic structure) which are considered super power in the present century . In
this paper work we tend to understand how privatization of administrative
services in foreign countries take place and how it has legal implications and
it violations so the readers can get a clear idea regarding pro and cons of
privatization of administrative services. As lpg or new economics policy is the
future of India’s economic and political scenario.
In this project we tend to focus on the privatization of administrative services
in other foreign countries.The concept of privatization administrative services
is more over like that of out outsourcing ,the concept of privatization of
administrative service disagree with concept of pre emption (basically cannot
over power laws made by central government in the 3rd list in the 7 schedule of
the constitution which states legislation cannot make laws on which are
repugnant to the laws made prior by the state ) due process of law , separation
power , etc there has been recent development of cases regarding privatization
and its inefficiency in its dealing with the citizens of the state (foreign
state) . These disputes include, involving private prisons or schooling health
care or welfare services which are contracted to private firms for providing
By privatization here we do not mean the regular definition of privatization as
in India where government sells shares in a public monopolistic company or
abandoning such government owned companies such as the new economic policy in
India. By privatization here means some sort of deregulation which the
government does to private firms in other words it is a sort of outsourcing of
certain works like that of private firms do in order to reduce cost . But both
out sourcing and privatization are not the same in sphere meaning or motive as
outsourcing is purely economic in character which is neutral by the term as it
might be positive by saving million in money by outsourcing or it might be
neutral or it might tend to lead to loses. In other words say it might be good
or bad but privatization of administrative services can only be a positive term.
Question regarding why might be obvious, because privatization tend to create
distinction between bureaucracy (bad and inefficient) and free market forces
(seen as more efficient and good).So as stated before privatization basically
means contracting with private firms for rendering services to the public more
efficiently and effectively . In this project we look at the limitation of
privatizations of administrative services from the point of view of technical
matters such as incentive, delegation, reduction in privatization in foreign
Discretion and types of contractual privatization of private firms
Regarding discretion to outside firms to whom administrative services are
contracted with either have little or no discretion to high amount of
discretion, perfect examples would be the building of road and contracting for
application for raw materials like concrete or other examples like contracting
for plat forming a particular road ,providing labors etc , On the extreme end
with high level of discretion is need such as contracting for private prisons or
welfare initiatives and eligibility for government services validating , etc .
Involve high degree of discretion; the question at hand is whether such
discretion might lead to violations based on motive of self-interest of the
contracting private firm. Which might harm the society to a greater extent ,
legally and in utility derived from such services.
Going into more details regarding contractual arrangements there are three types
of contract regarding privatization of administrative services.
1) Price – per- case contracts(usually found in private prison or juvenile
detention centre Arrangements)
2) Flat free contracts(to provide services for term of period with
extension clause)(usually these types of contracts are found in licensing agency
and child welfare centers)
3) Incentives contract( which works for attaining efficiency or goals as
prescribed by the government agency fulfillment of with will the contractor will
be paid such incentive for providing such service services)
One of the most important drawbacks for such privatization is self interest of
the private firms rendering service. Dividing it into 3 types due to the types
of contracts as mention above.
Per case fees in this case the government agency privatize their functions to
outside firms for a fixed fee for each problem or case it handles.
In theses case if there service is based on incentive for application or final
determination the private firm will quickly survey such application ignoring
vital factors to receive such incentives; Eg was found in Australia a company
Maximus co ltd to receive such incentive from that such final determination
clause violated many legal provisions such that for its own self interest. Going
through the application in a rapid manner without noticing important detail
hence lead to violation of administrative services.
A practical example is to deny cases of application for more the applicant will
reapply leading to double incentivization from the government agency.
Example took place in Connecticut a district in America where company named
colonial cooperation inc which was to make legibility determination for disabled
based assistance which was to give 122 dollars for each such application
received and hence the company for monetary benefits rejects these application
to receive 2ndreapplication for applicants and hence receives money for the
second time .This problem was very much shows resemblance to Brown vs Vance and
Doss vs Long where such argumentation on violations were invalidated.
Further these types of privatization contracts violate the neediest of the
society, due such rejection of initial application which leads to unwanted delay
adding months or even years to receive green lights for such second application.
Many of those who need the government help the most are as well are not able to
receive such services.
This lead to the growth a new form of contract known as incentivization
contracts where government agencies contract with private firms where the
private firms are rewarded for achievement of certain targets or goals specified
,either be it efficiency in quality of service or as mentioned by bureaucracy or
government policy. This type of contracts were famous during the 1990s where it
was named welfare to work campaign
One of the pitfalls of this form of contracts is the balancing the weight of
different consideration being it taxpayers goals or policy goals accountability
to different political consideration etc. This apart being budgetary constrains
hence due to these budgetary constrains the contacting firm tend achieve certain
goals which are of importance to maintain the contract.
The second significant problem in incentivization contracts is churning, meaning
that the private firm can easily take up individuals applicants for those most
likely to succeed which produces or triggers bonus or to reject applicants who
are likely to fail
Eg: The national association of child advocates has published as series of
studies on privatization of child related welfare services child support
collection , In this case the private firm pick and choose from those applicants
who are like have success , as the judgment given was likely to achieve overall
goals of the policy and not just a be a appropriate strategy for profit
maximization of the contacting firm.
The third and most important form of contract is flat free contracts which are
most commonly used through the world, where privatization is part of
bureaucracy. This type of contracting is very much similar to that of government
servants today who are paid salaries regard less of their productivity or
efficiency. Where by the same problem is faced in this types of privatization
contracts where the private firms get paid regardless of their productivity as
their term of service is fixed .Hence these firms do minimum to keep their
Eg for this scenario is again expressed in Maximus Inc a well-known private
administrative firm, which ran child support programme in Colorado America in
1995 nearly one out of the seven districts have complained on bad treatment of
citizens when reached out to receive such services further case work from
district attorneys office explained the reasons for non renewal of contract for
services provided by Maximus Inc as many clients services were not worked out.
To prevent these neglecting of work by constant monitoring but such strict
monitoring would defeat the purpose such deregulation or outsourcing as it would
lead to further costs and lead to budgetary constraints, one might say of
switching of contracting companies but such is not possible as those bidding are
few companies hence choosing from these companies would make no difference in
productivity. As stated before there is least amount of bidders in competition
for government contracts and only those firms which have a large back cost
portfolio tend to bid in these contractual bidding hence the choice to choose
different companies by government is very mere and hence leads to finding of
inefficient private firms which in turn tends to harm the citizen of the state.
Delegation and contractual language
One of the main back draws of privatization is delegation and contractual
language as used in statue which empowers the government agency or contract
which sub delegates to private firms. As the interpretative aspect of delegation
is complex and is cocoon in which the agencies get over powered and go beyond
the scope of delegation.
The terms that are more general confer more discretion on the agency.
Appropriate terms limit the ambit of the agency’s decision making and discretion
power. These agencies in turn sub delegate to private firms through contracts.
What is the question in doubt is contractual interpretation and statuary
interpretation is both different, further pushing the question into detail
judges or courts feel doubtful as to use the statue or the contract at hand to
evaluate the private firm’s action. a statue and a contract are two different
regarding genres of legal text and concepts and hence creates problem regarding
, whether a such private firms action are to be interpreted on the basis of
contract or the statue .Which in turn restricts the privatization decisions.
Coming to a understanding of privatization
We can understand that privatization has a lot of limitations inherent in it as
it is not good as stated before like while moving from government bureaucracy(
inefficient) to market capitalistic forces( which is good ). Recent studies
regarding privatization (2000- 2014) has shown surprising decline in many
constituencies of America and Canada and even Australia .Even private prisons
have shown great decline in number as to privatization of services , comparing
services to 2000- 2014 to that of 1980 to 1995 has shown great number in decline
these empirical study has shown that privatization was increasingly popular in
1980s and 1990s (49%)but has show downfall ever since 2000 to 2014(22 %) overall
in American scales alone . The reason for such abandonment of privatization is
due to economic social and political reasons. Regarding the economic perspective
study Mildred warren and company of members have studied in detail the municipal
corporations and public services bodies shows that privatization has not saved
any cost at all but rather put more budgetary constrain in the government body.
The experimentation during Ronald Regan administration and George Bush
administration has showed American administrative agencies that privatization as
a defective glue to fix administrative problems.
Initially as the Niti Aayog proposed in privatization of administrative services
as the solution to the problems of bureaucracy (it inefficiency etc) might be
wrong as privatization in other nations must be a example to prevent the failure
to following of privatizations. Further looking in to economic structure of our
country as dual economic, perspective regarding privatization might get
disastrous if put in to application as private firms would aim at profiteering
rather that providing services efficiently. Hence it would be more of a pitfall
than a solution to the current administrative problems and lead to further
complication which might have a disastrous effect. As a detail study on this
topic mainly regarding it limitation have give a clear scope to understand the
real situational difficulties face by government establishing privatizations.
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2)Nation library of Australia
3)Privatization of Public Services: Impacts for Employment, Working Conditions
4)Elliot. D. Sclar, YOU DON’T GET ALWAYS WHAT YOU PAY FOR.
5)LAWRENCE SOLAN ,THE LANGUAGES OF JUDGES
6)CRS REPORT FOR CONGRESS ,PRIVITISATION AND FEDERAL GOVERNMENT :An