It’s not just private companies that are enjoying the benefits of delegation. Governments – including the US government – know just how valuable contracting to the private sector can be.
Around the world, delegated contracts account for a significant amount of several countries’ GDP. For the Netherlands, it’s at 16%, while the UK and France are at 11%. In America, government contracts are at 6% of the GDP.
Despite the bad rap that contracting sometimes gets, in many cases, it is essential.
In specialized fields, it is much more efficient for government to delegate production or services to a private company. In the field of defense, for example, it does not make sense for the US to manufacture its own fighter jets and other related technology when it can work together with aerospace company Lockheed Martin, which already has the expertise and experience in doing the job. The US government has similar contracts with Boeing (for airplanes like Airforce One) and General Motors.
Governments also run into some problems with civil service rules. Caps on the number of employees and limitations on pay can sometimes make the accomplishment of tasks difficult, particularly when needing experts like lawyers or software engineers. Contracting gives government the opportunity to hire people for short-term projects, without having to undergo the process of hiring an employee.
Of course, it doesn’t always work out for the best. A high-profile example would be that of G4S, which secured a lucrative contract to provide security for the London Olympic games in 2012. They failed to meet the target of 14,000 guards, though, and the police and Army had to fill in and deploy thousands of troops. There’s risk when contracting to a private company, especially when it comes to huge contracts.
Delegation and contracting isn’t perfect. Some argue there’s too much of it going on. But when used right, it’s an absolute life-saver for governments to run efficiently.
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SOURCES:
“7 Examples That Explain Government Outsourcing.” The Balance, 24 March 2018, Web.
https://www.thebalance.com/government-outsourcing-examples-2553107
“6 companies that are most reliant on government contracts.” USA Today, 10 Novermber 2017, Web.
“The federal outsourcing boom and why it’s failing Americans.” The Washington Post, 31 January 2014, Web. https://www.washingtonpost.com/business/the-federal-outsourcing-boom-and-why-its-failing-americans/2014/01/31/21d03c40-8914-11e3-833c-33098f9e5267_story.html