Contestability in Public Services: An Alternative to Outsourcing

This paper makes a clear case for how contestability – the credible threat of competition – can drive improvements in public service delivery.

For author Gary Sturgess, the NSW Premier’s ANZSOG Chair of Public Service Delivery, the term ‘contestability’ has been used to mean a variety of different things: “In many cases, the word has been used as a synonym for ‘competition’ or ‘competitiveness’, and in some cases as a soft alternative to ‘outsourcing’, but the concept is much richer than that.”

True contestability is more like robust performance benchmarking, with providers (who may come from any sector) held accountable for the service outcomes they have agreed to deliver. Crucially, the final consequence for failing to deliver these outcomes within the defined timeframe and budget must be the replacement of the service provider and/or its management team.

This has several implications for the design of a contestable public service system, including (but not limited) to: the availability of alternative management teams to make the threat of competition credible; rigorous performance benchmarking; realistic budgets; and discrete front-line delivery units allowing performance to be compared with other similar units.

After charting the history of contestability as a concept in public services, Gary unpacks each of these design implications in turn, using mini case studies to show where contestability has succeeded and failed across a range of public service activities.

This resource should be useful to both practitioners and academics considering how best to make use of competition (or at least the threat of competition) to improve public services.

Suggested citation

Sturgess, G. (2015) Contestability in public services: An alternative to outsourcing. Melbourne: ANZSOG.