Analysis: Libertarians vs. Myth of Inherent ‘Government’ Functions

This is interesting as the project is being supported by the in some ways pro-libertarian GMU. In fact it ignores and confuses on issues long addressed, and is being widely quoted by leftist commenters to ‘refute’ Libertarianism. It ignores:

  Inherently Governmental Functions: Government Agency vs. Private Sector Management



Government Agency vs. Private Sector Management

Most of the literature on the Balanced Scorecard and other management theories is oriented around the values and needs of private-sector companies. In such organizations, profit is a pervasive performance metric that is relatively easy to measure, precise, and closely related to the strategic success of the company.

Government agencies and other non-profit organizations exist not to make a profit but to accomplish a mission. They still have a long-term interest in financial performance, because chronic losses may lead to low morale and the eventual demise of the organization. However, financial performance is only one indicator of success. Customer satisfaction in terms of mission outcomes is the primary motive and strategic value. This is especially true of governmental agencies, in which the ultimate “customer” is also the source of funding — the taxpayer. Therefore, unlike private companies, where internal efficiency is of little concern to the customer, efficiency and productivity are of great concern to government customers, since they are paying for the entire agency’s operations. This fact makes internal efficiency or cost effectiveness one of the key strategic goals of a government agency.

In many cases, private companies have developed best practices and efficient ways of operating, based on their need to compete in the marketplace. Hence it is appropriate for government agencies to consider outsourcing some activities to private contractors in order to improve operational effectiveness and efficiency. However, outsourcing can be taken too far. There are some functions that are inherently governmental, and that (either by statute or by agency charter) must be done by government workers. The following table suggests a way in which to distinguish these functions.

Inherently Governmental Functions

Recent legislation, including the Government Performance and Results Act (GPRA) and the Clinger-Cohen Act, has clarified what functions are inherently governmental, and on the other hand what functions could be carried out by contractors depending on their cost and benefits to the agency. The following table summarizes the distinctions between these two categories of functions. Note: this list is not official or authoritative; it is only a suggested list for study and research purposes.

Inherently Governmental

Not Inherently Governmental

Strategic planning: defining strategic goals, vision, desired outcomes, initiatives (GPRA)  Facilitating strategic planning retreats, documenting and publishing strategic plans
Defining performance assessment metrics, goals, targets, schedules, collection & reporting processes (GPRA)  Collecting data for performance evaluations, doing surveys
Budgeting for strategic initiatives  Accounting and financial data processing
Establishing or approving standards, policies, procedures, and guidelines  Writing instruction documents and manuals
Evaluating vendors for specific mission tasks, benchmarking  Testing vendor equipment, evaluating and comparing product performance; negotiating Service Level Agreements
Honest broker of vendor products and services, government and consumer advice  Providing multi-vendor contracts, bundling standard interoperable packages
Defining security and data access policies  Grounds guards, security testing
Mediating disputes between private parties  Supporting government investigations of third parties
Defining Common Operating Environments for interoperability Certifying interoperability of systems

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