CIVICA Research Blog

What does private sector involvement in government digitalisation mean for public values?

There is a long history of the participation of the private sector in the work of the public sector. In fact, it can be traced back to as early as AD 530, mentioned in Book 50 of the Pandects, a compilation of Ancient Roman law during the reign of Justinian I. This period saw references to “concession laws”, which saw private entities made partially responsible for building public infrastructure.

Fast forward a few thousand years and the active involvement of the private sector in government is still highly relevant. In particular, since New Public Management reforms during the 1980s and 1990s, private sector involvement in government tasks has become a prominent aspect of public service delivery.

This resurgence developed as a promising approach to address the time and resource constraints faced by public sectors in many countries. As a result, public-private partnerships emerged as a solution for building, designing, and managing primarily large infrastructure projects, with the aim of leveraging the strengths of both the public and private sectors.

Collaborating with private entities in large infrastructure projects not only allows the inclusion of efficiency and utility-based performance metrics but also creates the possibility of risk-sharing, with multiple entities sharing the responsibility for project success. However, the results thus far have been mixed.

Initially, when public-private partnerships were mostly limited to infrastructure projects, they were broadly classified into five types: institutional cooperation for joint production and risk-sharing, long-term infrastructure contracts emphasising precise output specifications in long-term legal agreements, public policy networks, civil society and community development, and urban renewal and downtown economic development.

From the outset, it was evident that there could be no blanket definition of what a public-private partnership could entail, given the wide spectrum of possibilities for private sector involvement. Private sector relationships with government extended to approaches such as “privatisation”, “contracting out” and “partnerships”.

In doing so, they indicated the use of public-private partnerships as a “language game”, as Stephen Lindner observed over twenty years ago. Terms like “contracting out” and “privatisation” carried connotations of exclusion and outsourcing, whereas “partnerships” elucidated collaboration and leveraging the strengths of different actors without impinging on institutional autonomy.

Public-private partnerships in government digitalisation

Since the turn of the millennium, governments have placed significant emphasis on digitalisation. However, it is well established that these efforts are limited by scarce resources and expertise to independently undertake digital transformation. Consequently, governments are increasingly relying on the private-sector to drive their digitalisation efforts to access private sector expertise and cutting-edge technologies such as AI, cloud computing and blockchain.

These partnerships encompass a range of initiatives, from small-scale programmes like the implementation of chatbots for quick access to information and tasks (countries such as Singapore, the United States, and Australia have already implemented chatbots for citizen services), to large-scale programmes such as Google’s Maps Content Partners programme, which collaborates with municipal, regional, and national governments worldwide to integrate geospatial data into user-friendly platforms.

The products usually have many benefits. Geospatial data platforms, for example, facilitate transparency of public transportation information, optimise traffic control and better report accidents. Other examples of public-private partnerships in the realm of information and communication technology (ICT) include smart city initiatives and digital health services. For instance, Barcelona’s partnership with Cisco Systems resulted in the establishment of a connectivity network to support the city’s environmental measures. Estonia has collaborated with several private entities to develop apps such as Hans, an AI support tool for parliamentary transcripts.

Some of the most notable public-private partnerships in government are focused on improving the delivery of e-government services to citizens, encompassing all stages of the service delivery process. This includes cataloguing (data entry/management companies working with government data), transactions (payment processing solutions for e-government services), and vertical and horizontal integration (end-to-end data streamlining services). Furthermore, public-private partnerships are increasingly used to engage in collaborative governance, involving additional actors such as industry associations, non-governmental organisations and civil society organisations.

Collaboration can occur at various stages, such as during the design phase (open forums for private feedback during the development of America’s Open Government Policy in 2009) and the production phase (America’s Library of Congress engaging private citizens/actors in the classification and categorisation of online content). Private sector involvement in government digitalisation has resulted in a diversification of external stakeholders in the planning and delivery of services, with a wide range of possible contractual arrangements between private and public entities, varying in organisational complexity and integration.

As government digitalisation has progressed, the private sector has been recognised as the primary driver of innovation, leading to increased investments in promising sectors and enterprises. For example, the European Union has made substantial investments in public-private partnerships to develop cybersecurity and computing capabilities.

Additionally, involving private players in e-government services allows government agencies to focus on their core services, alleviate technological challenges and support local businesses and the domestic economy. Ideally, such arrangements should save time and money for citizens, improve the quality of service delivery and provide better access to information and government agencies.

Existing literature highlights key features for the success of digital public-private partnerships, including alignment between the public partner’s needs and the public sector’s competences, a shared understanding of service objectives, a shared public and business value orientation and the ability to effectively manage the transfer of knowledge and resources.

Analysing public value shifts in public-private partnerships

Even in digitalisation-based public-private partnerships, analysing shifts in public value poses challenges. There is no consensus on the fundamental definition of what constitutes a public-private partnership, which leads to limited guidance on establishing conventions that safeguard public values.

Moreover, when multiple actors with diverse motives participate in public-private partnerships, conflicts between public and private missions can arise, potentially jeopardising the intended impact on end beneficiaries. Furthermore, while measuring private or financial value is relatively straightforward, measuring public values is more complex.

Academic literature in this domain lacks a cohesive framework, primarily relying on isolated case studies that possess limited external validity. To gain a comprehensive understanding of the impact of public-private partnerships on public values, it is crucial to map the landscape and synthesise key findings from preliminary literature reviews.

The varying nature of public-private partnerships

Public-private partnerships encompass a range of forms, with governments employing diverse contractual and organisational arrangements. These engagements exhibit varying degrees of private and public responsibility, with management contracts and complete privatisation representing the extreme ends.

Between these two arrangements lie the scope of public-private partnerships, where different aspects of public service delivery can be delegated. These aspects are categorised as Design, Build, Lease, Maintain, Own, Operate, Transfer, and Concession. To illustrate one of the models, Build-Operate-Transfer (BOT) models are frequently utilised, particularly for software development projects. In this model, the contracted entity builds and operates the product, transferring all intellectual property and rights to the contractor.

Another significant distinction among public-private partnerships lies in the number of external entities involved, ranging from one-to-one relationships to those encompassing multiple stakeholders. The number of stakeholders in a policy project influences the extent to which coordination, synchronisation, and agreement on common goals can be achieved.

For instance, a government agency hiring a data management company to develop a dashboard for tracking available beds in public hospitals during the COVID-19 crisis would be a relatively straightforward exercise. In contrast, initiatives like smart cities that involve private actors, NGOs and academic institutions (such as the Smart Aarhus initiative in Denmark or the Open Data Initiative in Barcelona) demand robust stakeholder management and citizen engagement capabilities.

Consequently, there is a dynamic interplay between the complexities of public-private partnership structures and their potential for sustainable, long-lasting impact. The public values relevant to each situation vary on a case-by-case basis. While much academic research focuses on examining the impact of specific public-private partnership arrangements, empirical research on the overall effects of private sector involvement on public values in government service delivery remains scarce.

Defining public values

Public values are akin to shareholder value, in that they represent the contribution of an organisation or activity to society. However, the concept of “public value” is highly contested, characterised by overlaps, conflicts and interactions. Nonetheless, it plays a vital role in considering the ultimate benefit to citizens.

Existing literature commonly defines public values in alignment with democratic principles such as transparency, accountability, citizen participation and privacy. There is a general concern that increased private sector involvement in public service delivery may dilute public values. For example, research suggests that improperly managed public-private partnerships can diminish transparency and accountability, result in a loss of control over public services, prioritise commercial interests over public welfare and potentially enable corruption through public borrowing.

Case studies of ICT-based public-private partnerships illustrate circumstances where they are threatened (governments using spyware on citizens), eroded (AI bias in algorithms used by government agencies) and even strengthened (digital inclusion initiatives). However, this research primarily focuses on specific cases, lacking comprehensive insights into the types of public values at stake, their relevance to different public-private partnership arrangements and how external involvement affects them.

The DigiPublicValues approach

Therefore, defining the scope for the question “what is the impact of public-private partnerships on public values” is a challenging task. Motivations and framework conditions for private sector involvement in government digitalisation are highly diverse and can’t be situated under a blanket judgement.

There is stark ambiguity about what forms of public-private partnerships mitigate, secure or enhance public values, and what the key drivers of such impact can be. There is a clear need for systematic research on the nature of these public-private-partnership-like relationships. This is what the CIVICA DigiPublicValues project aims to provide.

This article is the fourth in a series of blog pieces drawing on research from the DigiPublicValues: Preserving Public Values in Privatised Digital Systems project – a joint CIVICA research project by the London School of Economics and Political Science (LSE), Università Bocconi, European University Institute and the Hertie School’s Centre for Digital Governance. This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101017201. Please visit this webpage for more information on the collaborative research projects funded by CIVICA Research.

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