The USA

The USA was the starting point for the ‘Re-inventing government’ philosophy of the mid to late 1990s and there are now some 49 states who contract out some services.  The state of Wisconsin has been see as being at the leading edge of many of thse reforms, partly because it is seen to have been influential in the reforms taking place in New York.

The important features in this transformatiom seem to be:

• Bi-annual contracts;
• A ‘Prime Contractor’ model for an area, with local sub-contractors;
• A system of 80% fees and only 20% for outputs;
• Performance is judged on results along with client satisfaction, employer satisfaction and other measures;
• The right of ‘First Selection’ if performance is acceptable (38 out of 69 contracts were renewed on this basis in 2003).

In terms of results this has produced:

• No conclusive evidence that the private sector is better than public or not for profit agencies;
• A dramatic decrease in caseloads on welfare (300,000 to 15,000 in ten years) but a corrsponding increase of those on poverty programmes (the Food Stamp programme now has 200,000 recipients);
• Extensive audit evidence of perverse incentives (turning people away) in initial programmes that have required re-design.