Delegation without Agency Loss? The Use of Performance Contracts in Danish Central Government

Abstract

Performance contracts entered between ministerial departments and their agencies are used throughout the Danish central government. The article analyzes the use of performance contracting in 2005. The analysis draws on transaction cost theory and actor-centered institutionalism, stressing the bargaining aspect of hierarchy and the importance of economic and political transaction costs. The analysis shows considerable variation in the content of performance demands. Ministries with different organizational designs use contracts in markedly different ways and agencies with a strong interface to individual citizens and businesses are more likely to meet demands regulating policy delivery and service levels. Further, contracts contain substantive clauses, the terms of which are largely assessable. It also shows that performance contracts only rarely specify demands related to cost efficiency within agencies. Many of these results are statistically significant, even though a general point is the wide variation in the implementation of performance contracts between individual ministries.

Politicization and the Replacement of Top Civil Servants in Denmark

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Public Sector Reforms: New Public Management without Marketization? The Danish Case

“…In contrast, those scholars who have analyzed the reforms, including the tools/mechanisms promoted by the reforms, in a more substantial manner, and have used "hard cases" in their analyses, have reached different conclusions (cf. Binderkrantz & Christensen 2009a, 2009bChristensen & Petersen 2010;Hansen, 2008;KREVI 2008;Lubanski 2007;Petersen & Vrangbaek 2010). Many of the alleged market instruments (e.g., tenders, PublicPrivate-Partnership, and principal-agent performance contracts) have in practice not been implemented.…”

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Bureaucratic dilemmas: Civil servants between political responsiveness and normative constraints

“…The department acts as a secretariat to the minister, and policy implementation is delegated to agencies. Agencies normally report to the department and are thus subject to full ministerial control (Binderkrantz & Christensen, 2009). This organization is complemented by an equally clear image of the operation of central government.…”