The Promises and Pitfalls of Prime Provider Models in Service Delivery: The Next Phase of Reform in Australia?

Abstract

At a time of fiscal restraint and reductions in the size of the public sector, governments in Australia are exploring new approaches to delivering public services. One model receiving attention is the prime provider approach. This is an approach where government contracts a lead or prime provider who in turn organizes and manages a group of sub‐contractors. In prime provider approaches, non‐government organizations take on a quasi‐government role and this brings a new complexity into the relationships between the various actors involved in developing and delivering public services. This article provides an overview of prime provider approaches and, drawing on the limited research to date, poses questions that we view as being critical to the current debate. The aim is to provoke further discussion on the potential impact of prime provider approaches.

New Models of Contracting in the Public Sector: A Review of Alliance Contracting, Prime Contracting and Outcome‐based Contracting Literature

“…The literature identified by this review suggests that alliance contracting, prime contracting and outcome‐based contracting are undertheorized areas. Much of the literature is normative in basis, does not consider issues from a theoretical perspective, and does not give empirical evidence (Gallet et al ; O'Flynn et al ; Chen et al ; Buchanan and Klinger ). A recent growing literature is concerned with identifying the applicability of these models to the NHS in the light of the current policy literature (e.g.…”

“…The model is based on the belief that commissioners should move away from micro managing complex supply chains, and that moving this responsibility to a lead provider will result in better integrated services (Corrigan and Laitner ; Matthews and Parker ; O'Flynn et al ). There is evidence of the use of prime contracting in defence (Matthews and Parker ; Pryke ; Kebede ; Ndekugri and Corbett ), the construction industry (Bemelmans et al ; Voordijk et al ; Burtonshaw‐Gunn and Ritchie ; Rojas ), and contracts for the provision of welfare services (Finn , ; Hudson et al ; Gallet et al ). In common with alliance contracting, albeit to a lesser degree, prime contracting emphasizes the development of trusting and co‐operative relationships between contractual partners, both between the client and the prime contractor team (Defence Estates and Ministry of Defence ; Kebede ), and within the supply chain (Finn : 5).…”

“…Although it is expected that prime provider contracting also relies on relational norms due to the ongoing specification of performance, this is not recognized to any great degree in the literature. This is particularly interesting as relationships between prime contractors and sub‐contractors can become strained if risk and cost pressure is passed down the supply chain (Matthews and Parker ; Gallet et al ; Finn ). Distrust may occur between prime and sub‐contractors due to the perception that prime contractors are profiting from the contracts at the expense of sub‐contractors (Gallet et al ; Maddock ; Matthews and Parker ; Finn ).…”

“…A third distinguishable theme emerging from the literature, in addition to the implementation and impact of these new contractual models, concerns public sector governance. The transfer of risk and accountability from commissioner to provider inherent to varying degrees in these models is held to be in tension with public sector governance objectives including accountability, integrity and transparency (Davies ; O'Flynn et al ; Gallet et al ). The notion that risk can ever fully be transferred from principal to agent in any context is itself subject to debate, as responsibility for the contract reverts to the principal should the agent fail mid‐programme (Caldwell and Howard ).…”

Critiquing Food Security Inter‐governmental Partnership Approaches in Victoria, Australia

“…:157), engaging a lead contractor organisation to be responsible for organising and facilitating sub‐contractors to deliver required services (Gallet et al. ), and relying on not‐for‐profit organisations to take on core social and environmental service roles (Hall et al. ; Phillips and Hebb ).…”