By Steve Kelman

Blog archive

Losing citizen rights by contracting?

The BBC morning news ran a segment yesterday about a court case in the United Kingdom about whether the British Human Rights Act, which apparently applies to patients in nursing homes run by local governments, also applies to nursing home patients in facilities that local governments contract out.

This issue has been raised in a number of contexts in the United States by ideological and interest-group opponents of contracting out. It's interesting that this issue has now hit the U.K. as well.

As a policy matter, it is relatively easy to solve this problem -- one may simply put the same legal requirements about citizen rights or protections that apply if a service is provided in-house into a contract and thus have them apply when the service is provided by a contractor. This is, for example, what is done by agencies such as the Department of Education that contract out some student loan debt collection activities.

However, there are two cautions to keep in mind in doing this. One is to make sure that the government-unique protections or requirements actually serve an important public purpose. If these special protections simply embody an idisyncratic way the government does business, and these practices are uncommon among private-sector providers, including these requirements in a government contract simply excludes potential competitors and limits competition to a handful of government-adapted niche providers.

The bigger question, though, is that if these requirements are important, why does the law limit their applicability to government-provided services and not apply them to industry in general? If the requirements of the British Human Rights Act are important for nursing home patients, why not apply them to all nursing homes, not just those funded by the government? We have frequently in the Unjited States put special legislative requirements for, say, hiring people with disabilities, on government contractors that we don't put on businesses in general. These policies tend to reduce competition for government contracts by excluding firms -- which could often provide good value to the government, having been reared in the competitive environment of the private marketplace -- that come out of the non-government marketplace and don't want to adapt their practices to compete for a small amount of government business. At the same time, they are a sort of cop out -- if these policies are good ones, why not require them of all businesses, not just government contractors?

Posted by Steve Kelman on May 01, 2007 at 12:08 PM


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