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Working with external stakeholders
The delivery of government services in Australia and internationally, and the administration of government programmes more generally, depends increasingly on the ability of public servants to work effectively with external stakeholders. External stakeholders is a broad term, and can refer to other government agencies and jurisdictions, community groups and other not-for-profit organisations, industry groups and businesses, tertiary institutions and various research groups, unions, and individuals within the wider Australian community.
The APS interacts with external stakeholders in a variety of ways, including through input to policy and programme development. This is particularly important in developing long- lasting solutions to complex and intractable issues sometimes known as ‘wicked’ problems.
Increasingly, non-government organisations are also playing a direct role in delivering government services. The delivery of government services by third parties is sometimes called ‘devolved government’.
Third party service provision—Family Relationship Centres (FRCs)
The Australian Government is making major changes to the way family relationship issues are dealt with through the introduction of a network of Family Relationship Centres across Australia. Underpinning the Government’s reforms are the importance of promoting healthy family relationships, preventing conflict and separation, encouraging agreement rather than litigation, and promoting the right of children to have meaningful relationships with both parents. The Government wants separating parents to focus on their children and agree on parenting arrangements rather than go to court, and it wants families to have access to services to improve their family relationships and prevent conflict.
This programme is jointly administered by AGD and FaCSIA. Services are delivered by a range of contracted community, not-for-profit and private organisations. FRCs must work closely with government and non-government services to ensure families get the help they need.
Devolved government
There are a number of factors driving a greater role for non-government bodies in the delivery of government programmes. These include the drive for greater cost efficiency, for greater flexibility in the delivery of services, and a desire by governments to strategically focus their activity more on core business. There has also been a recognition that for some complex policy areas which need to be tackled to some degree from a ‘bottom-up’ perspective, non-government organisations should be involved in delivering government services both as a matter of practicality (as government does not have the sort of presence and expertise everywhere it is needed) and desirability (it can help if government is not seen as the only entity tackling problems). Involving non-government organisations with stronger community links can assist in developing solutions tailored to particular circumstances and give a sense of ownership to participants.
Expenditure on the delivery of services by third parties makes up a significant proportion of total Australian Government expenditure. Data collected by the Commission from agencies, while incomplete, indicates that at least $40 billion (or 18% of the total Australian Government Budget)5 was spent on third party service provision in 2006–07, with more than half of this money going to non-government organisations (both private and not-for-profit) (see Table 11.2). Agencies were asked to provide information about all instances where a portfolio agency gives money to another non-Commonwealth body to do something for the Commonwealth. These figures do not include services by third parties in relation to the direct operation of APS agencies (e.g. consultancy services, ICT contracts, employee costs), loans, transfer payments (such as Medicare payments and child care rebates made to individuals) which could be seen as an indirect subsidy for the provision of a service, or capital expenditure.
| Third party service provider | $ billion | % |
|---|---|---|
| State/Territory government | 17.845 | 44.0 |
| Local government | 0.532 | 1.3 |
| Non-government organisations | 22.184 | 54.7 |
| Total expenditure | 40.561 | 100.0 |
| Source: Estimates based on data provided by portfolio agencies. | ||
This is the first time that the Commission has collected this data from agencies, and it raised a number of definitional issues. The Commission is working with Finance to develop more consistent definitions for the collection of the data in future.
In 2006–07, the key types of expenditure were:
- specific purpose payments to the States and Territories such as the $753 million payment by FaCSIA for provision of public rental housing under the Commonwealth-State Housing Agreement and the $8.8 billion payment by Health for hospitals through the Australian Health Care Agreements
- special purpose grants such as the $928 million paid to State and Territory Governments for home and community care funding by Health
- discretionary grants such as the Regional Partnership programmes in DOTARS and the payments to community organisations by Defence for services and amenities on bases and support for Defence families
- administered contracts such as those for English language tuition as part of the Adult Migrant English Program (AMEP) in DIAC, provision of Job Network services through DEWR, and those used by AGD to manage the provision of legal aid to organisations delivering legal aid to Indigenous communities.
The use of third parties to deliver services is likely to increase with growing pressure on government to provide flexible and responsive services. This will bring with it new challenges and the need to consider issues such as:
- performance management—how do we develop effective performance indicators, particularly in areas of complex service provision?
- accountability—how do we find the right balance between the need for flexibility and rapid response and community expectation about accountability, and develop workable approaches that can be implemented? How can we ensure that in a more devolved environment, citizens have adequate avenues for complaint or redress?
- capability—how do we enhance the capability of public servants to foster innovation and for systems thinking in areas in which the APS no longer has direct service delivery and expertise? How do we ensure that the APS has the capability it needs in contract design and management, performance management, risk management and stakeholder management?
- devolved decision-making—to what extent, if any, should decision-making about the delivery of services be devolved to non-government service providers?
These are questions that APS agencies are already addressing as they work with third-party service providers. There are no ‘right’ answers, with the solutions needing to be developed to suit the circumstances of the particular service.
Third party service delivery—UK experience
In the UK, the Government is actively looking for ways to increase involvement of the ‘third sector’ (not-for-profit and voluntary organisations) in the business of government, particularly in designing and delivering public services. Partnership in Public Services: An Action Plan for Third Sector Involvement is about training civil servants in how to work with the third sector, providing a commitment to streamlined contract and assurance processes, and creating a summary list of public service delivery opportunities for the third sector. To implement this initiative, the Government has created the Office of the Third Sector and has commissioned an inquiry examining, among other things, the benefits of contestability for the provision of public services, the effects and benefits of commissioning the third sector, financial implications of third sector public service delivery, and comparisons with services delivered by the private sector.
APS interactions with external stakeholders
The Commission’s agency survey asked agencies about the extent to which they were involved in working, in different ways, with external stakeholders. Agencies reported high levels of interaction with stakeholders. Attending meetings to hear stakeholder views was the most common form of interaction, with almost all agencies indicating that their employees either often or sometimes had such meetings. Negotiating policy positions and implementation processes were also common forms of interaction, although the latter was more prevalent. Around 86% of agencies reported that their employees were often or sometimes involved in managing contracts, projects or programmes with stakeholders. Figure 11.3 summarises these interactions.
Figure 11.3: Extent and type of agency involvement with external stakeholders, 2006–07
Figure 11.3 shows the extent and type of agency involvement with external stakeholders in 2006–07. The most common involvement was attending meetings with stakeholders to hear their views and the least common was negotiating with stakeholders to develop mutually agreed policy positions.
Note: Agencies reporting ‘Not applicable’ are included in the denominator.
Source: Agency survey
The extent of agency involvement with external stakeholders appears to be increasing. In particular, those agencies reporting their employees often attend meetings to hear stakeholders’ views increased this year from 79% to 88% and those often negotiating implementation processes increased from 51% to 64%.
Although not directly comparable, employees’ views were generally consistent with agency results (see Figure 11.4). As would be expected from the agency survey, the highest involvement is in liaising with stakeholders. Nevertheless, there is a significant level of involvement in more substantial interactions, including negotiating with stakeholders and contract management.
Figure 11.4: Proportion of relevant APS employees involved in different types of interactions with external stakeholders, 2006–07
Figure 11.4 shows the extent and type of APS employee involvement with external stakeholders in 2006–07. APS employees were most likely to liaise with stakeholders (e.g. arrange meetings provide or collect information, answer enquiries), followed by attend meetings with stakeholder to hear their views and negotiate with stakeholders to develop mutually agreed policy positions or shared understanding of issues
.Note: Employees who reported ‘Don’t know’ are included in the denominator.
Source: Employee survey
Relevant SES employees are most likely to report interactions with external stakeholders (93% usually or sometimes liaising outside their agencies), along with relevant EL employees. Nevertheless, relevant employees at the APS 1–6 levels reported substantial involvement with external stakeholders, ranging from 30% often or sometimes negotiating and managing contracts, projects and programmes, to more than 76% involved in liaison work.
The extensive involvement of APS employees at all levels with external stakeholders highlights the need to develop the necessary skills and capabilities in a wide range of staff. In particular, there is a strong argument for a focus on developing good quality liaison, representational and interpersonal skills and contract management and negotiating abilities.
Frameworks underpinning the relationship with external stakeholders
An important issue for APS agencies working with external stakeholders is to develop appropriate governance arrangements. There are a number of relevant issues here, including the capacity of the not-for-profit sector, funding and accountability arrangements and the complexities of contract design and management. To ensure effective outcomes, some agencies are moving away from a grants-based approach to greater use of performance/ outcomes-based contractual arrangements. This approach is designed to provide greater programme flexibility, while better articulating accountability arrangements.
Agencies put a strong focus on establishing an appropriate framework for their relationships with external stakeholders. Consistent with last year’s results, there is a widespread use of policies and protocols by agencies to guide and evaluate interactions with external stakeholders (see Table 11.3). The large majority of agencies have measures in place to:
- promote consistent and accurate contract management decisions
- safeguard access to ICT systems and protect private and commercially sensitive information
- measure and evaluate performance (e.g. outcomes, value for money).
There is still potential for greater use of measures to protect citizens’ interests in projects managed jointly with stakeholders, currently used by around half of agencies.
Also consistent with last year’s results, 94% of agencies had at least one measure in place, and about one-third of agencies had all four measures in place.
Employees working with external stakeholders were also asked to indicate whether they agreed with a range of statements relating to their agency’s support for dealings with external stakeholders (see Table 11.3). Half or more of relevant respondents agreed with each of the statements, with employees most confident that processes were in place to protect private and commercially sensitive information held on ICT systems. These figures reflect a slight decrease on the results from last year for all categories.
| Agencies | Relevant employees | ||||||
|---|---|---|---|---|---|---|---|
| Agency policy/protocol | Yes (%) | Being developed (%) | No (%) | Not applicable (%) | Agree (%) | Neither agree nor disagree (%) | Disagree (%) |
| Promote consistent and accurate contract management decisions by staff | 81 | 8 | 6 | 6 | 48 | 20 | 6 |
| Safeguard access to ICT systems and protect private and commercially sensitive information | 91 | 6 | 1 | 2 | 69 | 13 | 2 |
| Measure and evaluate overall performance (e.g. outcomes, value for money) | 78 | 9 | 6 | 7 | 49 | 23 | 9 |
| Protect citizens’ interests in projects managed jointly with stakeholders | 48 | 5 | 13 | 35 | 60 | 17 | 4 |
| Source: Agency and employee surveys | |||||||
The relatively lower employee survey results for the first three protocols are likely to reflect the fact that not all employees’ roles require them to apply these protocols. The high level of agreement by relevant employees that citizens’ interests are protected in projects managed jointly with stakeholders, however, suggests that agencies are putting a strong focus on this issue, even where formal policies and protocols do not exist.
Case study—Department of Industry, Tourism and Resources
DITR’s role is to foster the increased prosperity of all Australians through internationally competitive and sustainable business in growing local and global environments.
In October 2001, the Department conducted its first stakeholder satisfaction survey. The decision to undertake a survey arose from the need to assess whether the Department was making appropriate use of resources in delivering its business outcomes. The Department’s stakeholder satisfaction surveys obtain views about how well the organisation is performing in a range of areas, particularly relating to policy development, programme implementation, and staff service. The surveys also identify opportunities for improving the Department’s relationship with its key stakeholders.
Stakeholders surveyed include industry peak bodies, professional associations, State Government departments, local government bodies, academic researchers, and business leaders. Information included in the stakeholder list allows the identification of the specific division and sub-activity relevant to the stakeholder. This facilitates focused responses to questions and allows divisions to identify and deal with possible areas of poor performance or risk.
The results of the first survey were used to develop the Department’s Client Service Charter. Subsequent results will be used to inform a review of the Charter in 2007–08.
The survey results provide:
- DITR’s Executive Committee with valuable information about high-risk pressure points in the Department
- DITR’s divisions with information they need to build improvements into their business plans
- the Department with feedback to assist employees in enhancing their dealings with stakeholders and customers.
The survey process, and the results produced, also assists the Department to meet its statutory obligations and business outcomes. The survey is a valuable component of the Department’s business and governance improvement process.
Working more effectively with external stakeholders
This year’s employee survey asked relevant respondents to provide their ideas on what would improve their ability to work with external stakeholders. A small proportion of respondents who reported contact with external stakeholders took the opportunity to comment, and four main themes emerged:
- A need for greater resources and skills to negotiate and manage contracts.
Devote more resources to the sections that advise contract managers, especially during negotiation of contracts.
The governance overheads on these processes are enormous now, and line managers spend far too much time on them because of inadequate numbers of staff.
My agency has a commitment to increase training in contract management and tendering but does not have commitment to then resourcing these areas.
State and Territory offices are not adequately resourced to manage stakeholders effectively.
- A need for less rigid and complex procurement processes for tenders.
[We need an] ability to pick the best external stakeholder for the task rather than have restrictions based on contracts values. The complexity of procurement guidelines continues to make us ineffective, less timely.
A more holistic approach to ‘value’ when undertaking procurement and commercial activities.
Timelines and overheads imposed by mandatory tender periods are often an obstacle to actually gaining high value for money.
I think it is important to listen to stakeholders’ needs and requirements but at the end of the day public servants should be empowered to make their strategic decisions and align themselves with a clear vision, rather than being swayed continuously by the views [of those] who are not across the entire decision-making process.
… reduce bureaucratic processes and let delegated officers take the responsibility for decision- making within their level of delegation.
- A need for more internal support when entering into contracts and negotiations.
Greater interest and communication from Senior Management would assist [to] clarify stakeholder relationships.
More internal agency, and whole of government, support on contractual, legal and procurement issues. I would like to see the contracts section expanded to meet demand. Their advice and support is of a high order, they just need more staff.
I was left to manage a large number of stakeholder interests in a recent project, usually without much assistance or guidance.
Focus on systematic systems and procedures that enable us to work with stakeholders as part of normal business, rather than having to treat each one in a customised way.
[We need] more consistent action at a high level in my agency and a willingness of senior managers to trust and value the work of staff who have direct contact with stakeholders.
- A need to address problems with consistency in achieving desired outcomes and performance from contracted service providers.
Contracts with providers are too open to interpretation. Contracts with stakeholders should clearly state service standards and performance appraisal procedures with relevant outcomes.
Currently very few contracts contain such measures and we endure suboptimal service without adequate recourse.
[Contracts should have] clear and concise timelines, responsibilities, expectations and deliverables and dynamic intermediate (milestone/decision point setting) and final evaluations, which are robust and provide meaningful quantitative data.
[There is a] need for more budget and time allocation to monitor and meet with contracted services to really ensure government value of money and appropriate use of funds.
In some programs, agency staff have no method of deciding whether a project represents value for money and yet when applications for funding are assessed this is a criteria on which applications are judged … stakeholder consultation and engagement appears to have a very ad hoc approach.
Contracts with consultants should not be on a time-and-materials basis; but on a fixed-cost basis, especially when the target outcome is able to be well-defined, and is on a fixed deadline.
Comments focused largely on contracting and tendering arrangements, and there were few comments about improving relationships or achieving outcomes. This suggests that public servants still have a predominant focus on regulatory and control mechanisms, rather than on establishing the relationships necessary to deliver the sorts of outcomes increasingly being sought by governments, particularly in social policy contexts. It is important that agency heads reinforce to their staff the need to place a priority on relationship management.
5 The estimated $40 billion was compared with $225 billion sourced from 2007–08 Budget Paper No.1, Statement 10 (Table A1: General government expenses by agency, Appendix A: Additional Agency Statistics). Due to the limitations of the data collected from agencies, the percentage of the total Australian Government Budget should be used with caution.
6 It is likely that the total devolved government expenditure is an underestimate, due to definitional problems resulting in not all agencies being able to provide the required information. Some agencies also had problems with allocation of expenditure between categories. Given the limitations of this data, users should exercise caution in how they use the figures in this table.
