When it is done well, contracting obliges commissioners and delivery agents to clarify the intended outcomes of the service in question, and the resources (people, money and time) that will be required to deliver those results.56 This was particularly the case with facilities and services procured under the Private Finance Initiative, where the scale of the projects, the extent of risk transfer, and the early involvement of external financiers, resulted in a robust debate over such matters.
This was a deliberate design feature of early PFI contracting. When this model was being developed by HMT in the mid-1990s, Steve Robson, then Second Permanent Secretary of the Treasury, explained that some of their interest in this model lay in the expectation that it would stop the game where agencies lied about costs and benefits until ministers had announced the project.57 This is now politely referred to as 'optimism bias', but Robson was right in regarding it as a form of systemic self-deception - there appear to be particular circumstances where ministers and civil servants lose their grip on reality. This is not a question of capability but of perverse incentives and cultural settings which robust process arrangements such as gateway reviews can manage only in part.
Done well, contracting serves to challenge this tendency to self-deception. This is the core principle on which the discipline of commissioning is built - commissioners are not only given a range of levers to ensure that the hand-off from policy (and funding) to delivery is managed well, they are also provided with a place to stand. It is as much a question of authority as it is of capability.
When commissioning and procurement are done badly - in circumstances where there is only weak authority or incentive to challenge - the contractual boundary serves to magnify the self-deception (on both sides). And of course, in a market where there is little trust and where both sides are gaming the system, the boundary becomes a conflict zone.
This is not primarily about the public-private divide, but rather an extreme version of the traditional differences between policy and delivery, evidenced by the following example.
In July 2016, the NAO reported on the UnitingCare Partnership, a limited liability partnership formed by two NHS foundation trusts, which won a five-year contract to deliver community services for adults and older people in Cambridgeshire and Peterborough. The contract was terminated after eight months when the parties failed to agree on costs. There appears to have been inadequate attention given to the time and cost of transition, and an optimistic estimate of savings - UnitingCare significantly outbid its private sector competitors in this regard, who were more experienced.58
When contracting works, it is because certain design characteristics are in place. The experience of the past few years suggests that when those features are not present - when the self-deception is not challenged - contracting may deliver worse results than when services are delivered directly by public providers and they are funded primarily for capability and flexibility.