Efficiency of Contracting out Services in the Public Sector - Experience from the Czech and Slovak Republic

From the theoretical point of view, contracting out services in the public sector should convey efficiency gains. However, the practice results do not confirm the aforementioned assumption. The aim of this study is to contribute to the recent discussion about efficiency of contracting out in public sector via the use of multi-criteria efficiency evaluation using the method of the best value criteria. The study builds on the original research of contracting out in the Czech and Slovak public sector and assesses them from a comprehensive perspective. The research question is set: "Does contracting out in public sector in the Czech and Slovak Republic bring efficiency gains?" To answer the research questions two alternatives of services provision, namely internalisation and contracting, were evaluated. The three criteria, 1) expenditure on the provision of the service per citizen/employee, 2) the expenditure per performance indicator and 3) the quality of services evaluated on the basis of citizen/employee satisfaction as consumers of services were used in evaluation. It is not possible to come to the final conclusion about higher efficiency of internal versus external production. However, what can be clearly and undoubtfully documented is the fact that depending on the concrete case the more efficient solutions differ. The core factor of the limited success of contracting out - the quality of contract management represent critical problem in the Czech and Slovak Republic.