Contract and Voucher in Public Service Delivery; Institutional Design and Rule Making

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In this research, the current situation and the issues in providing efficient and quality public services were clarified, having considered the possible methods of public service delivery in Japan: by means of contract, the designated manager system and voucher (quasi-market), in addition to direct delivery by Public Administration. Moreover, the present state and the challenges faced by third sector organizations, which are viewed as one of significant providers of public services, were also identified.The problems that were indicated included: that sole source contracts where competition is eliminated remain frequently employed in contracting and in the designated manager system, and that market entry is restricted to specific judicial personalities in the voucher system. We suggest possible solutions to these problems such as introducing performance-based contracting to ensure accountability for the use of public funds, while protecting autonomy of private organizations at the same time, in the cases of contracting and the designated manager system. In the fields where possible, a voucher system should be introduced to allow user choice and competition among diverse service providers.In addition to improving the institutional designs as above, structuring of certain rules is also required, such as concluding an agreement similar to Compact in the UK, which sets out rules of operation to be followed by both the Government and the voluntary sector based on a gentlemen’s agreement. Establishing a method of calculating the full costs of projects, including the overhead costs, is another.