Resetting the Balance in Public-Private Partnerships

August 24, 2015
By Bill Nolte

It’s more than just a cliché, but not enough people realize what really must be done.

I may not be alone in having a list of favorite phrases that come up when senior government officials address conferences of one sort or another. Sometimes I even maintain a private checklist: how many of the “big ones” did the official hit? “Thinking outside the box” may be past its prime, but it still shows up. “We need a paradigm shift” will never, unfortunately, go away, nor will “our employees are our most important resource.” At intelligence-related events, I can usually count on several variations on “we’ve solved the technical problem; all that remains is the cultural issue.” I never get a sense that the cultural issue is going to be addressed, but there it is.

If the audience includes representatives from the corporate sector, I can expect to hear about the central, essential or critical—or all of the above—role of public-private partnerships. I believe the speakers believe this. I am, however, less confident they understand the degree to which changing times and changing technologies fundamentally have altered the balance between government and the private sector. Too many actions and too many structures continue to imply that the balances—in energy, in innovation and even in talent—favor government, as they generally did in the period from 1950 through 1980 or so.

That earlier balance may remain in certain areas, but government’s edge overall has declined over the last 50 years. For example, gone are the days when space was a government monopoly, with the private sector building to meet government specifications. In the 1950s and 1960s, the leading government users of computing technology, largely concentrated in defense, intelligence and a few other areas, probably were correct in believing they represented the leading edge in information technology development and applications.

Somewhere in the 1970s or 1980s, government’s information technology edge began to erode, displaced by the emergence of the personal computer followed a few years later by the Internet. At the same time, federal participation in the research and development world began to decline. According to the American Association for the Advancement of Science, the federal government’s share of U.S. research and development funding, as a percentage of gross domestic product, has been halved since 1976. A longer look back to the 1960s, for example, almost certainly would show that the change began well before 1976.

Finding other metrics supporting this overall trend involves little more than frequent glances at the business page of any major newspaper or the federal government pages of any Washington-based publications. Whether it is government’s inability to compete for cyber professionals or the trend for companies to spin off their government business to new entities that must at times feel like the losers in a lifeboat drill, trends suggest that government increasingly is the trailing edge partner in relationships it once dominated and drove.

There may be nothing inherently wrong or improper in this shift. The problem occurs when the trailing edge partner appears not to understand that the shift has taken place, or when that partner uses its financial clout to insist on procedures and processes reflective of an earlier time and an earlier balance. For example, a frequent and depressing topic at AFCEA intelligence committee meetings is federal acquisition policy. Imperfections in this process are as old as the republic—it was Alan Shepard, I think, who once noted the stress of going into space on something built by low bidders on a government contract—but it would be hard to argue that the process over recent decades has become more complex and more congested than at any time in our history. The process has slowed, while many of the technologies targeted by the acquisition process are moving and evolving at ever faster paces.

Acquisition simply may be another of those pesky “cultural” problems, but the issues it represents cut across an increasingly sclerotic public sector. Keep in mind that private sector organizations that lose their agility often will resolve their place in a shifting environment simply by going away—a harsh but useful Darwinian outcome. Public institutions generally exempt themselves from such outcomes to the detriment of themselves, the public and the nation. This is true not just in the national security sector of our life, but also in fields such as health care and education. In education, administrative overhead has grown faster than educational expenses—not to mention the rate of inflation—for at least the last 40 to 50 years, a period in which, by many measures, U.S. education has declined against international competition.

In a future item in this series, I intend to address the most outdated of public sector technologies or methodologies—the bureaucratic model itself. For now, let me suggest simply that making the future of public-private partnerships more than a CEO platitude will require significant attention to adjusting the balances within such relationships. The CEOs are right: public-private partnerships have been critical to our security and our success as a nation. They are almost certain to prove equally central to our future. The private sector portion of this relationship may have issues of its own, but clearly the trailing—if not failing—partner is on the public side. And the issue needs to be addressed, even if it means dealing with a stubborn culture issue or two.

Bill Nolte is a research professor at the University of Maryland School of Public Policy.

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