Government by Proxy

Government by proxy refers to administering government programs by network or contracted agencies. Government by proxy was widely voiced by scholars starting in the 1980s. Network government has grown enormously over time. The federal government increased its assistance to state and local governments through grants and loans. In addition to the contracted services and loans, the federal government also created some quasi-governmental agencies to deliver public services. Amtrak and the United States Postal Service are two examples of these quasi-governmental agencies. The interesting thing about the government by proxy is that each service delivery and production relies on proxies instead of the governmental responsibility or direct production or service delivery by the government. Thus, government effectiveness depends on the performance of so many proxy agencies, as well as on government performance.

Several factors contributed to development of government by proxy: changes in the nature and scope of the governmental mission, changes in technology, constraints in budget, and market forces. The several forms of government by proxy include contracts (federal government contracts its goods and services to private companies, recently to nonprofit organizations as well), grants to state and local governments (federal government provides grants to states and local governments so the services can be rendered at these government levels instead of the federal government), tax expenditures (tax breaks or tax incentives), loan programs (federal government makes loans available from student loans to mortgages), and regulation (federal government develops rules to govern activities of individual citizens and private entities). State and local governments also are adopting government by proxy in their services. Waste collection, for example, is mostly contracted to private companies in small and large cities.

Government officials at all levels of government make decisions on contracting services and the acquisition of materials and goods. Recently, public agencies have been depending on third parties for delivery and products. The contracted service has broader impacts on the economy and on nonprofit and private-sector organizations. It is not easy to measure the performance of the contracted services. It is also a significant challenge for public agencies to determine if they met their policy obligations by the contracted services.

Evaluating quality and performance of services rendered by a third party is a highly complex process. Efficiency, effectiveness, equity, high performance, responsiveness, and accountability are important criteria for contracted services. Public agencies should go beyond the traditional evaluation criteria in evaluating the performance of government by proxy. Public managers should consider the entire contract process and the relationships in their evaluation of the performance. The contract management can be seen as an essential tool for policy implementation by the contract managers in government agencies. Building capacity is an important issue for leaders of the public sector in managing the indirect government.