- 10 Marks
PSAF – May 2017 – L2 – Q1a – Public sector fiscal planning and budgeting
This question examines the fundamental differences between public and private sector entities, the concept of outsourcing, and factors to consider when outsourcing in the public sector.
Question
a) The current medium-term strategic plan of Dumko Municipal Assembly (DMA) has the overall objective of improving the performance of the Assembly. One critical strategy towards the attainment of this goal is the adoption of a new public management strategy to increase participation of the private sector in the provision of public services without losing sight of the differences between the public sector and the private sector. In fact, some of these differences are so fundamental that they cannot be washed away anytime soon.
The Chief Executive suggested outsourcing as a key strategy in improving the delivery of public services at the local level through the private sector. DMA is currently bedevilled with poor revenue mobilization, lack of proper data on the Assembly’s activities, and poor infrastructure provision. Other supporting activities like cleaning and security are not well performed or are performed at a very high cost by internal staff. These issues have been tabled at the first strategy meeting convened by the Chief Executive.
Required:
i) Describe THREE fundamental differences between public sector and private sector entities that DMA should take cognizance of in pursuance of the new public management strategy. (3 marks)
ii) Explain the term ‘outsourcing’ in the public sector context and advance TWO arguments for the use of outsourcing by DMA in its operations. (4 marks)
iii) Explain THREE factors that the management of DMA should consider in making the decision to outsource some of its functions. (3 marks)
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