Delivering public outcomes as a government supplier: public value, accountability and last-mile delivery

Many Australian businesses earn a significant share of their revenue from government: building and maintaining assets, running services, supplying equipment, managing data, providing advice. Government contracts can be stable and substantial, but they differ from private work in ways that catch suppliers out. The customer is accountable to ministers, parliaments, auditors, ombudsmen and the public. Success is measured by public outcomes, not just whether the contract’s outputs were delivered. And failures are visible, sometimes in the media, long after the contract was signed.

Suppliers who understand these differences do better. They frame proposals in terms of public value and show they can deliver it. They support the government’s accountability rather than resisting it. They recognise that many public outcomes depend on what happens at the edges of a service, in clinics, depots, homes and local offices, and design delivery accordingly. And they build governance that detects and corrects problems before they become public failures.

This article explains the public value test that government decision-makers apply, why accountability cannot be outsourced and what that means for suppliers, how to design delivery when outcomes depend on many distributed decisions, and how to think about governance as a control system. It is general information for businesses that sell to or deliver services for government. Procurement rules, privacy obligations and contract requirements differ between the Commonwealth, states, territories and local government, so check those that apply to each contract.

The public value test

Private investment decisions centre on whether an investment strengthens the business. Public decisions must consider a wider field: social outcomes, who gains and who loses, public trust, legal authority, effects on other agencies and whether public systems can sustain the result.

A widely used framework, adapted from Mark Moore’s work on creating public value, describes three conditions that must all be met:

• Public value: is the outcome worth creating for the community? Who benefits, by how much and over what time?
• Legitimacy and support: is the initiative authorised and supported by law, policy, elected government, stakeholders and the community, enough to survive implementation?
• Operational capacity: can government and its delivery partners actually produce and sustain the outcome, with the funding, people, systems, suppliers and coordination required?

None of the three is enough alone. A valuable initiative without legitimacy stalls. A popular initiative without operational capacity fails in delivery. An easily delivered initiative that creates little value wastes public money.

For suppliers, this framework is practical. A proposal that shows clear public value, aligns with the authorising environment and demonstrates realistic delivery capacity is easier for decision-makers to approve and defend. A proposal that promises benefits without evidence, or capacity the business does not have, creates risk for the buyer.

Public value and cost-benefit analysis

Government business cases often use cost-benefit analysis, which counts costs and benefits to society as a whole, including externalities: effects on people outside the transaction, such as noise, emissions, congestion, safety or wider economic benefits. A positive result does not settle the decision. Aggregate benefits can exceed costs while particular groups carry concentrated losses, and legitimacy and capacity still need testing. The cost-benefit analysis for business decisions article explains the method.

Suppliers can help by providing evidence for the benefits they claim, being honest about uncertainty, and identifying who will be affected and how.

Accountability cannot be outsourced

Government can contract out delivery. It cannot contract out accountability. An agency remains answerable to citizens, parliament and service users for the outcome, even when a private party builds the asset or runs the service. National PPP policy states this explicitly for partnerships, and the same principle applies to ordinary service contracts.

Public services carry obligations that are not purely commercial, such as:

• Privacy of personal information.
• Transparency to parliament, auditors and, within limits, the public.
• Health and safety of users, staff and the community.
• Equity and access, especially for vulnerable users.
• Continuity of essential services.
• Fairness in how people are treated.

Data is a particular point of friction. Records created while delivering a public service, such as user records, asset condition data and performance reports, are often needed by the agency for its own accountability and for any future transition. Agree early who owns the data, how it will be stored and secured, how the agency can access it during the contract and how it will be handed over at the end.

Financial penalties under a contract may compensate government commercially while users still experience harm. A late ambulance, a lost record or a missed inspection is not fixed by a payment deduction.

What this means for suppliers

• Expect scrutiny. Government contracts can be examined by auditors, ombudsmen, parliamentary committees and freedom of information processes. Keep records that would stand up to that scrutiny.
• Support transparency. Provide the reporting, data access and audit rights that let the agency account for the service.
• Protect personal information. Under Commonwealth privacy law, agencies must take contractual measures to ensure contracted service providers handle personal information in line with the Australian Privacy Principles, and states and territories have their own privacy regimes. Treat privacy obligations in contracts as core, not boilerplate.
• Plan for continuity. Agencies need assurance that services will continue if a supplier fails. Expect step-in rights, transition plans and requirements to hand over data and knowledge.
• Manage probity and conflicts of interest throughout tendering and delivery.
• Engage with social procurement objectives, such as policies supporting Indigenous businesses, local employment or social enterprises, which many governments apply.

The writing tender responses buyers can evaluate article covers presenting capability and evidence in government tenders.

The last-mile problem

Some public outcomes are controlled at a single asset: a bridge is either safe or it is not. Others are produced by thousands of small decisions spread across many people and places: how clinics segregate waste, how households heat their homes, how local teams maintain equipment, how field staff apply standards, how subcontractors handle data. Leadership can set policy centrally and still fail because the decisive behaviour happens at the edge.

Research illustrates the choice. A study of air pollution in a Polish city found that emissions came largely from many household boilers burning low-quality fuel; cleaner district heating was available, but many households faced the cost of switching, while support schemes favoured larger buildings. A study of healthcare waste in a Kenyan county evaluated concentrating treatment in a central facility rather than relying on many small clinics, using geographic analysis to find suitable sites. One problem called for changing many distributed decisions; the other considered redesigning the system so control sat in fewer places.

There are three broad responses to a last-mile problem:

Two lessons follow. First, a rule is not control. Distributed actors need the capability, equipment, incentives and supervision to comply. Second, non-compliance is often an economic design problem, not an attitude problem. If complying costs the people at the edge more than it benefits them, voluntary compliance will predictably underperform. Suppliers who design delivery around these realities, making the right action the easy and affordable one, outperform those who rely on rules and penalties.

Governance as a control system

Governance often fails not because rules are missing but because the system cannot sense, decide and act. An engineering view helps. A working control system needs:

1. A signal that reveals deviation, such as data, inspections, complaints or reports from staff and users.
2. A channel that carries the signal to decision-makers without being filtered or suppressed.
3. A decision point with the independence and authority to interpret it.
4. Capacity to act: resources, powers and the willingness to change things.

Failure at any point disables the whole system. Monitoring is useless if reports are suppressed. An independent decision-maker cannot act on what it never hears. Reporting creates cynicism if nothing follows. Research on regulation also suggests that extra enforcement capacity has diminishing value once compliance is achieved, and that capacity cannot compensate for decision-makers who have been captured by the interests they oversee.

For suppliers, this means building contracts and operations so that problems surface quickly and honestly:

• Measure outcomes, not just activity, and share data with the agency.
• Create safe reporting channels for staff and subcontractors, including for concerns about the business’s own performance.
• Escalate early, before problems become crises.
• Give frontline teams authority to stop unsafe or non-compliant work.
• Review governance periodically, asking where signals might be lost.

Measuring outcomes without perverse incentives

Outcome measures help agencies account for services, but poorly chosen measures can distort behaviour. A target for call answering times can encourage short, unhelpful calls; a target for completed inspections can encourage superficial ones. Good measures:

• Combine outputs and outcomes, such as collections completed and contamination rates, or repairs done and repeat faults.
• Include quality and user experience, not just speed and volume.
• Are agreed with the agency and reviewed as the service matures.
• Are hard to game, with audits or sampling to confirm reported results.
• Are fair to the supplier, separating what the supplier controls from what it does not.

Suppliers who propose sensible measures, rather than waiting for them to be imposed, often find contracts easier to manage and disputes less frequent.

Starting out in government work

Smaller businesses entering government markets should start with contracts that match their capacity, learn the procurement rules and evidence requirements, and build a record of delivery. Panels, subcontracting to larger suppliers and smaller local government contracts are common entry points. The grants, incentives and selling to government article covers the early steps and the risks of depending on public work.

A worked example

This is an illustrative example. A regional services company wins a contract with a state health agency to collect and dispose of clinical waste from about 60 small clinics. The contract sets standards for segregating waste and penalises contamination, such as general waste in clinical bins or sharps in the wrong containers. In the first months, contamination is found in about 18% of collections, and the agency is concerned about safety and cost.

Diagnosis. The company visits clinics and finds that the problem is not indifference. Bins differ between rooms, labelling is unclear, staff turnover is high, collection days do not match clinic workloads and nobody gives clinics feedback until a penalty arrives.

Redesign.

• Standard colour-coded bins and clear labels are supplied to every clinic.
• A ten-minute induction for new clinic staff is provided on site and online.
• Collection schedules are adjusted to clinic activity, so bins do not overflow.
• Drivers record contamination with photographs through a simple app, and each clinic receives a monthly summary.
• A dashboard shared with the agency shows trends by clinic, so the agency can account for the service and target support.
• Drivers can refuse unsafe loads and escalate to a supervisor, with a same-day response.

Result. Contamination falls to about 4% of collections within six months. The agency has better information for its own reporting, and the relationship shifts from penalty disputes to joint improvement. The company uses the results as evidence in its next tender.

Applying this as a government supplier

• Frame proposals around public value, legitimacy and operational capacity, with evidence.
• Be honest about capacity and uncertainty.
• Support the agency’s accountability with reporting, records and audit access.
• Treat privacy, safety, equity and continuity as core obligations.
• Design last-mile delivery so the right action is easy and affordable for those who must take it.
• Measure and share outcomes, not just outputs.
• Build governance that senses and acts, with safe reporting and early escalation.
• Check the procurement and privacy rules that apply to each level of government.

Where government supply relationships go wrong

• Promising benefits without evidence or capacity.
• Treating accountability requirements as red tape.
• Relying on rules and penalties to control distributed behaviour.
• Measuring activity instead of outcomes.
• Suppressing or filtering bad news.
• Ignoring continuity and transition planning.
• Weak handling of personal information.

Questions to ask about a government contract

• What public outcome does this contract serve, and how will we show we contributed?
• Who in the authorising environment needs to be confident in this service?
• Do we really have the capacity we are promising?
• Which outcomes depend on many people at the edges, and how will we support them?
• How will problems reach decision-makers quickly and honestly?
• What would the agency need if we failed tomorrow?

Bringing it together

Government contracts are judged by public outcomes. Suppliers succeed by understanding the public value test, which requires value, legitimacy and operational capacity together, and by supporting the government’s accountability rather than resisting it. Many outcomes depend on distributed decisions at the edges of a service, so design delivery that makes the right action easy and affordable, rather than relying on rules alone. Build governance as a control system that senses problems, carries signals honestly, decides independently and acts. The result is services that deliver what the public needs and supplier relationships that last.

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Source: KEVOS editorial notes, drawing on earlier KEVOS corporate articles on public value, public accountability in partnerships, last-mile governance and governance as a control system, together with general knowledge of Australian public procurement and privacy frameworks. Research referred to includes Mark Moore’s work on public value and published 2017 studies of urban air quality, healthcare waste management and regulatory capacity. The worked example is illustrative. This article is general information, not legal advice.