Third‐Party Governance: Using Third Parties to Deliver Governmental Goods and Services By Jessica N.Terman (Ed.), New York, NY: Routledge. 2024. p. 209 $51.99 (paperback). ISBN (print) 9781032261775
本书通过案例和理论框架，深入分析政府利用第三方实体（如外包和公私合作）提供公共服务的机制、挑战与问责问题，适合政策制定者、学者和实践者参考。
Governments utilize various strategies in public service delivery, depending on factors such as the nature of the service, market dynamics, and other considerations. The most common approaches include in-house provision, contracting out, or joint public service delivery. In her work, “Third-Party Governance: Using Third Parties to Deliver Governmental Goods and Services,” Jessica N. Terman explores the role of third-party entities in collaboration with governmental structures in public service delivery. Terman's book constitutes a valuable addition to the literature on public administration and policy, offering a nuanced understanding of the interplay between government and market forces in enhancing public welfare. The book focuses on outsourcing and public–private partnerships, analyzing their implications for democracy and governance effectiveness. The discussions provide useful insights for policy makers, scholars, and practitioners alike through real-world case studies and detailed theoretical frameworks. Additionally, Terman's book fills a gap in the literature by focusing specifically on third-party governance within the realm of public administration and policy. While other works may cover similar topics, Terman's book provides a more in-depth analysis of administrative behavior, decision-making processes, and the complex dynamics of collaboration in public service delivery. This book is relevant for policy makers seeking insights into innovative governance mechanisms, scholars interested in advancing theoretical discussions on public administration, and practitioners involved in public service delivery and contracting processes. Terman's writing style is accessible, making the book suitable for a wide range of readers, from seasoned professionals to students exploring the field. The most distinguishing feature of this book is its use of case studies. These case studies not only contextualize theoretical discussions but also offer practical illustrations of how theories manifest in real-world scenarios. Terman weaves together theory and practice to ensure readers grasp the complexities and implications of third-party governance comprehensively. Beginning with the first chapter, the author sets the stage for the subsequent exploration of third-party governance. For instance, the examples of contrasting service delivery mechanisms (e.g., the direct government services, such as the United States Postal Service, and the indirect implementation of public policies through non-governmental actors, such as federally guaranteed student loans) succinctly introduce the author's main arguments for the book to the readers (pp. 1–4). The model for illustrating the book's thesis through cases enhances comprehension and demonstrates how theories about third-party implementation can be applied in practice. The three chapters that follow the book's introductory chapter explore a central theme that emerges regarding the complex interplay between government and market dynamics. They illustrate how these two sectors interact and cooperate in specific circumstances. In these chapters, Terman delves into the multifaceted role of government in society, emphasizing its function in democratic governance, the challenges of government failure, and the delicate balance required to maintain both governmental structure and individual freedom. Terman illustrates how government decisions affect individual preferences and collective decision-making processes by using concrete examples such as elections in Virginia and the dynamics of the GIG economy (pp. 16–20). In addition, the author discusses government failure, including thoughts on information failures, self-interest of political actors, and short-term policy solutions. Meanwhile, she also explores the connection between equality and economic activity, providing a practical perspective on the importance of government intervention. Real-world examples, such as the Baltimore Tracks program—a partnership between Baltimore City and local tech companies to provide paid summer internships to high school students interested in technology careers—bring relevance to the discussion, showcasing how targeted government initiatives can address societal needs and foster economic development (p. 28). In addition, Terman navigates the concept of government intervention in market dynamics, exploring economic freedom, market behavior, and government oversight of economic endeavors. Terman emphasizes the importance of economic transactions within third-party governance structures and examines the principles that underlie market efficiency, including Adam Smith's (1776) theory of the invisible hand. The discussion also extends to instances of market failure, including negative externalities, information asymmetries, natural monopolies, and public goods. Using examples such as the Kroger-Albertsons merger and BetMGM's handling of winnings, the text demonstrates the real-world implications of market dynamics and government involvement (pp. 50–53). As Terman argues, concerns about the relationship between information asymmetry and market failure can be extended to service professions such as medicine and finance. An examination of certified professionals who adhere to standards set by professional groups such as the American Medical Association shows how these standards can serve as a barrier to entry for those unable to meet them, thereby ensuring ethical behavior in the marketplace. …in the case of public goods, it does not mean that the goods must be directly provided. It only means that the government should probably pay for it. For whatever reasons, there is a social benefit that has positive externalities such that it is worth putting public tax dollars toward in order to provide it (p. 61; see also Sclar, 2000). Exploring third-party governance involves a pivotal decision-making process: internally producing a governmental good or service or procuring it from the market. This dilemma, commonly called the “make or buy” decision within government circles, involves weighing the options of handling production internally or sourcing it externally. Chapter four traces the historical progression of government procurement and contracting practices in the United States. Kicking off with an examination of the ideological underpinnings of neoliberalism, the chapter elucidates the ideology's emphasis on the open market as a driver of societal well-being alongside reduced governmental intervention. This ideological backdrop provides essential context for understanding the rationale behind using third parties to furnish government-related products and services. Reforms such as New Public Management advocated for integrating private sector methodologies into public agencies and restructuring the public sector to prioritize competition and market dynamics. The chapter sheds light on the intricacies of outsourcing inherently governmental functions to private contractors through detailed case studies and historical examples. Additionally, historical patterns in government procurement, such as the emergence of the military–industrial complex, are explored, underscoring their implications for national security and technological innovation. A notable aspect of the discussion in this chapter is the presentation of a five-category typology of PPPs that considers the level of private sector involvement and risk-sharing arrangements. Case studies to illustrate the typology are useful, especially in the case of the Hoover Dam. Partnering with Six Companies, Inc. during the Great Depression, the government overcame financial and logistical hurdles to construct the dam, delivering a remarkable public works project (pp. 95–102). This collaboration highlights the significance of tapping into private sector expertise and resources for addressing large-scale infrastructure challenges. Through risk-sharing and efficient coordination, both parties could complete the project ahead of schedule and under budget. Ultimately, the discussion focuses on the roles of government and market forces and their intricate cooperation under certain conditions. Terman illustrates how the government and market sectors interact closely and adopt various forms of cooperation to improve public service delivery. This examination provides valuable insights into the evolving landscape of third-party governance and its implications for the future. Transaction cost theory often informs “make or buy” decisions. Chapter five highlights the significance of transaction costs in understanding economic exchanges, contrasting idealized theories with the complexities of real-world transactions. The contribution of this chapter is to explore the intricacies of transaction costs and their role in third-party governance, explicitly focusing on the decision-making process between making or purchasing government goods and services. Terman begins her exploration by asking a fundamental question about government involvement: Should governments “make or buy”? She uses examples, ranging from office supplies to fleet maintenance, to illustrate the nuances of this decision-making process. Outsourcing office supplies demonstrates the effectiveness of market competition, while a case study in Indianapolis shows how internal departments competing for contracts can increase productivity and reduce costs. This comparison highlights the intricacy of service exchange, which challenges traditional market theories. Terman argues that decision-making is not only based on cost considerations but also heavily influenced by market conditions and the distinctive features of government goods and services. These factors significantly shape transactional dynamics. Terman emphasizes the role of transaction costs and contrasts theoretical ideals with real-world complexities. Oliver E. Williamson's transaction cost theory emphasizes the significance of efficient governance structure (Williamson, 1981). Terman uses the example of General Motors and Fisher Body to demonstrate how transaction-specific investments and uncertainties influenced integration, resulting in reduced external procurement costs. The author examines the factors that impact transaction costs, such as asset specificity and measurability. The chapter highlights strategies such as in-house production and effective contract management to mitigate these obstacles. Additionally, the chapter explores methods to reduce transaction costs, including relational contracting and integrated risk management. Relational contracting prioritizes trust-building to deter opportunistic behavior (see also Lamothe & Lamothe, 2012), while integrated risk management identifies and addresses risks within public–private partnerships. Property Assessed Clean Energy (PACE) program in Virginia serves as an example of this approach (p. 135). Terman provides a comprehensive framework for understanding and managing transactions through insightful analysis and practical solutions. Chapter Six comprehensively explores the evolution, functions, and challenges of organizational networks in governance. According to Terman, “In the third-party government context, we might think about networks as collections of organizations coming together for some kind of common interest” (p. 139). The purpose of networks is to provide benefits that hierarchical command and control government cannot. As such, networks are designed to be more flexible and adaptable to changing circumstances. From service implementation to problem-solving and community capacity building, the author delineates the multifaceted roles that networks can fulfill in addressing societal challenges. Two case studies effectively exemplify the application of network governance: the Chesapeake Bay Program, a regional network including government, nonprofit, and university representatives collaborating to protect and restore the Chesapeake Bay, and the Enhanced Collaborative Model (ECM) Human Trafficking Network, which brings law enforcement agencies and victim service organizations together to combat human trafficking in the United States (pp. 143–149). The review of these cases demonstrates the intricacies and challenges of network governance, clarifying matters regarding accountability, conflict resolution, legitimacy, commitment, and design. Through examination of different models of network governance, such as self-governance, lead organization, and network administrative organization structures, the author offers valuable perspectives on the elements essential for efficient network administration. Through nuanced analysis in Chapter Six, the author encourages readers to critically evaluate the implications of adopting networked approaches in governance contexts. The final chapter of the book explores the complexity of accountability in government systems, with a focus on third parties. The author emphasizes the importance of accountability mechanisms, such as performance measurement, hearings, reporting, and auditing. The text explores different accountability regimes, including democratic, legal, and market accountability, and provides examples, such as the Walter Reed scandal and Governor Gray Davis' recall election. Challenges in holding third-party governance accountable are highlighted, particularly regarding legal and market mechanisms that may falter without oversight or competition. Maintaining transparency and accountability in third-party engagements is crucial due to concerns about oversight failures, noncompetitive contracts, and abuses of power. To address these concerns, it is important to ensure that there is proper oversight and competition in third-party engagements. In conclusion, Jessica N. Terman's book, “Third-Party Governance: Using Third Parties to Deliver Governmental Goods and Services,” enhances our theoretical understanding of governance dynamics by thoroughly examining the intricacies of outsourcing and public–private partnerships. It sheds light on the complex interplay between government and market forces. Using real-world case studies and a strong theoretical framework, Terman explains the practical implications of third-party governance and enhances our theoretical understanding of the changing landscape of public service delivery. The author's examination of transaction costs, organizational networks, and accountability mechanisms in the context of third-party engagement provides insights that go beyond mere descriptive analysis and fosters a deeper appreciation for the challenges and opportunities inherent in contemporary governance arrangements. Overall, her book is a good read for policy makers, scholars, and practitioners interested in the changing landscape of public service delivery and third-party governance mechanisms. Alperen Zararsiz, PhD Candidate in Political Science, Dodge Family College of Arts and Sciences, Department of Political Science, The University of Oklahoma. Email: [email protected]