Unregulated, and predictably so: the inherent failure of regulation in outsourced services

Over the past two decades, non-governmental bodies have become increasingly involved in the supply of public services. This policy, referred to as outsourcing or contracting out, is based on what may be termed "the governmental management model". The term refers to the fact that this form of privatization does not limit administrative discretion, and thus - does not limit government prerogative in managing privatized services. And yet, this article describes structural, inherent failures in the manner in which such services are regulated, and to government control being compromised. The article shows how two forces contribute to the structural failures. First, the law that is in force places limitations and creates certain incentives that lead to governments to distance themselves from stringent regulation. And, second, the character of public services and the structure of the supply market may lead to a transfer of power from government to contractors, thus reducing the effect of regulation