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How Policy Entrepreneurs Convinced China’s Government to Start Procuring Public Services from CSOs-2

---By Yang Tuan, Huang Haoming and Andreas Fulda.
(After authors’ consent, this article is reprinted from the Book: Civil Society Contributions to Policy Innovation in the PR China.
Government-sponsored environment-management and protection project in Beizhuang Town
I was invited to share our government procurement project, 'Environmental Management and Protection Project’s implemented in Beizhuang Town. ... Compared with other procurement projects, the Beizhuang project is a special case. ... [In] a narrow sense, the Beizhuang project is not exactly a government procurement project, but rather a project 'supported’ by the government. There are still some formal differences between the two. Nevertheless, it is an NGO project in cooperation with the government....
[The] Environmental Management and Protection Project in Beizhuang is a one-year project launched in April 2011. It was implemented in 11 administrative villages in Beizhuang Town of Miyun County, located north of Beijing. The project adopted the cooperative model of ‘government leadership; NGO participation’ and chose environmentally friendly construction as a breakthrough point. The aim is to establish a natural conservation culture and harmonious countryside consisting of the following key elements - harmonious society, beautiful environment and sweet life.
The cause of this project is closely related to an important public figure, Mr Wang Haibin, mayor of Beizhuang Town. Before he took his current position, he was a friend of Global Village of Beijing for many years. He has paid close attention to our projects and always had tried to cooperate. In 2011, Beizhuang Town was appointed the key township of a 'water-based leisure and tourism environment in the ‘twelfth five-year plan’ of Miyun County. At that lime the social, economic and ecological construction had already started in the county. According to local government advocacy and requirements, the county should give guidance to environmental NGOs or institutions taking part in ecological construction and in environmental management and protection work. This should be done by means of outsourcing contracts or commissioned projects. Since Global Village of Beijing has been committed to ecological education and model innovation for more than ten years, the goals were consistent with the develop­ment direction of Beizhuang Town. Hence, the cooperation started.
When the Global Village of Beijing signed a government cooperation agreement on 1 April 2011, it became responsible for the management of the ecological environment in the 11 administrative villages of Beizhuang Town, with an ‘Office for Six Protections’ established with the town government and village committees. The head of the Environment and Pubilc Health Institute of Beizhuang was appointed office director. Every village assigned one public-health officer who worked with Global Village of Beijing staff as project implementers. The Environment and Public Health Institute is in charge of environmental governance assignments, stakeholder communication, and the coordination of relations between different government departments, including highway stations and local police stations. Global Village of Beijing was responsible for daily environmental maintenance, personnel management, convening meetings between public- health officers and ecological workers and mediating disputes the project activities triggered among villagers.
Global Village of Beijing used the seamless management model and divided the 11 villages in Beizhuang Town into 86 areas for 86 ecological workers to manage, so that everything has a responsible person and dead ends could be avoided. These 86 ecological workers were again divided into three further groups assigned respectively to protect the river, road or village.
Global Village of Beijing staff spent most of their working hours on daily patrol to check every project area and engage in one-to-one in-depth exchanges with every ecological worker, listening to their opinions and strengthening their awareness of environmental protection, making outstanding ecological management officers out of them. In addition to our own work, we were also responsible for promoting environmental protection in the neighborhood. We should lead by example in everyday life to influence more people, so as to achieve the great goal of ‘everyone loves the environment, everyone cares for the environment’.
To raise people’s awareness of environmental protection, the Global Village of Beijing implemented a series of activities, such as waste classification, individual composting, recycling of plastic bags, issuing brochures, and urban and rural exchanges.
We also organized a Beijing volunteers’ team. During weekends or holidays, the volunteers provided services for free. They not only brought fresh blood to our team, but more importantly, they could bring the news of a new Beizhuang to more people, which was a major contribution to the project’s publicity.
After the one year project, the Global Village of Beijing has helped the Beizhuang Town government win first prize in the four Miyun County quarterly inspections for environment and comprehensive public-health appraisal.
Not all the experiments in the government procurement of CSO services have, however, been successful. There is in fact a clear indication that government organizations and Chinese CSOs still need to develop imple­mentation protocols that delineate the roles and responsibilities of the cooperating partners more clearly. The second case study illustrates how policy entrepreneurs managed to use a failed experimental project to engage in policy learning.
Learning by doing: the case of CSO participation in government-funded poverty-alleviation projects
In 2006, the Asian Development Bank (ADB) cooperated with the State Council’s leading group on poverty alleviation to develop new models for civil society participation in poverty reduction. This initiative aimed to find new ways to mainstream CSO participation in poverty alleviation in rural China by providing government funding to CSOs. The China Association for NGO Cooperation (CANGO) was initially selected to nominate a member for the evaluation committee. Its executive director Mr Huang Haoming, however, decided to give up the chance of sitting on the evaluation committee in favour of participating in the project bidding. CANGO was eventually one of the six selected bidders.
Participating Chinese academics and civil society practitioners by and large agree that this initiative failed to meet its ambitious goal. All the participating CSOs were GONGOs that received RMB 500,000 for each poverty-alleviation project from the Chinese State Council. ADB provided a management fee of RMB 50,000 to each participating CSO. Given the lack of local CSOs in Jiangxi province, CSOs that came from other parts of the country, such as CANGO, had to travel to project sites and send staff to Jiangxi on long secondments. CANGO soon saw that its organizational expenses exceed the allocated management fee. Project implementers from outside Jiangxi also found it difficult to establish cooperative relationships in local communities, which have their own distinct languages and customs. Since poverty alleviation is a long-term process, participating CSOs struggled to make a difference during the project period. Eventually, CANGO solved the problems by cooperating with a local partner, the Ningdu County Poverty Alleviation Association.
Although CANGO did not benefit financially from implementing this project, it learnt a lot about designing, managing and supervising projects. Such experiences also informed MoCAss drive to start procur­ing public services from CSOs in 2012 and 2013. This indicates that a failed project from which all stakeholders learn important lessons can be considered the foundation for improved practices and institutional frameworks.
The shortcomings of government procurement in China
Civil society practitioners have generally welcomed the advent of govern­ment funding for Chinese CSOs. At an EU-China Civil Society Dialogue forum on the government procurement of CSO services in January 2013, Mr Huang Haoming, the executive director of CANGO and one of the three authors of this chapter, applauded the government procurement of CSO services as a chance to promote the healthy development of CSOs. He sees it as an opportunity for them to increase their organizational capacities and to professionalize their services. According to Huang, it also leads to a change in the government’s role as a referee (caipanyuan), a new intermediate role that could potentially help combat corruption.
On the other hand, critics of the government procurement of CSO services have pointed out that the Chinese government may use CSOs to ‘manage society’ (shehui guanli), a code word for the previous Hu/Wen administration’s stability-preserving policy (weiwen). Besides the danger of co-optation, they fear that government- affiliated organizations (shiye danwei) may benefit disproportionately from government funding. This would be problematic because government-affiliated organizations already provide between 80 and 90 per cent of the public services in China, thus blurring the boundary between funding provision and service production. Even when the government decides to procure the services of CSOs, many technical and administrative problems remain. Mrs Zhang, the legal representative of a university alumni association, which is an officially- registered social organization, reported the following challenges over managing projects procured by Chinese government organizations:
After the Spring Festival in 2009, a MoCA officer came up to me and said we did a great job improving schools in a rural area of Sichuan province and hoped we would apply for a project that the government can procure. After doing our calculations, we sub­mitted a project budget of about RMB 80,000. The money was to be used mainly for the travel costs of volunteers. Between May and June 2009, MoCA approved our project proposal. At the same time, it requested us to start the project prior to funding approval. We needed to submit the project and the audit report before we could receive any funding. Since we had used our own money to implement the project, we were concerned about this approach. We finally spent RMB 50,000. In November 2009, we submitted the project and audit report to MoCA, but it only approved RMB 30,000 and said that we must pay 5.5 per cent in business tax before they would transfer the funding to our account- By January 2010, we had only received RMB 20,000 into our account [this note from the field was written in July 2011]. Although MoCA has rated our project as outstanding, we have decided that we will not engage in government procurement again in the future.
The emerging trend towards government procurement of CSO services will thus produce winners and losers. CSOs focusing on providing general community and health services, as well as specialist services for children, the elderly and the disabled, will be the main beneficiaries of the new government policies. Service-delivery CSOs can find areas of mutual interest, which makes government procurement more likely. Despite such possibilities, there are still numerous institutional bottlenecks on the road to a more cooperative state-society relationship. In this keynote address to a symposium on social innovation organized by MoCA and the Yunan provincial government on 18 July 2013, Professor Junkui Han from Renmin University of China made the following observations (note from the field, July 2013):
There exist eight problems for the government procurement of public service from social organizations: the government procure­ment of public service does not include an administration fee; therefore, social organizations will suffer losses if they increase their amount of work. There is no tax exemption for participating social organizations; this comes as a surprise since the funding for the government procurement of public services from social organizations relies on fiscal revenue generated by taxes. Nevertheless, social organizations need to pay turnover tax when they receive funding. This can be considered double-taxation. The government plans the procurement from top to bottom; the government uses the management approach of a planned economy to manage social-service demands. Generally, the government only purchases public services in areas about which it is concerned; this will crush the living space of social organizations. The financial settlement of government procurement occurs in accordance with the financial year; however, the implementation of a project often takes longer than a financial year. The government aims to foster low-capacity social organization and to restrict competition among social organizations across regions. Laws and regulations need to be improved; some laws are difficult to enforce. There is a lack of evaluation for the government procurement process. A withdrawal and complaint system is not established.
Against the backdrop of first the evolution of the Chinese government’s procurement of public services from CSOs in the first part of this chapter, our discussion of models and key characteristics in the second part and our overview of their shortcomings in the third and final part, we would like to outline four major challenges that both the Chinese government and China’s CSOs currently face. To address these four challenges, we conclude with five recommendations to the Chinese government and five to Chinese CSOs. We start with the first of the four challenges.
Lack of uniform and standard regulation on government procurement
There are no agreed regulations on models of government procurement at present. The China Foundation for Poverty Alleviation (CFPA) launched the State Council’s poverty-alleviation office’s call for project proposals. The CFPA set up a 16-member committee to review the proposals it received. The poverty-alleviation office of Jiangxi province gave the final approval, which it based on the judgment of the committee and a 'no objection, confirmation from the Asian Development Bank (ADB). The CFPA also invited experts at home and abroad to organize training for the winning bidders before they started the project implementation in the target villages.
There is no uniform, nationwide law or policy regulation to cover such procurement and, in most areas, no institutionalized or standardized operational rules. In 2011, MoCA issued 11 documents, including a project handbook, implementation plan and project-management rules. These clarified (1) project type and scope, (2) responsibilities, (3) operating procedures, (4) means of procurement, and (5) assessment method. We argue, however, that in most instances, the procurement process lacks detailed regulation and provides insufficient evaluation and monitoring.
Currently, the promotion of government procurement mostly relies on the initiative and creativity of individual government-department leaders instead of on the whole state system. Government procurement, which has been developed in just some pilot areas but not promoted further or been given practical institutional help, is undoubtedly facing dilemmas. This is especially distressing in an environment in which the levels of participation by civil society actors are relatively low. CSOs tend to be more passive and have little or no opportunity or rights to enter a critical and constructive dialogue with authorities to address these shortcomings.
Remaining doubts about the wisdom of government procurement creating long-term dependencies?
As we have argued, government procurement of CSO services in China differs from the situation abroad. Professor Deng Guosheng has pointed out that 80 per cent of the public donations following the Wenchuan earthquake in 2008 went into government coffers. According to Shiew and Deng, because ‘NGOs cannot fundraise publicly, almost all of the record- shattering RMB 65.252 billion in public donations raised for the earthquake in 2008 went to government departments and GONGOs’. This shows that Chinese CSOs are still at a disadvantage when calling for the government to procure their services.
CSOs also face their own challenges in terms of their credibility, professionalism, competitiveness, vitality and public exposure. They feel concerned about whether their service can gain the trust of the public, whether they have the organizational capacities to fulfill the requirements of government procurement, and whether they can regard the public interest as the objective of the service they provided.
At present, CSOs are relatively uncompetitive. But are they more competitive than corporations or government institutions? Or are they becoming overly dependent on the support of local and national govern­ment procurement? Will CSOs survive when government projects come to an end? An urgent task therefore is to foster the development of CSOs working on social and public services, to improve the capacity of CSOs to gather public donations and gradually to reduce the percentage of civil charitable resources the government uses. Only when the above conditions are met, can the government procurement of CSO-provided public ser­vices become more meaningful and beneficial.
Social organizations need to be more independent of the government
The government has a tendency to procure services from CSOs with a government background, such as social-welfare institutions that cater for orphans, patients with mental-health problems, the elderly and other disadvantaged groups. Social-service delivery organizations that offer shelter or other provisions to orphans, the sick, the elderly, the mentally ill, the homeless and the destitute are more likely to receive support than environmental or advocacy groups. In many cases, we can regard such social-service organizations as extensions of the government’s function, as the government’s third hand. In Guangdong province, only 9 per cent of successful bidders could be considered grassroots NGOs, which indicates an obvious bias and imbalance in the bidding and selection process.
In closely watched instances, it is often difficult to distinguish between the roles of government bodies and those of CSOs. At present, only the Pudong New Area of Shanghai has come up with ideas on how to separate government and civil society functions and to promote interaction between the two bodies. There is a need for further clarification of the boundary line between the functions and duties of the service provider (the government) and of the party that undertakes the service (the CSO).
There is no context in which government and CSOs can develop genuine partnerships. It is strongly suggested that local governments and CSOs should establish community-based citizen centers to provide a platform for public participation in local policy making.
Lack of regulations in the government procurement of public services
Our research suggests that the government may be moving too fast and be too eager to provide CSOs with opportunities to grow. Government officials willing to procure the services provided by CSOs are sometimes overly enthusiastic, too anxious and impatient to succeed. This can lead to disappointment when they realize that the CSOs are not prepared or sufficiently qualified to meet the government’s needs.
Sustainability cannot be assured by depressing the costs of labour and management. When the government procures the services of CSOs, it usually ignores or downplays the organization's operating costs and this can create serious financial strains. The more projects he respective functions of the government, enterprise and CSO. This would accelerate the separation of government from society and help construct a system of community independent of the government;
•   reform the management system of CSOs and pave the way for the government to procure public   services from CSOs; and
•   complete the supervision system and create a favorable environment in which to procure public services from CSOs.
We would also like to make five recommendations to CSOs willing to engage in the government procurement of their services. They should:
complete their governance structures; establish a facility for conveying information and publicizing their service; enhance their internal and external governance capacities; and improve their social credibility;
reconsider their organizational ethicsand standards. The question of ethics is particularly important in ensuring cooperation between CSOs and other enterprises;
establish a comprehensive governance structure of CSOs;
strengthen their ability for capacity development; and establish transparent, open and accountable operation mechanisms. In the future, set up a system that ensures transparent organizational operations and standardized financial management; accept that they are accountable to the government, their donors and the beneficiaries of their services; and strive for openness to the public. (END)