Abstract

Performance supervision (“Gewährleistungsaufsicht”) to ensure the effective fulfillment of public functions by private entities

A third category between the classic state supervision (“Staatsaufsicht”) and the economic monitoring and control (“Wirtschaftsaufsicht”)

It is a characteristic of the modern administrative state that the private sector fulfils public functions. Three forms of privatization of public functions can be distinguished: outsourcing, public private partnerships, outright privatization. Although the responsibility for the fulfilment of the function shifts to the private entity, the responsibility to guarantee the fulfilment of that function remains with the state. State responsibility includes – besides the careful selection of the private entity – the permanent control of the private entity (performance supervision). This article shows that performance supervision does not fall within the categories of classic state supervision or conventional economic monitoring and control. Permanent control of the private entity is necessary in order to ensure public welfare and the protection of third party rights. Therefore, the following standards of control apply: 1. Does the private entity fulfil the public function effectively? 2. Is the protection of third party rights secured? In contrast to classic state supervision and the established economic monitoring and control, performance supervision makes use of mainly informal and cooperative instruments. The role of third party participation in the control procedures is enhanced due to structural control deficits in the case of privatization of public functions.