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Book Chapter

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We are long past the “vending machine”-style privatization of government functions – where the government contracts to buy a discrete product or service at a set price, whether aircraft components or landscaping. Government is increasingly enlisting, or collaborating with, private entities for functions long perceived as distinctly public. Private entities may make policy explicitly (through standards that agencies later adopt) or implicitly (through the third party verification of compliance with regulatory objectives). For example, the Department of Health and Human Services relies on the recommendations of an American Medical Association committee of specialist physicians to establish Medicare physician payments, while the US Department of Agriculture relies on private and state organizations to certify that food meets federal organic standards. Not only do these appear to be public functions, and important ones, but private actors also are exercising considerable discretion and sophisticated judgment in carrying them out. Meanwhile, as the examples suggest, many of these outsourcing relationships are far from the fairly structured principal–agent relationship that characterizes traditional outsourcing by contract.