Performance Contracting

Performance contracting is a predominant of NPM inspired Agencies. Government- Agency relationships are frequently governed by a contract or the like, (Thynne, 2004). It is about expectations, commitments, rewards and sanctions and these underline and influence their relationships in terms of accountability and control, and this can also impact on degree of autonomy of an agency (Greer, 1994. pp.13-20; Greve, 2000; Lane, 2000). According to Lidbury and Petrie (1999), performance contracting is a way of setting targets for organisations and reforming on the activities of an Agency, which is, at times, loose. That is, it does not necessarily mean a formal contract, but any self-generated, agreed or imposed set of performance targets for Agencies, formulated into a specific agreement, contract plan, or statement of some sort. It is a system of setting targets for, and reporting on, even though not necessarily publicly, the activities of an Agency (Pollitt and Talbot, 2004). It is used more as a management tool between superiors and subordinates, rather than as a contract between independent bodies, (Pollitt and Talbot, 2004). For Agencies, to some degree, performance

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contract usually forms the basis of judgement about the Agency’s performance by its parent’s Department, Minister and other stakeholders. Nonetheless, it is an idea that has been said not to be crucial, but rather a new way of management (Ferlie and Ongaro, 2015).

According to Cheche and Muathe (2014), performance contracting is a complex concept with many variables that interact. Notwithstanding their assertion, they were able to identify six key variables from existing literature that can help illuminate the scope and understanding of performance contracting: performance management, performance measurement, stakeholder and employee involvement, commitment, and, performance targets (Cheche and Muathe, 2014:67). ‘Performance management is concerned with encouraging behaviour that leads to attainment of the organisational objectives, also a management tool that aims to align goals of the Principal and the Agent in a manner that creates a shared vision,’ (Cheche and Muathe, 2014:67). On the other hand, performance management is focused on the process of establishing achievements and gaps in order to provide feedback (Armstrong, 2006 cited in (Cheche and Muathe, 2014: 67). Commitment within performance contracting context occurs at two levels: top management and the level of employees. Targets is about the organisation meeting the Vision, Goals and Objectives set to measure standards of service delivery (Cheche and Muathe, 2014: 67). Cheche and Muathe (2014:69) note that there is considerable evidence that shows that performance contracting has had a positive impact on service delivery in public service across the world.

Nzioki (2011) see performance contract as an agreement between the Government and a Public Agency that requires the Agency to establish goals based on its mandate, set target to achieve the goals and measure performance and provide incentives for achieving the targets. Usually, the contract is signed by the Chief Executive of the Agency and the Secretary to the cabinet for the Government. The contract is countersigned by the Minister or the Chairperson of the Board. It is also endorsed by the Prime Minister as the supervisor and coordinator of

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government business. Nzioki (2011) is of the view that Performance Contract would contain the Agency’s Vision and Mission, Mandate and Core Functions, Strategic Objectives, Core Values, Policy Priorities, Focus for Action, Commitments and Responsibilities of the Chief Executive, Commitments and Obligations of the Government, Monitoring and Evaluation, and Performance Evaluation Targets (matrix) (Nzioki,2011).

Performance Contracting was introduced to the Nigerian Public Service for the first time by President Jonathan on August 22, 2012 and this was signed by his Ministers. It was introduced against a backdrop of disagreement between the Presidency and the National Assembly over the perceived poor implementation of past budgets (especially the 2012 budget) and it was developed by the Monitoring and Evaluation Department of the National Planning Commission in conjunction with Ministries, Departments and Agencies (MDAs) (Bello, 2012). The contracts prepared by the National Planning Commission (NPC) was to serve as a benchmark performance indicator upon which each Minister will be monitored, evaluated and assessed in relation to the implementation of the President’s Transformational Agenda (Ojameruage, 2012).

In addition, all Heads of Department and Agencies under each Ministry were mandated to sign portions of the Performance Contract with their Ministers. Upon signing it, President Jonathan noted that, ‘these contracts would improve performance and deliver quality and timely services to the citizens, improve productivity and instil a greater sense of accountability for effective service delivery,’ (Ojameruage, 2012). The President also reiterated that he would expect the process to serve as an instrument for the realization of the objectives of Government, as enumerated in the Vision 2020 Document and the Administration’s Transformation Agenda by the year 2015, (Ojameruage, 2012).

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The introduction of Performance Contracting system in Nigeria is informed by two main reasons: (1) enabling the Federal Government of Nigeria measure performance of MDAs in a fair, objective and comprehensive manner, and, (2) creating results- oriented public service delivery mechanism (Darma, 2013). In the context of Nigeria, performance contract concerns: promoting transparency and accountability in governance through public display of performance results measured against performance commitments of the agency (Darma, 2013). It promotes responsiveness of Agencies through the design of its Service Delivery Charter and thus holding the Agency accountable for implementing its charter. Performance Contract focuses on transforming administration with the development of an Agency Specific Strategic Plan to specify the correct direction to be followed within a defined time-frame; increasing efficiency and focusing resources on key national policy priorities as well as institutionalizing performance- oriented culture in the Public Service through introduction of an objective Performance Appraisal System for staff (Darma, 2013).

According to Bello (2012) contracting will serve as a new evaluation tool for measuring the performance of key Public Officials such as Ministers, Permanent Secretaries, Directors and Heads of other Government Departments and Agencies beyond the traditional method of how they utilise their budgetary provisions.

Prior to the introduction of Performance Contracting, the National Planning Commission developed in 2011, the Half Year MDA scorecard as a data collection and analysis tools for Monitoring and Evaluation (M&E). This was implemented to track the performance and contributions of Sectors and Federal/ State MDAs towards achieving the Nigerian Vision 20: 2020 during President Yar’adua’s administration (National Planning Commission, 2011:2). The administration reinforced the Performance Management System with the inauguration of an integrated Performance Management System comprising institutional and individuals’ framework by the Office of the Head of Service of the Federation (OHCSF) and the

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establishment of a National Monitoring and Evaluation Department in the National Planning Commission in 2010 (National Planning Commission, 2011). It was envisaged that it would serve as a consistent format that can be applied to all MDAs, to capture the Key Performance Indicators (KPIs) for outcomes and outputs in their Strategic Sectors, and thereby ascertain their progress against annual targets (National Planning Commission, 2011:2).

The Key Performance Indicators (KPIs) provided a set of suggested KPIs for Monitoring and Evaluation (M&E) purposes, covering each of the Federal Ministry and it was the natural starting point for MDAs wishing to understand what kinds of data were expected in MDA scorecard submissions (National Planning Commission, 2011:2). The criteria for measurement were set against the standard in Nigerian Vision 20: 2020. After the introduction of the PMS, the public service recorded improvement and clarity in the alignment of institutional and individual performance. Activities implemented for the institutionalization of the system were development of Key Performance Indicators (KPIs) that were used to track the delivery of Ministries, Departments and Agencies (MDAs), the development of Performance Agreements with Mr President cascading down to the Permanent Secretaries, Head of Parastatals and Agencies, and, the development of a reporting template for the MDAs, (Usman 2013:24). The 2012 Performance Contract agreement between the President and Honourable Ministers of the Federal Republic led to regular Ministerial Performance Reporting at the Federal Executive Council (Usman 2013:24).

On 22nd _{November 2012, the acting Executive Secretary of Tertiary Education Trust Fund}

(TETFund) signed a Performance Agreement with the Minister of the Federal Ministry of Education. Following this, the Executive Secretary then set up Performance Agreement for Heads of Department of the Fund. The Fund, as of then, was structured as- Education Support Services, Project Management, Monitoring and Evaluation, Corporate Planning and

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Development, Finance and Investments, Information and Communications Technology, and Human Resource Management. Each Director by this Performance Contract was expected to draw up clearly defined duties and responsibilities as well as targets for each staff under his supervision against which he or she will be appraised for performance. This appraisal forms part of the criteria for biannual staff evaluation, promotion, demotion or termination of appointment as the case may be.

Before the introduction of Performance Contracting in Public Service in Nigeria, the National Planning Commission was charged with the responsibility of the physical Monitoring and Evaluation of MDAs programmes and activities based on key performance Indicators outside any form of contracting as mentioned above. In one of such Reports on TETFund published in July 2012, the Commission stated that: This Report is intended to be a resource to enable Government Executives and Leaders to track the effectiveness of TETFund in defining and improving programmes and projects required to accomplish their Mandate. It is designed to identify whether projects carried out have yielded the desired outcome to the beneficiaries. This will further assist Government and the Management of the Fund, strategize appropriately on projects to be funded and the efficient use of funds available to the institutions. In essence, this will lead to a better means of learning from past experiences and demonstrating results, as part of improving service delivery and accountability to stakeholders. The objective of the Monitoring Exercise is to support the TETFund and beneficiary organisations, institutionalise and reinforce Results Based Management across all levels of their operations. Although, several internal processes for assessing projects may exist in TETFund and its partner organisations, the use of “external and independent” assessors enhance decision making and accountability.

The report is aimed at determining the outcome of projects funded by TETFund in the respective institutions. It determines the success factors of the intended projects, the

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constraining factors and reasons for such, which will, in turn, help in future policy design and implementation. In the same vein, the report’s objective also aims at finding out the levels of commitment, transparency and effectiveness on the part of the various institutions administration in the judicious use of the intervention funds in implementation of proposed protects in their institutions within the agreed timeline. Hence, the report comes in hand as a testimony to the findings of the inspection team on these projects in order to ascertain their level of completion or otherwise, the constraining factors as the case may be and what efforts that need to be made to ensure achievement of targets.

This subsection has been able to establish that performance contracting is in operation in TETFund. The next subsection will examine the agency behaviour.