14 LGP news 3 | 2016 3 | 2016 LGP news 15

foCuS foCuS

Phot

o: L

gP

T he so called “outsourced services entities” (companies, limited li-ability companies, public agencies, associations, etc.) were founded by the federal government in order to

carry out traditional administrative tasks. Their number totals around 6,000.

The outsourced service entities could not be more varied: they include traditional administrative institutions such as the Aus-trian Central Statistical Office (Statistik Austria) and the Accounting Office (Buch-haltungsagentur) as well as the Federal Theatres Holding (Bundestheater) and the Federal Museums; the universities as well as the railways and broadcasting regula-tory bodies and much more; financial insti-tutions such as the Austrian National Bank (Österreichische Nationalbank, OeNB) and the Financial Market Authority (Fi-nanzmarktaufsicht, FMA) as well as the broad spectrum of shared service provid-ers such as the Federal Real Estate Com-pany (Bundesimmobiliengesellschaft, BIG). They also include the Federal Computing Centre (Bundesrechenzentrum, BRZ) and the biggest public purchasing service pro-vider, the Federal Procurement Agency (Bundesbeschaffung GmbH, BBG); large social institutions such as the Public Em-ployment Service Austria (Arbeitsmarkt-service, AMS); smaller health agencies such as AGES and Gesundheit Österreich; several research funding bodies and more unusual institutions such as the Span-ish Riding School or the Judicial Support Agency (Justizbetreuungsagentur, JBA). The number of institutions totals over 200. For the most part, these outsourced service entities have stood the test of the last 40 years, but the initial euphoria of outsourc-ing them has decreased. With the exception of single cases (e.g. the public funding of sport), scarcely any new institutions are

founded. It has become all too clear that the main goal of reform – to make ad-ministration cheaper and slicker – has not been achieved. A broad investigation of the Federal Chancellery (Bundeskanzler-amt, BKA) showed some years ago that the increase in staff in outsourced services entities was steeper and that salaries were climbing more sharply than in the federal government. On the other hand, a stabili-sation of governmental basic remunera-tions was achieved, precisely because the outsourced services entities could generate their own revenues.

In recent times, however, increasingly complex and legally demanding challeng-es emerged. The contractual relationships between the legal entities and their man-agement constitute one such field. The ap-pointment period of five years, the neces-sity of a complex selection procedure, the fact that the appointment is a political act of the minister, the corporate-legal respon-sibilities of company directors (who are not businesspeople, but for example artists and scientists) give rise again and again to expert opinions and professional contrac-

tual arrangements, sometimes also leading to complicated legal disputes.

A second issue is the difficult adaptation of corporate law, more specifically of limited liability company (LLC) law, to the eve-ryday activity of these enterprises, whose foundational regulations often provide for the subsidiary applicability of LLC regu-lations, whilst also envisaging a consider-able number of deviations from them. To take the example of the Federal Theatres Organisation Act (Bundestheaterorganisa-tionsgesetz): the issue lies not so much in the slip of the pen that brought about the misspelling “Prüfausschuss” (vetting com-mittee) in lieu of “Prüfungsausschuss” (au-dit committee) in the text of the law. Rather, the problem concerns more specifically the unclear regulation of the organisation’s competencies and responsibilities. And so it happens that outsourced services entities turn to corporate law to prevent the interfer-ence of ministerial secretaries. In essence, then, it is a question of securing informa-tion about current developments in legisla-tion and jurisdiction, so that the institutions can maintain an accurate overview.

the transfer of tasks from the state’s organisational units to independent legal entities is an area that has received only little attention so far in the field of legal science. this is surprising, because the share of outsourced public services entities is as large as the traditional (federal) administrative organisation, with the latter employing approximately 110,000.

a complex field of activity seen from the legal perspective

A third problematic area is that of the de-velopment of compliance and governance regulations. There does exist a Federal Code for Public Corporate Governance, but its implementation seems so complicated to many managers of outsourced services entities that they rely on their annual au-ditors. Ultimately, in many cases manag-ers find that it would have been easier to establish the correct regulations internally. Many in the relevant institutions have been somewhat “surprised” that the criminal of-fence of breach of trust can also be relevant for the activities of a theatre director, a rec-tor or a granter of subsidies.

A fourth issue is comprised of the con-tractual relationships of legal entities to their superordinate departments (so called “Ressort-Mütter”, lit. department moth-ers). This raises issues concerning, in par-ticular, the limitations of the in-house allo-cation of assignments, the configuration of objectives and performance agreements or

their sanctioning, as well as the reduction of the cost of mutual cooperation. In the latter area, above all, much work remains to be done.

In all of the problems outlined above, the single outsourced services entities are un-able to help themselves in the legal field: they tend to employ few lawyers, and cer-tainly no “legal all-rounders” with exten-sive qualifications in both public and private law, but rather as a rule only specialised lawyers working in a particular area. Even superordinate departments lack the relevant expertise – particularly in corporate and criminal law. Ultimately, decentralised in-stitutions need legal partners who see situa-tions comprehensively and who can devel-op complete solutions – sometimes thinking beyond the mere field of law.

These partners do not currently exist in the German speaking area or in Austria’s neighbouring states. Traditional law firms

focus on company law just as chartered ac-countants and tax advisers focus on taxes and balance sheets. Consultants lack man-agement insight and as a result they do not understand the actual challenges of a spe-cific field of activity. For the legal advisor, then, there remains much work to do. n

dr. ManFrEd Matzka,former head of the Presidential Section (Präsidialchef) of the austrian federal Chancel-lery, is of Counsel at LgP and advises on issues concerning public administration. until 2016, he was the highest ranking administrative official in the federal Chancellery and was at the head of Section I from 1999. manfred matzka was respon-sible for the coordination of the departments of the Chancellery and inter-departmental organisa-tion, as well as for protocol and order and for the supervision of the austrian Statistical office. dr. matzka holds a law degree and can look back over a long career in the public service, which began in 1980 in the Constitutional Service of the federal Chancellery.

dr. manfred matzka, former head of the Presidential Section of the austrian federal Chancellery