Governments are increasingly outsourcing their services to external service providers. A precondition for successful outsourcing is that service providers can be managed at arm's length by the government, via means of performance management. One way of testing whether or not this is the case, is to conduct a performance management readiness review (PMRR). In this article, we will describe a framework that we developed at the request of the Dutch Ministry of Transport, Public Works, and Water Management, to establish whether or not two of its service providers-Dutch Railways and ProRail-were ready to be managed at arm's length. The framework's application will be illustrated by a description of a successful review at the two service providers. The results of this test give us confidence that the performance management readiness review framework can be used for efficiently evaluating governmental service providers. © 2010 Kelley School of Business, Indiana University.
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