Recently, local governments are faced with a new challenge: how they can restructure the role arrangements among local governments, civil societies and private companies for providing public and quasi-public services. Some entrepreneurial local governments began to start partnership programs with the private sector in which the private sector takes over the existing government roles after their proposals are discussed and examined. This paper analyzes a government process of restructuring the role arrangements through one of the advanced cases, namely “Collaboration Testing” by the Saga Prefectural Government.The analysis resulted in an institutional framework for public services restructuring process. In the framework, fourteen issues are classified with four building blocks: (1) objective setting,(2) knowledge-sharing process design, (3) decision-making process design and (4) incentive mechanism design for key participants.

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