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Play by the Rules: The Issue of Private Contracting of Public Services

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Andrew Vaz
October 19, 2017

Imagine if you were to wake up one day in a world where you have pay to inhale the air all around you. Sounds extreme, yet, the commodification of our necessities is a reality and if there is a way to capitalize on our public resources, private companies are keen to take control of those services and extract money from consumers. While I find it unethical to privatize public services, public administrators are more likely to reach out to private contractors for their services to cut costs. Despite this, public administrators also realize the dark truth of privatization: private contractors never play by the same rules as public entities.

When I was working for the Water and Sewer Department in my home town amoney few years ago, I obtained an appreciation of the quality of service the government provides for its citizens. I was never concerned about the backlog being created as the local government had a monopoly. There’s the argument that shift from public to private management is so profound it will produce a panoply of significant improvements: boosting the efficiency and quality of remaining government activities, reducing taxes and shrinking the size of government. However, I disagree. I do not want to shrink the size of government; this idea would leave citizens in dark and the whims of private companies who don’t serve the interest of the people. As well, what evidence has there been to show that privatization has made other government services more efficient? Finally, reducing taxes is never a priority of a government trying to reduce its debt. Taxes need to be increased and the majority of citizens in the United States are willing to pay more in taxes.

Let me expand on these points: when it comes to efficiency, providing a service requires its management to be aware of its target population and its needs… private sector managers are only interested in profit, which doesn’t include caring about the needs of the people. An example is any profit-seeking operation that may not, for example, choose to provide health care to the indigent or extend education to poor or learning-disabled children. According to the Harvard Business Review, efforts to make such activities profitable would quite likely mean the reintroduction of government intervention — after the fact. The result may be less appealing than if the government had simply continued to provide the services in the first place.

What is essential must not be privatized; instead, what government agencies should be striving for is private-public-partnerships (PPP). I have written on this concept in past; I feel strongly about corporations working in tandem with the public sector, not against it. The benefit PPPs have is contract periods of 25 to 30 years or longer. Financing comes partly from the private sector but requires payments from the public sector and/or users over the project’s lifetime. What did the private partner accomplish? The private partner participates in designing, completing, implementing and funding the project, while the public partner focuses on defining and monitoring compliance with the objectives. The most important item of PPPs is that the risks are distributed between the public and private partners according to the ability of each to assess, control and cope with them.

Going forward, public administrators need to do more to preserve our public services by working with the private sector. Instead of giving services away, government should develop relationships with corporations to enhance technology that would improve the quality and delivery of services to the public. What I can see happening in the future is the development of partnerships that will flourish across all levels of government with the private sector; this will be an opportunity to create new jobs and more efficient ways to deliver services and product to our communities that we have never thought would be possible. More people will be affected by a partnership than just the public officials and the private sector partner. In addition, those employees, the portions of the public receiving the service, the press, appropriate labor unions and relevant interest groups will all have opinions, and may have misconceptions about a partnership and its value to all the public.

This article is not meant to be political; if it is interpreted in that fashion this couldn’t be further from the truth. It is about addressing who gains and who fails with public services going to the private sector: the public.

Author: Andrew R Vaz, M.Sc., M.P.A. is a doctoral student in the public policy and administration program at Walden University. He is a graduate of the Master of Science in Criminal Justice and Master of Public Administration double master’s program at Florida International University. He can be reached at [email protected]

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