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Private Delivery of Public Services, 20 Years On

A note for our readers: the views reflected by the authors do not reflect the views of ASPA.

By John Carroll

It has been a little over 20 years since Osborne and Gaebler rocked the public sector with “Reinventing Government.” In those early years of the Clinton administration, all levels of American government looked in the mirror to think about how we could do it better. In describing their models of government, the delivery of public services through contract with private entities played a substantive role. The book did incredibly well and I remember at least some academics quietly murmuring their displeasure at the time that practitioners had taken the lead in this area (probably more like envy at the success).

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Since the re-inventing movement of the 1900s, government performance has shifted from the emphasis on efficiency to effectiveness. It still makes me crazy when the terms “effectiveness” and “efficiency” are used interchangeably in conversation or writing – as if they were the same thing. They are not. Although there are many definitions out there, I prefer to look at efficiency in terms of costs (providing public services at the most reasonable or best costs we can). Effectiveness is the results of providing the service.

Is this now decades-long trend as simple as enhancing efficiency or effectiveness in the provision of government services? State and local government have had several serious periods of revenue shortfalls over the last 20 years, forcing decision makers to either reduce services, find alternatives (like contracting to the private sector) or some combination. The federal government may be able to have expenditures exceed revenues (all the time, it seems), but state and local governments cannot.

“Privatizing” government services has grown in the last two decades. A great amount of federal services are contracted (or “outsourced”) to corporations, who in turn subcontract service provisions to others. State and local governments have contracted the management of airports, seaports, transit, corrections, health provision and many others to the private sector. The variety of contracted services is as wide as the 90,000+ units of government in this country.

The discipline of public administration generally evolved from the political science schools to branch out to a number of studies. Though most programs are located in the schools of social sciences, our program is housed within the university’s business school. One might be hard pressed to discount the similarities in management theories between the disciplines, though their fundamental purposes are quite different (profit versus service).

Our school’s namesake and benefactor, H. Wayne Huizenga, built his first mega-business in part on public contracts. His trash hauling company evolved into Waste Management, Inc., one of the largest of its kind in the world. He also built up other Fortune 500 companies and bought stakes in commercial real estate and sports teams. His ideas of entrepreneurship and building organizations from within to take advantage of opportunities, resonates with elements of the reinventing movement.

The relationship between public and private sectors is not limited to contracting the delivery of services. The public sector has relied on the private sector to build and maintain the products and infrastructure used by government in order to provide public services. We may purchase aircraft carriers from defense contractors, but at the state and local level we also use private manufacturers for the purchase of everything from pencils, to computers, to vehicles, to just about everything government needs or consumes to provide services.

Another trend over the last 20 years has been the eclipse in the compensation for public employees over private employees. Increased salaries, benefits, pensions and other costs, pushed by “the market,” the influence of public unions, and the desire of local elected officials to stay that way, finally pushed many public employees past their private counterparts.

Personnel costs comprise the vast majority of public budgets. The no-brainer becomes reducing this overhead by turning to the private sector where employees are now paid less. Reducing personnel costs becomes a multiplier of sorts, because the support personnel and equipment needed are also assumed by the private contractor.

Is this the only way to contract services? No, not at all. Contracts are now tendered to nonprofit groups that are willing to fill in those areas where services are needed but no longer able to be provided by government. Public entities can also contract out to one another for services as well.

The sheriff’s office where I served for more than 27 years had a variety of contracts – all of which had to be coordinated with the county commission (the taxing and budget approval authority). Our corrections side (the county jail) contracted its food and health services with private sector companies – the political aspects of which are a discussion for another day. Our vehicle fleet was maintained by private contractors.

The county commission provided separate contracts to the sheriff’s office to provide countywide fire rescue services, as well as law enforcement/security/fire rescue for the county’s international airports and seaports. The state of Florida contracted with the sheriff’s office to provide child protective investigations. The county school board contracted to offset the cost of school resource officers. Fourteen municipalities contracted to turn over their police departments to the sheriff’s office, five of which also contracted for fire rescue services.

Osborne and Gaebler can be credited with being among the architects of the recent performance management wave, with a move toward accountability that continues today. Were they the first? Jimmy Carter called for streamlining government in his 1976 presidential campaign. We have heard the calls for government practices to better reflect business methods for some time now (another argument for another day).

A large part of the progressive movement at the turn of the 20th century focused on improving government services. Government looked to the private sector for advice in the contributions of Taylor, Fayol, White, Follett, Gulick and Urwick, Willoughby, and many others from my theory courses. Will the private delivery of public services continue for another 20 years? Very likely, but will we reach a point where we do not recognize the difference between the two? We’ll see.


Author: John J. Carroll, Ph.D., M.P.A., is an assistant professor for Public Administration, Huizenga School of Business & Entrepreneurship, Nova Southeastern University, Fort Lauderdale, Florida. Prior to joining academia, he served in the public sector for more than 30 years.

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The American Society for Public Administration is the largest and most prominent professional association for public administration. It is dedicated to advancing the art, science, teaching and practice of public and non-profit administration.

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