Union Position

Key reasons not privatize public services

Time and time again, bad government decisions and greedy privateers have proven our point that public employees are the right workers for delivering public services.

Eight key reasons why government should not contract out public services include:

1.  HIGHER COSTS 

2.  POORER SERVICE FOR CITIZENS 

3. INCREASED CHANCE FOR CORRUPTION 

4. FAILURE TO PERFORM SERVICE 

5. BALLOONING COSTS AND DEPENDENCY 

6.  PROBLEMS IN DRAWING UP ADEQUATE CONTRACTS 

7. CONTRACT IRREGULARITIES 

8. LESS ACCOUNTABILITY AND FLEXIBILITY  

2.  POORER SERVICE FOR CITIZENS  Since the objective of private firms is to maximize profits, companies are always looking to "cut corners".  These actions may result in decreased quality and quantity of services.  Again, governmental monitoring is necessary to detect this decline. [ top ]

3. INCREASED CHANCE FOR CORRUPTION  As detailed in Government for $ale (an AFSCME commissioned book on contracting out of public services), bribery, kickbacks, and payoffs have long been associated with contracting out.  Companies, with a desire to expand profits, may often engage in questionable or illegal practices.  Even with competitive and open bidding, corruption is still a real danger for municipalities that decide to contract out. [ top ]

4. FAILURE TO PERFORM SERVICE  Contractors may cease or curtail operations because of bankruptcy, financial problems, lack of equipment or for other reasons.  This could leave a city or county without vital services and cause severe hardship on its citizens. [ top ]

5. BALLOONING COSTS AND DEPENDENCY  To obtain a contract, a firm may offer a very low price in its first contract, hoping that the jurisdiction will become completely dependent on their services. After contracting out some service, such as trash collection, municipalities will often sell their equipment, making it impossible for them to resume operation in the future.  Then the contractor will raise its prices for performing the service. [ top ]

6.  PROBLEMS IN DRAWING UP ADEQUATE CONTRACTS  It is extremely difficult to formulate contracts that will ensure a government gets what it wants for the price it pays. Lack of experience in writing performance contracting specifications can create loopholes for contractors and result in a decrease of services for the public. [ top ]

7. CONTRACT IRREGULARITIES  These include: no competitive bidding or bidding among "price-fixing" contractors, provisions allowing for automatic adjustment or re-negotiation of costs and lack of performance bond requirement (even if a bond is required, the contractor must make up for this expense in its charge for services). [ top ]

8. LESS ACCOUNTABILITY AND FLEXIBILITY   Because the services performed by private firms are governed only by specific terms in the contract, the average citizen will have little or no impact in registering complaints or making suggestions on how to alter services. Government will be unable to make a contractor respond to public needs, except through costly re-negotiation. [ top ]