The Municipal Privatization in USA

Abstract

Competitive contracting is the most common form of municipal privatization and has been growing in USA since the 1970s regardless of the political affiliation of elected officials. Between 1982 and 1992 contracting increased by 121 percent in the 596 cities where comparable data were available. The average common municipal service is contracted out by 27 percent of cities. Cities privatize first to save money and second to improve services. A summary of nine major, comprehensive studies covering every contract entered into by the reporting jurisdictions – 7, 168 contracts in all – showed average savings of 29,5 percent. Mayor Stephen Goldsmith gained national and international attention for his successful efforts in Indianapolis. He used public-private competition to bring about large improvements in street repairs, wastewater treatment, fleet management, solid-waste collection, airport management, golf courses. All in all he put eighty-six services out to bid, of which city employees won 43 percent – but only by drastically improving their productivity. The number of employees declined by a third but no union member lost a job, and the city projected cumulative savings of $450 million.