Public-Private Partnership FAQ
The National Council for Public-Private Partnerships (NCPPP) is a non-profit, non-partisan organization that can offer more information on the benefit of privatizing a public service.
Why should governments turn to the private-sector to help perform services they have traditionally handled themselves?
Simply stated, public-private partnerships are more effective. Creative government leaders understand that partnering with private contractors can improve operations and services without increasing taxes. Private companies have access to better rates and the latest technologies and have the expertise to successfully meet environmental compliance regulations while skillfully managing government projects. Public-private partnerships mean improved operations and services for tax payers at no extra cost.
When services are contracted out to private companies doesn’t that mean that public employees lose jobs?
This is definitely not the case. A 2001 Department of Labor report found that virtually all affected public employees were either hired by the private contractors or transferred to other government positions. In fact, many private companies like ESG not only hire these existing employees as their own but they actually offer their new employees more resources, opportunities for training, professional acknowledgement, and professional growth and advancement opportunities.
When the private sector is involved, doesn’t that mean that citizens will eventually have to pay more for services?
Citizens will pay less for services and, even more interestingly, with a public-private partnership extra major projects can often be undertaken at little or no cost to the public. In cases where there have been rate or tax increases, these resulted from upgrading or expanding systems under the terms of the contract signed between the public and private partners so tax payers receive much more for their service dollars.
Governments are increasing their partnerships with private contractors because their constituencies can then benefit from high-quality services without experiencing an increase in taxes. Private-sector partners are more able to practice cost efficiencies to hold down expenditures while taking advantage of additional revenue streams than governments alone. Private companies are able to provide better services for less.
Actually, the opposite is true. Private companies involved in public-private partnerships are much more accountable because they not only answer to the governments that hire them but also to various regulators, the Securities and Exchange Commission, Congressional oversight committees, etc. Plus, their actions are scrutinized by the media. Private companies work extra hard to make sure the public is happy with their services and because of this are often much more accountable than governments acting alone.
Isn’t there a danger of corruption when private companies are involved in providing public services?
The only way private companies can achieve long-term success in partnering with governments is to insist on quality, value, and dependability in the services that they provide. Private companies are held to very high standards when complying with regulatory requirements so regulatory bodies tend to enforce regulations more tightly with private contractors than they do with government agencies. With this increased oversight, both private companies and government officials are scrutinized and held accountable which minimizes the opportunities for corruption.
Will the need for public-private partnerships increase or will we see fewer of them as the economy improves and governments become less revenue-strapped?
First, public infrastructure and service needs far exceed the capability of government budgets to meet them. This is true in virtually every area of public life from highways to waterworks. Public-private partnerships enhance government resources and capability to address pressing public needs.
Second, public-private partnerships aren’t just about budgetary issues. Governments are turning to partnerships because they see that merging the resources of the public and private sectors improves the quality of services provided to citizens.