Smith Group Consulting

Privatization is a popular word usually meaning the operation
of a governmental function by a private company. This could
mean selling the assets of a municipally-owned utility to a
private corporation, or it could be the contracting of the
operations of a governmental function to a private firm for a
period of time, usually three to five years.

Privatization also can mean offering a contract to potential
bidders from both the public and private sectors. In this case, a
group of public employees who operate, say, a city's fleet
maintenance or sanitation department will be asked to compete
against a private company that may offer the same services.
Contracts may run for one to three years or longer.

What is a Privatization Review?
A Privatization Review is an examination of a governmental
unit's operations to compare them with similar functions in the
private sector. This allows the governmental unit to develop a
competitive strategy and return savings to its citizens in the
form of better services and/or lower taxes or user fees.

Through the implementation of business efficiencies,
governmental units may be able to provide public services more
cost effectively than the private sector. Other public services
may be best offered by private companies under contract to a
governmental unit. These situations may vary from community
to community, depending upon the needs and assets of each
governmental unit.

A Privatization Review provides a governmental unit with the
facts its leaders need to explore options for providing services
to its citizens. By applying principles of modern business to
governmental operations, a sound strategy can be developed for
cost savings and improved public services.

How is a Privatization Review conducted?
A Privatization Review begins by taking stock of the
governmental unit's current situation. What is its true financial
status? In what condition is its infrastructure? How are its
public works services organized and administered?

After these questions are answered, an assessment of the
governmental unit's strengths and weaknesses is made, and
recommendations for improvements and option considerations
are presented in a formal report.

Can a Privatization Report help you make the right
decisions?
With the Privatization Review report in hand, the governmental
unit is in a position to better evaluate its options.
Implementations of the recommendations can make the
governmental unit more effective.

If privatization is to be considered, the Privatization Report can
be an invaluable aid in evaluating private contractor proposals.
Negotiating privatization contracts is best done when all the
facts are known.