Georgia Cities Revamp Outsourcing Deals

The one-contract-fits-all approach might be on the decline for governments looking to outsource public services to private companies.
January 12, 2011
 

The one-contract-fits-all approach might be on the decline for governments looking to outsource public services to private companies.

At least, that’s how it’s shaping up in Georgia, according to the Atlanta-Journal Constitution. Five years ago, Sandy Springs, Ga. helped transform the concept of local government by initiating a lump-sum contract for services with a single private company. But now, Georgia’s newest city, Dunwoody, is leading the charge to revamp that model by opening the field to whatever companies want to bid for the work.

As the privatization landscape continues to shift, this evolution is only natural: As competition goes up, costs go down. And while many state and local governments have identified hundreds of millions of dollars in savings by outsourcing tasks like trash collection, pothole repair, and water and wastewater treatment, contracting with different companies to run different departments could lead to more green.

According to the AJC, Dunwoody and Sandy Springs will receive bids from dozens of companies as their main contracts expire. It’s too early to tell whether these tweaks will make a big difference, but one change is imminent: greater transparency.

Local officials will be able to sign direct deals with subcontractors, and, in turn, increase the accountability factor. For instance, now officials will have direct access to specific details on services, such as the cost to fill a pothole. With this information, officials can avoid such fiascos that have forced other cities to renege on their outsourcing deals.

Atlanta, for example, outsourced its water service 10 years ago, but neglected to incorporate goals and measurements into the contract. Four years later, the mayor brought the service back in-house. The AJC notes that other local and smaller governments, like Chattahoochee and Milton, also had to cancel contracts due to financial pressure. According to a 2007 survey by the International City/County Management Association (ICMA), most governments that lose the outsourcing game blame costs.

Privatization as a concept isn’t going away, but the best approach remains to be seen as governments experiment with new options to save money.

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