Privatization 101

What is Privatization?

Privatization involves handing over control of public functions to private companies.  To keep it simple, we place privatization contracts into two categories:Contract

  • Service privatization: The government pays a contractor to provide public services
  • Asset privatization: Typically, the government receives money for the building, long-term lease, or purchase of revenue-producing infrastructure, facilities or other assets.  See our page on public-private partnerships for additional information. 

Risks of Privatization

Privatization and contracting out involve giving up control of public structures we all rely on to private companies.  Once a public service or asset is privatized, we, the public, lose the ability to have a voice in decisions affecting that service or asset.  We also lose the ability to request and view important information related to the privatized function.  Without proper information and a forum in which to voice opinions, the public is effectively shut out of the decision-making process.  These services and structures are no longer controlled by a government accountable to the public, but instead beholden to companies who may have entirely different goals and priorities.    

ITPI has documented numerous examples that demonstrate that the supposed benefits of privatization are merely myths.  Privatization has often moved forward without adequate public deliberation or oversight. Poorly conceived and constructed contracts have resulted in cost increases, as well as diminished service quality, reduced access to vital services, and have failed to protect against corruption.  More information on the risks of privatization can be found here

Responsible Contracting

Concerned with the loss of control, many communities are advocating for protections against poorly conceived and/or executed privatization contracts. They are working with lawmakers to provide protections against contracts that are against the public interest by promoting fair and responsible contracting standards, and requiring full public deliberation of contracting decisions.