State and Local Privatization Trends
1. Trends in State and Local Privatization Activity
Figure 1: Trends in Privatization Activity, 1993-1998
A majority of agency respondents (86.3%) said they either increased or maintained the level of privatization activity between 1993 and 1998.
Source: Private Practices: A Review of Privatization in State Governments, Keon S. Chi and Cindy Jasper, Council of State Governments, 1998, p. 7, fig. 4.
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3. Reasons for Increases in Privatization Activity
Figure 2: Reasons for Increases in Privatization Activity, 1993-1998
Source: Private Practices: A Review of Privatization in State Governments, Keon S. Chi and Cindy Jasper, Council of State Governments, 1998. p. 8, fig. 6.
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4. Methods Used to Privatize
Figure 3: Methods used to Privatize Programs and Services, 1998
Source: Private Practices: A Review of Privatization in State Governments, Keon S. Chi and Cindy Jasper, Council of State Governments, 1998, p. 13, fig. 7.
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5. Privatization by State
Figure 4: Number of Privatized State Services and Programs, 1997
Source: Council of State Governments, Survey on Privatization
in State Government, 1997.
| Table
1: Number of Privatized State Services and Programs, 1997 |
| State |
Number of Programs & Services Privatized |
Number of Agencies Responding to Survey |
| Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Guam
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
U.S. Virgin Islands
Utah
Vermont
Virginia
Washington
Washington, D.C.
West Virginia
Wisconsin
Wyoming |
49
41
48
61
124
125
90
31
151
56
3
59
37
88
39
118
50
73
78
42
118
30
119
46
31
41
41
68
52
54
112
6
60
49
35
26
42
45
47
22
26
90
48
86
82
5
58
28
76
49
23
45
48
29 |
10
8
7
10
9
10
14
4
16
7
5
13
8
6
6
10
6
7
11
9
10
3
11
6
4
8
4
10
8
8
9
3
7
10
9
4
6
7
7
6
5
11
8
10
8
2
7
6
8
9
5
8
6
7 |
| Source: Council
of State Governments, Survey on Privatization in State Government, 1997. |
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Federal Privatization Trends
1. Frequently Asked Questions
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2. Privatizing Half the Federal Bureaucracy
Background
- Since 1955, it has been federal policy to use the private sector to deliver commercial services.
- In 1998, the Federal Activities Inventory Reform (FAIR) Act required agencies to list commercial activities each year.
- Under the Clinton administration, agencies performed the first FAIR inventory. They identified 850,000 commercial positions—everything from making maps to writing software and mowing lawns. Private sector companies do these jobs every day.
- President George W. Bush plans to subject the 850,000 commercial positions—roughly half the federal bureaucracy—to competition. The plan was outlined in the President’s Management Agenda.
- On May 29, 2003, the federal competition regulations were finalized.
Benefits
- Cost: Studies by the GAO, the Center for Naval Analysis, and many other sources place typical cost savings from competition at 30 percent.
- Performance: Under new regulations, those who win contracts should offer the “best value” meaning the best combination of performance and low cost.
- Fairness: The new federal competition regulations give federal workers a fair chance to deliver results. In fact, federal workers win competitions about half the time, and when they do lose the majority either work for the contractor or shift to other open positions elsewhere in the federal government.
- Case Study: In 2002, the OMB decided to use competition in response to poor performance by the Government Printing Office, and offered the job of printing the fiscal 2004 budget to competitive bidding. In order to keep its job, the GPO turned in a bid that was almost 24 percent lower than its price from the previous year. That was $100,000 per year that the GPO could have saved taxpayers at any time it chose, but it never chose to do so until it was forced to compete.
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3. Trends in Federal Privatization Activity
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4. Federal Privatization News
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Global Privatization Trends
1. Revenues from Privatization
- Privatization in developing countries has increased dramatically from 1990 to 2000.
- After reaching peak revenues in 1997, privatization transactions dipped the following two years—caused, in part, by the East
Asian and Russian crises and the completion of major elements of Brazil’s privatization program.
- Estimates suggest that privatization revenues for 2000 have again risen, reaching an amount close to the 1997 peak.
Figure 5: Annual Privatization Revenues for Divesting Governments, 1988-1999, $US billions
Source: Privatisation International, as reported in Gibbon (1998, 2000).
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2. Trends by Region
- From 1990 to 2000, about 50 percent of privatization activity took place in Latin America and the Caribbean.
- About 25 percent of activity took place in East Asia and the Pacific.
- The Asian financial crisis slowed Asian privatization substantially.
Figure 6: Privatization Revenues in Developing Countries, by Region, 1990-99 ($US billions)
Source: Appendix 4, Global Development Finance, The World Bank.
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4. Trends by Sector
- Selling off large-scale infrastructure, such as, telecommunications, power, and transport accounts for the largest share of
privatization revenue.
- Telecommunications transactions were largely responsible for 1997-98’s revenue peak.
- In 1999, primary sector privatization—for example, petroleum, mining, agriculture, and forestry—overtook infrastructure privatization.
Figure 7: Privatization Revenues in Developing Countries, by Sector, 1990-99 ($US billions)
Source: Appendix 4, Global Development Finance, The World Bank.
Footnote: It is important to note that these privatization data include proceeds from domestic and foreign investors as well as direct and portfolio investments.
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5. Best Practices Studies
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