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Statement ofthe Issue Montgomery County Organizational Reform Commission Contracting and Privatization One of the key areas the ORC explored, for the purpose of developing cost-savings and enhanced efficiency in service-delivery, was that of contracting out or privatizing some of the County's existing functions. In analyzing opportunities for the County to convert existing . operations to "in-sourcing" or "out-sourcing," the ORC focused primarily on areas that would entail large-scale functional improvements, rather than adjustments to smaller-scale functions within specific departments and agencies. In some cases, as a result of this review, cost-saving opportunities unrelated to contracting out or privatization were also identified and considered. Experience with contracting government services has demonstrated that neither government, nor business, nor nonprofit organizations are inherently more or less efficient, but that the key factor determining cost-effective performance is good management motivated by strong incentive, which usually translates into competition. To the extent business is more efficient than government, it is usually because competition inherent in a market economy drives businesses to innovate and improve. If business lacks that incentive, as is often the case in business monopolies, it is no more likely to demonstrate greater efficiency than a comparable government monopoly. By the same token, government agencies operating in a competitive environment have demonstrated that they are capable ofbeing as efficient as business. Some local governments have discovered that the key to deriving efficiencies from contracting is to skillfully structure markets and competitions for government services in which governments and businesses (and also nonprofit organizations) all compete against one another for contracts. For example, in the 1990s, Indianapolis held scores of public-private competitions across some two dozen separate services (e.g. trash pickup, wastewater treatment, street repairs), exceeding a half billion dollars in work. Government workers won at least 16 bids outright and split 13 additional bids with private contractors. Overall, the public-private competitions alone were estimated to cut the city's costs by over $100 million over a seven-year period. Discussion ofthe Issue and Recommendations Among County services that the ORC considered as possible candidates for contracting out or privatization were: • School Bus Transportation (contracting) • Information Technology Seat Management, Cloud Computing, Data Centers (contracting) • Transit Services/Ride On (contracting) • Liquor Control operations; wholesale and/or retail (contracting/privatization) - 48PDF Image | Montgomery County Organizational Reform
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