Privatization:

Questions State and Local Decisionmakers Used When Considering Privatization Options

GGD-98-87: Published: Apr 1, 1998. Publicly Released: Apr 1, 1998.

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Pursuant to a congressional request, GAO identified critical questions that state and local decisionmakers found useful when considering whether to privatize a government activity, focusing on lessons learned concerning: (1) political champion issues; (2) implementation structure; (3) legislative and resource changes; (4) reliable cost data; (5) strategies for workforce transition; and (6) monitoring and oversight.

GAO noted that: (1) the six governments it visited tailored their approaches to privatization to their particular political, economic, and labor environments; (2) in the six governments, a political leader or, in one case, several leaders working in concert, played a crucial role in introducing privatization; (3) five of the six governments GAO reviewed established governmentwide commissions to identify privatization opportunities among government activities and to set policies to guide privatization initiatives; (4) the commissions were created either by the chief executive or by the state legislature; (5) the governments found that privatization can take various forms, such as contracting out and assets sales, and that implementation strategies and analyses need to be tailored to the project or situation and will likely vary depending on the form of privatization; (6) governments may need to enact legislative changes and reduce resources available to government agencies in order to encourage greater use of privatization; (7) most of the governments GAO surveyed used estimated cost data, because obtaining complete cost and performance data by activity from their accounting systems was difficult; (8) GAO found that governments needed to develop strategies to help their workforces make the transition to a private-sector environment; (9) for example, all six governments developed programs or policies to address employee concerns with possible job loss due to privatization; and (10) officials from all six governments worked to enhance their employees' skills so that they could undertake more sophisticated, complex activities, such as wastewater treatment or the medical care of prisoners.

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