District of Columbia:

City and State Privatization Initiatives and Impediments

T-GGD-95-194: Published: Jun 28, 1995. Publicly Released: Jun 28, 1995.

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GAO discussed the District of Columbia's privatization and reinvention efforts, focusing on other city and state governments' privatization initiatives. GAO noted that: (1) about 90 percent of state agencies are using some form of privatization to increase flexibility and efficiency and reduce costs through competition; (2) privatization initiatives include contracting out, public-private partnerships, sales of obsolete assets, internal markets, voucher programs for educational, social and health services, and service franchises; (3) in the past, governments contracted out only support functions where results were more important than the means of achieving them; (4) city and state governments are increasingly considering contracting out parts of their core missions, such as payroll, educational, correctional, social, and health services to compete with the private sector; (5) public-private partnerships tend to focus on infrastructure projects that have common interests; (6) impediments to privatization include resistance to privatization, inadequate financial and performance information, and poor procurement and contract administration practices; and (7) city and state governments have minimized layoffs, eased the transition to a competitive environment, and have provided structural incentives to counter resistance to privatization.

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