Privatization


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Privatization refers to the transfer of programs from the public sector (i.e. government) to the private sector.  It is also referred to as “de-nationalization.”  Private market actors can often more efficiently deliver many goods or services than the government due to free market competition.  In general, over time this should lead to lower prices, improved quality, more choices, less corruption, quicker delivery and less bureaucratic red tape. There are various types of "privatization":

Competitive Sourcing
Competitive sourcing is the most prevalent type of privatization. Under this system, government agencies are required to submit a list of their commercial activities to the Office of Management and Budget (OMB). Private entities then compete directly with the government for the opportunity to perform some of these activities. The current initiative is guided by OMB Circular A-76. Competition provides an imperative for the public sector to focus on continuous improvement, removing roadblocks to better performance and greater efficiency.  The objective is to focus on the most effective and efficient way of accomplishing the agency's mission, regardless of whether it is done by civil servants or contractors.  A competitive source analysis consists of contrasting a public sector task with that of a similar private sector task and rating them based on a cost, quality, efficiency, and the like.

Divestiture
Divestiture involves the sale of commercial government operations to the private sector. Examples include Reagan’s sale of Conrail and Clinton’s sale of the Elk Hills Naval Petroleum Reserve

Public-private partnerships (PPPs)
A PPP is simply a joint effort between public and private entities. Typically, the government will contract with a private company to finance, construct, and operate a public service. The private entity then profits by charging either users or the government for services rendered.

Vouchers
Vouchers provide subsidies which can be redeemed for goods and services offered by the private sector, as opposed to the government directly providing these goods and services. Examples include food stamps, school vouchers, and student loans.

AWF supports all privatization efforts to increase the efficiency and effectiveness of government, lower the cost and burden to the taxpayers and provide for increased transparency.

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