“Several years ago the Bethel Park School District in Pennsylvania voted to contract with ServiceMaster, a $1.5 billion multinational corporation, to provide custodial services to city schools. The School Board took this step because it believed it would save money. […] By the time the ServiceMaster contract was up for renewal, Bethel Park had discovered the real costs of contracting out: dirty schools, destroyed equipment, and low morale among poorly-paid workers. The school district dropped the contract, having learned the hard way that contracting with a profit-making corporation raises costs while weakening public control over service delivery.” (p. 1)
“Cost savings are often illusory; quality of service declines; corruption takes root; the disadvantaged are further isolated; and in a most fundamental way, the very democratic nature of our public services is sacrificed to the marketplace.” (p. 2)
Hidden Costs of Privatizing
Administrative costs:
Cost overruns: Frequently a contractor will “low-ball” or underbid to receive a new contract, in anticipation of raising its rates once it has become established. (p. 3)
Contractors Pad Contracts to Ensure Profits: Contractors who submit artificially low bids to gain a contract often make up the difference by adding certain prerequisites to their contracts.
Negative Impact on Communities: Contracting with private companies is nothing more than shifting from workers and community members to big contractors. The local economy loses. (p. 4)
Quality of Service Declines
“[…] evidence from hundreds of communities that the quality of service suffers at the hands of contractors who hire inexperienced transient personnel at low wages, skimp on contract requirements, and provide inadequate supervision.” (p. 5)
“Public administration is essential to public services. It’s integral to our system of checks and balances. Whereas privatization relies on the motives of private gain, democracy depends on the capacity to assert collective interests over those of the few. […] It is through our public programs and services that we are bound together as a society, each citizen with a responsibility to others.” (p. 8)
Bilik, A. (1990) Privatization: Selling America to the Lowest Bidder, Labor Research Review, 1(15). Retrieved from http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1143&context=lrr