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The Pros And Cons Of Contracting Out In The Public Sector

2472 words - 10 pages

Advantages and Disadvantages of Contracting Out In The Public Sector


Many public agencies in recent years have followed the trend of privatization, or contracting-out. Activities and functions that were once performed, or services that were once provided, by public employees are now being performed by private sector employees (Lyons). Vehicle towing, health services, police protection, and solid waste collection are among the many services and functions that government has contracted out. A survey in 1995 that was sent to mayors or city managers of America's largest cities (based on population) revealed that only three of the 66 cities that responded to the survey had not privatized any city services. This trend translates to not only an administrative concerns but a staffing concern faced by many managers.

Privatization As A Staffing Concern

Replacement Of Civil Servants By Contract Employees

Privatization of governmental functions has a direct relationship with the number of contract employees in government and an inverse relationship with the number of civil servants. As privatization has become more acceptable, contract employees are being hired to do the jobs, thus, replacing civil servants.

As indicated by Gregg Lodan, Assistant Administrative Analyst for the City of Long Beach Community Development Department, approximately 20% of the department’s employees are contract employees, as opposed to approximately 5% three years ago. He stated that other departments and other cities might have even higher percentages because functions of whole departments or individual functions are now being considered for privatization (Lodan).

In Indianapolis, IN, Mayor Steve Goldsmith, who believes strongly in privatization, has privatized the management of the city-owned wastewater treatment plant. He has also privatized trash collection, printing, and street repair. By doing so, he Ahas reduced city staff other than public safety personnel by 30 [%] over two years.@ The employees from the contracted-out company have replaced city staff.

Advantages Of Hiring Contract Employees.

Why is contracting out so attractive to a public agency? Privatizing has its advantages that represent benefits to the agency.

Although reducing costs and improving services have been cited as the most important reasons services are privatized by agencies, contracting out offers the attractiveness of hiring a contract employee over a public employee. This occurs because of the apparent advantages offered by such options (Dilger et al. 23). Some advantages of hiring a contract employee over a civil servant are as follows:

Hiring And Training Costs Are Reduced

Reduction Of Hiring Costs Hiring a civil service employee involves recruiting, testing, interviewing, and selecting a candidate or candidates for given positions. This process is...

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