Making The Decision To Privatize
- Why is there a need for alternative service delivery? What is the problem to be solved? What goals are to be achieved? Have all efficiencies been achieved with the existing service model?
- Is the service one that fundamentally can be provided on a for-profit basis?
- Is this a one-time project or an ongoing operation?
- Is privatization the best alternative model or are there other options to consider such as contracting with another public agency?
- Is there a history of the private sector providing the service: is it successful? Does the private sector have the core competencies to provide the service successfully?
- Are there examples of “successes” and failures of privatization of this service? Why did a particular initiative to privatize this service succeed or fail? Have stakeholders where this service has been privatized been contacted for input?
- Are there multiple private providers in the market place; or would this be a sole source situation with no competition.
- If the service is privatized, how will the government agency monitor quality, cost and contractor performance?
- How will clients of the service be affected? (Political and social costs)
- If the service is privatized, what will happen to government employees and assets?
- How much will it cost to privatize the service?
- Who are the stakeholders in the service and how will they participate in the decision to outsource?
- What happens if privatization fails (contractor walks or other scenario); how will service be continued or reestablished?
- What are the existing requirements and practices for public records, notice, participation and transparency for this service?
- What is the size and complexity of this proposal? Possible measures include the number of parties involved, the dollar amount of the contract, the number of public and private staff involved, any equipment covered by the prospective contract, the geographical area in question, the time frame, the number of recipients or beneficiaries of the service, and the amount of fossil fuel used for project purposes.
- Does the governmental agency have prior experience with privatization?
Contractor Selection Checklist
After The Decision To Privatize: Managing The Contractor Selection Process
- Has the consultant selection process been thought through?
- How will prospective bidders present their qualifications; have the most important experience, technical and other qualifications been articulated?
- Does the Request for Proposal (RFP) clearly define:
- Expected service levels and performance criteria?
- Allowable contract costs and how profit will be defined?
- Contractor performance and evaluation criteria?
- How rate increases will be approved? What information must be provided by the contractor in rate increase applications?
- Annual financial and performance review audits.
- What will happen for non-performance?
- Whether or not the contractor will be required to pay prevailing wage and comply with other employment criteria?
- Required insurance, performance bond, and/or hold harmless provisions and how the government agency expects to be protected from liability arising from the contractor’s actions or negligence?
- Have the criteria by which the contractor will be selected been well articulated and included in the RFP? Will the decision be based solely on cost or by quality?
- Who will review the proposals, rank the proposals, and interview the bidders? Will the process include neutral third party, peer reviewers in the process?
- How will stakeholders be involved in the selection process?
- Who will make the final selection and how will they be held accountable for the decision?
Contract Negotiation Checklist
After The Decision To Privatize: Negotiating The Contract
- Who will be negotiating the contract and do they have the requisite experience? Are specialized negotiators needed?
- Who will be drafting the contract and do they have the requisite experience? Is specialized legal expertise needed?
- Does the contract incorporate the performance and other criteria set forth in the selection process?
- How will the contract and its provisions be reviewed by stakeholders before final approval?
- What will be the contract term? Does it provide for automatic renewals or are there specific criteria that must be met for an extension?
- Who will approve the final contract?
- Does the contract clearly specify a process to resolve contractual disputes that may arise during its term? What recourse, penalties, or other leverage does the contract specify in case of noncompliance?
Contract Management and Oversight Checklist
After The Decision To Privatize: Managing The Contract And Overseeing Performance
- What will be the frequency of performance reviews?
- Who will be responsible for monitoring the contract and contractor performance? Do they have direct technical experience with the service provided? Does the team include finance and legal audit experience? Will neutral third party or peer reviewers participate in the process? Will clients/customers and staff be included in the annual performance review?
- Who will assure the performance deficiencies will be corrected by the contractor within appropriate timeframes?
- Are there checks and balances in place to assure that personnel overseeing the contractor do not become to close or “chummy”? Are there written protections for whistleblowers?
- Will program/contractor audits be open for public review?