Term Paper: Privatization

Pages: 10 (2567 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Government  ·  Buy This Paper


[. . .] Findings and Discussion

Now that we have reviewed the literature on the topic of privatization let's explore our findings and discuss implications. Our research has found that privatization of the federal government has grown tremendously in recent years. We discovered that the use of privatization can take on many different forms. Our investigation led us to believe that much of the privatization of the federal government in America involves contracting out and public-private partnering.

We found that contracting out involved the hiring of private firms to handle governmental services. We discovered that when the government contracts out it is financially and managerially responsible for the production of the good or service that is contracted. On the other hand we found that public-private partnering required both the government and the private sectors to equally govern the creation of contracted services and goods.

We also found that there were several advantages to privatization. These advantages were recognized within the government, by the private sector and by consumers. Our investigation found that the introduction of competition into the market is one of the most important advantages of privatization. Open competition is essential to our society. Competition is essential in our government because it enhances performance among competing interests. Organizations that compete for funding keep their cost down respond quickly to changing commands and strive to satisfy their customers. Privatization promotes and ensures open competition on federally funded or assisted projects.

The research also found that privatization can improve the efficiency of private sector firms. Our research uncovered that many businesses in the private sector report an increase in profits after privatization. We concluded that under privatization competitive private firms have greater freedom and more incentive to innovate than government agencies. Government sources to be innovative are rarely available and training of governmental employees is almost non-existent. Privatization takes advantage of innovations; especially in the cutting edge technology and information systems that maximizes the well being and economic growth of the nation.

Along with the advantages of privatization we also found that there were some disadvantages. One of the main disadvantages to a system of privatization is the potential for corruption that exist with certain forms of privatization. We found that this corruption can have detrimental effect on the government and the public.

There is also a risk that privatization will forced the government to work even harder than if the work was performed by the government. This extra work comes when the government is forced to manage the activities of the contractor. If the government is forced to do more work under privatization the benefits associated with it are decreased.

Another disadvantage of contracting out is that it has the tendency to cost federal employees there jobs. As we stated earlier the Bush administration has identified 850,000 federal jobs that can be contracted out. Many of these employees may find themselves out of work and looking for jobs in the private sector.

Implications of findings

So, what does all of this mean for the future of privatization in the federal government? Well, we can definitely conclude from our findings that this will continue to be a topic of much debate for years to come. Privatization of the federal government will continue to grow and expand.

It is essential that the government carefully consider the advantages and disadvantages of privatization. The government must then decide if different aspects of privatization will benefit the American people or hurt the way of life that we have grown accustomed to.

Indeed our government must learn from the mishaps of countries around the world that practice privatization.

We can imply from our research that privatization should be pursued in certain areas. Contracting Out and public-private partnership are two of the most popular forms of privatization and can prove to be very beneficial to government, private contractors and taxpayers. I believe that contracting out federal work ensures open competition, maintains government neutrality, and prevents discrimination. In addition it serves to encourage innovative ideas and promotes accountability.

The drawbacks to privatization should also be examined carefully as the federal government decides whether or not to privatize. The government must be willing to face an onslaught of federal employees who may loose their jobs to contractors. In some cases it seems that it may be more important to preserve federal jobs than to hire contractors. The economic conditions have a great deal to do with whether or not the federal government decides to privatize. The government does not want to create a problem that is worst than the situation that they started with.

Privatization also has huge implications for businesses operating in the private sector. Businesses must be prepared to meet the challenges that they will face as they compete in a privatized environment. In addition, businesses must learn how to work in collaboration with the federal government.

Privatization will also have implications for consumers. Consumers will be able afford items that they would not have been able to afford without privatization. In all likelihood consumers would also have a higher quality of goods and services to choose from. This may lead to an increase in consumer spending which will have economic impacts for years come.


This paper has explored privatization of the federal government as it relates to contracting out and public-private partnerships. We found that privatization is important to the federal government because it makes it more efficient. In these treacherous economic times privatization presents the government with a way to reduce spending and still get a high quality product or service.

We can conclude that there are serious advantages and disadvantages that should be discussed prior to the implementation of any privatization strategies. The government must weigh the costs and benefits that privatization will have on the economy, consumers and businesses in the private sector. This discussion is only a small portion of privatization within the United States and only provides a small view of the negative and positive attributes of privatization. In conclusion, my theory is that the federal government should privatize more commercial functions. Hopefully my research supports my theory.


Megginson, William. 2000. "Privatization."(effects and management of sale of state-owned enterprises). Foreign Policy. http://www.findarticles.com/cf_0/m1181/2000_Spring/61640247/p1/article.jhtml?term=Privatization+of+the+federal+government

Terms Related to Privatization Activities and processes. 1997. The General Accounting Office.

Wing, Eric. 2003. "Defense Contractors." Washington Business Journal. published January 3,2003. [END OF PREVIEW]

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