The Urbanophile has a post about New York City potentially privatizing its parking meter operation. He notes that Chicago’s meter privatization was a fail but that such projects are not necessarily doomed to failure; and offers some notions that are probably applicable generally.
First is, you have to appreciate how dynamic the system is. Contracts have to be able to evolve – practically, that probably means shorter term contracts, easier escape clauses, or an ability to amend duties.
Another is appropriate allocation of risk. Renn notes that one of the main benefits to a municipality of privatization is shifting risk but that all too often, privatization contracts do not leave the contractor with much in the way of appreciable risk. They need to make a profit, of course, but assumption of risk is one of the primary justifications for allowing someone profit (labor and innovation being the two other ones that come to mind.)
He suggests that it’s too bad former Indianapolis mayor and New York deputy mayor Steve Goldsmith is not working on the issue given his experience with privatization efforts in Indianapolis. I’d be interested to know how successful Goldsmith was in protecting Indianapolis from risk by shifting it on to private contractors.
All too often what you get with privatization is all of the monopoly of a municipality with none of the transparency and with more of the compensation getting shifted away from ground level workers and up the management chain.
Goldsmythe really hit it out of the park by hiring SCT to take care of the City’s IT duties.
Every 6 months, it was a scene out of Oliver Twist with the CIO Jake Whats-his-name coming before Beurtt Servaas with his bowl, saying “Please, Sir, may I have some more?”.