Privatization in Practice: Case Studies of Contracting for TANF Case Management. Agencies Must Prepare to Address the Challenges of Privatization


Privatization is not easy. All the study sites found privatization challenging  some more so than they anticipated. The most demanding aspects of privatization include promoting competition, developing a fair and effective procurement process, designing contracts that provide incentives for contractors to meet program goals and are acceptable to diverse organizations, monitoring effectively, and coordinating the work of private and public agencies. Although nearly all the study sites had experience contracting out for TANF services prior to welfare reform, it was typically on a much smaller scale and for job training services rather than case management.

States and localities considering privatization must allocate sufficient government resources  particularly staff time and outside expertise  to ensure it is done well. Public agencies in several study sites found it helpful to access outside expertise for RFP and contract design. San Diego County, for example, placed considerable emphasis on soliciting advice from community stakeholders, other states, and researchers; this advice helped produce a contract the agency found to be effective. Delaware hired an independent management consultant to help develop its RFP and contracts and explain the rationale for performance-based contracting to the providers and the public agency. Both public agency and contractor staff benefited from this assistance.

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