Privatization of Welfare Services: A Review of the Literature. Challenges Faced in Privatizing Social Services


While privatization might offer the potential for increased efficiency and flexibility in delivering social services, appraisals of state and local efforts to privatize have revealed a number of challenges that government agencies must address if contracting is to be successful. Among the many hurdles that officials face, seven issues receive special emphasis in the literature: (1) guaranteeing a competitive bidding environment, (2) developing effective requests for proposals (RFPs) and contracts, (3) monitoring contractor performance, (4) addressing political opposition, (5) involving community-based organizations, (6) avoiding "brain drain," and (7) protecting the integrity of the procurement process. This chapter discusses each of these challenges in turn and, when applicable, notes strategies proposed to address them.

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