20.4 Direct Relationships Between Government & Businesses

Procurement

Procurement refers to the process by which government entities acquire the goods and services they need from the private sector. This includes everything from office supplies and construction materials to professional services like consulting and IT support. For example, a school district might procure new computers for its elementary schools or hire a private construction company to build a new gymnasium.

Government agencies employ professionals who know how to manage these purchases and projects. Ideally, these personnel follow best practices to ensure that everything is done ethically, efficiently, and effectively. They use competitive bidding to find the best deals and make sure all contracts follow the rules. The goal is for the government to get high-quality products and services at a relatively low cost and receive them on time.

Contracting Out Public Services

Many local governments have shifted from providing public services in-house to contracting these services out to for-profit companies. For example, cities used to handle sanitation services internally, owning the trucks, employing the sanitation workers, and sometimes even owning the landfills. This approach was often expensive and inefficient. Today, most local governments contract with for-profit companies to pick up the trash. These companies bring specialized expertise, equipment, and economies of scale that local governments might lack, making the process more streamlined and cost-effective.

Contracting out public services comes with both advantages and disadvantages. On the positive side, it can lead to cost savings, improved efficiency, and access to specialized skills and technologies. For-profit companies may provide services more efficiently due to their expertise and experience. However, there are also potential downsides. Contracting out can sometimes lead to issues if the private company cuts corners to save costs, resulting in reduced service quality. Therefore, local governments must carefully weigh these pros and cons when deciding whether to contract out public services.