Privatization and the Federal Government: An Introduction   [open pdf - 209KB]

"During the past two decades, the privatization of federal agencies and activities has been much debated. That said, privatization - here defined as the use of the private sector in the provision of a good or service, the components of which include financing, operations (supplying, production, delivery), and quality control - is not a recent phenomenon. Since its founding in 1789, the federal government has used private firms to provide goods and services. Hence, privatization is of perennial interest to Congress. This report is an introduction to privatization in the federal governmental context. It discusses the emergence of privatization on the federal policy agenda in the late 1970s and early 1980s. To some, privatization appeared as an answer to the purported failures of 'big government.' Privatization attracted political support due to its rhetorically persuasive rationales, purported benefits, and political attractiveness. However, privatization also has been controversial. Critics have complained that privatization is a form of union busting and that privatization can have unforeseen and undesirable consequences. The report notes that, whenever policymakers consider privatizing a federal agency or activity, a fundamental issue arises - 'Which activities are essential to the state and should remain directly accountable to the elected representatives of the people and which may be carried out by the private sector?' This question is complex and value-laden; no definitive answer exists. Thus, the decision to privatize is inherently controversial."

Report Number:
CRS Report for Congress, RL33777
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