In a 1998 survey by the U.S. Council of State Governments, respondents were asked the reasons they used public-private partnerships over the past 5 years. The results were as follows:
• Cost savings 40.9%
• Lack of in-house personnel and expertise 32.5%
• Lack of State support of political leadership 30.8%
• Flexibility and less red tape 23.8%
• Speedy implementation 21.4%
• Increased innovations 20.4%
• High quality of service 18.5%
• Other 10.6%
These results are similar to many other surveys that point to the same advantages for public-private partnerships. Overwhelmingly, the most frequent use of partnerships is to save costs. The U.S. experience with outsourcing of public services routinely results in 10-20% savings over the traditional delivery system. In some cases, savings as high as 40% have been achieved. Conversely, more and higher quality services can be provided at the same cost as before or less. In the State survey, cost savings are also the result of other reasons given, especially "flexibility and lack of red tape", and "speedy implementation." Public bodies have found that they can use private resources and expertise to save precious funds through faster facility design and construction, as well as cheaper operations.
But cost is never the only reason to use public-private partnerships. The second-highest reason cited in the survey is the access to specialized expertise and proprietary technology. As generalists, governments cannot afford to provide or maintain such know-how in-house, especially in the area of information and communication technology. The laboratory of the competitive private sector accelerates change to a rate that cannot be matched in the public sector.
Even in other more traditional areas, like environmental control systems, the private sector develops advanced techniques that are better left to their proprietary owner to operate, even if the new technology is installed by the public sector on its own. This is related to another key benefit of partnerships: the sharing of risks with the private sector. In developing complex projects, the private sector can guarantee fixed or maximum prices for construction and eventual operation of systems, relieving the government of its open-ended financial risk in those areas. A private provider can also guarantee the effectiveness and efficiency of the technology it installs, giving public agencies access to such technologies without innovation or performance risk. In some cases, as with concessions, the private provider can even relieve the government of market risk or rate/pricing risk. In most cases, all the risks in a partnership can be distributed among the parties by having the party best equipped to handle each of them take on that responsibility.
Lastly, use of the private sector can help governments to address sensitive political and labor issues. In the State survey referenced above, the third highest reason for public-private partnerships was to accomplish objectives when the political leadership couldn't directly take on an issue. With the flexibility and efficiency of private developers and operators, the public can sometimes enlist the private sector to handle more easily problems such as downsizing, coordination of political entities, regionalization, implementation of difficult policies and cross border relationships.
In the United States, as elsewhere, the criticism of privatization as a way to cut public payrolls and slash wages has been a rallying issue for partnership opponents. Overwhelmingly, however, private operations in the U.S. have not meant massive layoffs. Most operating contracts call for downsizing only through attrition, and the assumption of the public payroll at salaries and benefits that are comparable to those that existed in the public sector before the takeover. Many private providers have union represented employees in their operations, and in many cases, union members and the unions themselves have fared better than with the public employer. In many cases, grievance filings have been all but eliminated, attesting in part to the greater flexibility of private employers.