A partial or full divestiture involves sale of public infrastructure to the private sector. Because the actual asset is transferred and government permanently loses control, this option is on the extreme private end of the spectrum. Divestiture can be advantageous for governments with little or no funds to devote to improving failing infrastructure, because with a purchase the private sector assumes all financial responsibilities. In addition, in some situations the government may receive an additional economic benefit from the divestiture if the sale price of the divested asset exceeds the public debt on that asset. A sale agreement will generally have certain conditions, however, such that the government can ensure that various improvements Page 8 are made and the new owner continues to serve the citizens. Although few in number, there have been some divestitures made, such as the Conrail railroad and the U.S. Nuclear Enrichment Corporation.
Other Forms of Partnership. Besides the traditional spectrum of partnerships, there have been other ways in which private sector resources have been incorporated into government programs. For example, vouchers have been successfully used in the food stamp program, where private grocers provide eligible families with foodstuffs and get payment from the federal government in reimbursement for the stamps that the families use for the purchases. Similar voucher programs have been used in subsidized housing and are now being experimented with in education. Outsourcing to NGO's has a long and proud tradition in the U.S., where church groups and non-denominational organizations provide social welfare, health, shelter, education, training and other services at the behest of government.
Lastly, de-regulation and commercialization round out the partnership picture. In the airline, natural gas and now the electrical utility industries, deregulation has led to more free market provision of services - with mixed results to date. In new and fast-breaking areas, like information services and e-government, new commercialized service is being explored. For example, government may make its databases and information (non-private) available to private firms to sell or manage, with the government getting a royalty; or the government may operate the information service but pay for it through commercial advertising. Some Other Examples of U.S. Public-Private Partnerships
Toll Roads. Going back to original practices, some states, notably California and Virginia, are implementing private toll roads where the private investment is supported by toll revenues. In some cases, like Orlando, Florida, the public toll road authority has contracted out tollbooth operations to a private firm. Other road agencies now contract out road maintenance.
Water/Wastewater. Beyond the outsourcing of individual plant operations, water and wastewater utilities are looking at contracting out the entire operations of their systems. Cities such as Atlanta, Milwaukee and Indianapolis have already contracted out their systems on a long-term basis to private firms. New treatment and bio-solids management facilities are being developed using DBO (BTO) technique, including those in Seattle, Atlanta and Phoenix.
Prisons. Privately owned prisons, detention centers and rehabilitation facilities have been built based upon long-term contracts with local governments and the federal government to house their inmates at those facilities. Some are even partial merchant plants offering the facility on a market basis to governments. These programs have worked most successfully with low and medium security facilities.
Infrastructure Sales and Leasebacks. Although relatively rare in the U.S., there have been some privatizations of facilities. State-owned Stewart Airport in New York State has been leased to a private consortium under a long-term lease. In Franklin, Ohio, a water treatment system was sold privately. Similarly, a small water system in Pennsylvania was put out to bid by a local authority and sold to a private water firm. Most examples of this sort are small, noncontroversial and usually special cases.
Comprehensive Programs. Some states, such as Michigan, Texas, Virginia and New Jersey, and some cities, like Philadelphia, Indianapolis, Los Angeles and Charlotte, North Carolina, have undertaken thorough reviews of all of their functions in order to select those that could be Page 9 performed better through a public-private partnership. These governments have developed tools and techniques to evaluate and determine the cost, performance and quality of hundreds of services delivered by both in-house resources and through potential partnerships. Many have converted eligible functions into management contracts or other forms of partnership.
A-76. The federal government has a comprehensive managed competition program based on Management Circular A-76, under which government functions are evaluated as to whether they are best performed by in-house government workers or outsourced to private firms. One such function that has been so privatized is the investigation and background checking of potential government employees. The A-76 program is under constant scrutiny and is now being overhauled by the Bush Administration as part of its effort to privatize more government functions,
Defense Department. Even the U.S. Defense Department is looking to partnerships so that it can focus more of its attention on its core mission and less on support functions. For example, the armed services are now looking to the private sector to provide housing units for service people and their families with payments made by voucher or other form of guaranteed revenue. All defense bases are also under mandate to privatize their utilities - electricity, natural gas, telecommunications, water and sewage treatment - by selling off those utilities to private providers
Summary Within the enabling legislation of the federal and state governments, only the imagination and courage of government leaders limits the types of arrangements that can be made. It is hoped that this exploration of the U.S. experience can serve to generate some effective and creative thought in Mauritius as it embarks on its own initiative to use private sector resources to provide its citizens with more, better and more cost-effective services and infrastructure.
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Acknowledgement. The author would like to acknowledge the National Council for Public- Private Partnerships for its support in producing this article. The Council has published a useful white paper on the subject, "For the Good of the People: Using Public-Private Partnerships To Meet America's Essential Needs", which is available on its website: www.ncppp.org.
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