American City & County has an interesting article discussing the benefits new or small-sized municipalities can realize from contracting out for public safety services (typically with other nearby jurisdictions), rather than producing them in-house:
When Deltona, Fla., incorporated 15 years ago with 86,540 residents, it was an anomaly among cities of its size because it did not have its own police force, relying instead on the Volusia County sheriff's office for law enforcement. Today, Deltona looks more like a trendsetter, as experts say more small- and mid-sized U.S. cities, particularly newly incorporated cities, choose to outsource public safety to the county or state to save money and resources.
Increasingly, new cities are either contracting or sharing city services, says Leonard Matarese, director of Public Safety Services for the International City/County Management Association. "Elected officials are coming to the understanding that we just can't afford to do business [in the traditional sense] any longer," Matarese says.
He points to Weston, Fla., the 14-year-old city of 63,000 residents that contracts out virtually everything, from police and fire to public works. Farming out operations can allow a new city to focus on policy and mapping out a vision of what the community wants to be, Matarese says. "It eliminates a lot of the headaches of managing a city because the line management is performed by the people you're contracting with," he says.
Full article here. This is a great example of how strategic outsourcing—whether to public or private providers—can transfer major risks and costs away from procuring authorities (and local taxpayers) to contractors, including significant capital start-up expenditures and long-term retiree benefits.