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Federal Competitive Sourcing Saved Taxpayers $7.2 Billion Over the Last Five Years

Reason Foundation's Annual Privatization Report says public-private partnership infrastructure projects in various stages of development are worth $104 billion

August 7, 2008

The federal government's competitive sourcing efforts saved taxpayers $7.2 billion over the last five years, according to Reason Foundation's 22nd Annual Privatization Report.

Competitive sourcing allows the private sector to compete for jobs and contracts that are currently performed by the government. Federal employees actually won 83 percent of the job competitions from fiscal 2003 through fiscal 2007. But taxpayers are the real winners: the Annual Privatization Report shows taxpayers save $25,000 for every job that is put up for competition because even when the government keeps the job it significantly improves efficiency and reduces costs.

Reason Foundation's Annual Privatization Report examines the latest trends in privatization and public-private partnerships at the federal, state and local levels.

With as many as 23 states potentially facing budget deficits in fiscal 2009, state governments are increasingly looking for ways to cut costs without cutting services. Enter the private sector.

"Democratic Gov. Ed Rendell recently accepted a $12.8 billion bid to lease the Pennsylvania Turnpike, in what would be the biggest toll road privatization deal in U.S. history," said Leonard Gilroy, director of government reform at Reason Foundation and author of the report. "Florida has undertaken over 150 outsourcing initiatives since 2005. Leaders of all political stripes recognize privatization is a proven policy tool that can help save money and balance budgets."

The Reason Foundation report singles out Chicago as a hotbed of local privatization under Democratic Mayor Richard Daley. Chicago leased the Skyway-a 7.8 mile toll road-for $1.8 billion in 2005 and four downtown parking garages for $563 million in 2006. Now Chicago is soliciting private sector bids for Midway Airport, its downtown parking meter system, and some recycling facilities.

A few of the Annual Privatization Report's other notable points include:

Roads and Infrastructure
Today, there are over 70 public-private partnership transportation projects worth $104 billion at various stages of development in the United States.

Education
In the 2007-08 school year, 347 new charter schools opened in 40 different states.

The five states with the largest school choice programs are Florida (39,000 students), Pennsylvania (38,000 students), Arizona (28,000 students), Wisconsin (19,000 students) and Ohio (14,000 students).

State Lotteries
In late 2007 and 2008 over a dozen states considered proposals to privatize their state lotteries.

Other topics explored in the report include airports, airport security, telecommunications, municipal broadband, water systems, and prisons.

Full Report Online

Reason Foundation's Annual Privatization Report 2008 is available at: http://reason.org/files/b15b25f6bb40427e193e799628a1ea1b.pdf

About Reason

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Contact

Chris Mitchell, Director of Communications, Reason Foundation, (310) 367-6109



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