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Privatization: Private Sector
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Congressional authorization for privatization of utility distribution systems on U.S. Military Installations was conveyed in 10 USC 2688, "UTILITY SYSTEMS: CONVEYANCE OF AUTHORITY." Furthermore, on November 10, 1997, the Secretary of Defense, Mr. William S. Cohen, issued a directive to all Military Commands that utility systems [electric, gas, water and wastewater, and thermal (steam)] would be transferred to the Non-Department of Defense Sector; essentially, the private sector. The only exceptions would be systems on military bases with unique security situations or systems that would not present the military with an economic advantage if privatized.
In approving the transaction, the Commission acknowledged the many benefits of privatization, such as transfer of risks to the private sector. The Springfield contract incorporates a unique sharing mechanism for risks associated with market conditions and change in law for sludge disposal. In addition, U.S. Water will manage the Commission's compost contract.
There is no single definition of privatization. Privatization covers a broad range of methods and models, including contracting out for services, voucher programs, and even the sale of public assets to the private sector. But for the purposes of this paper, privatization refers to the provision of publicly-funded services and activities by non-governmental entities.
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Individuals interviewed often cited some common barriers as the main stumbling blocks in the privatization process. These obstacles were specifically related to: personnel issues; philosophical differences between health department administrations, staffs, and private partners; and difficulty in finding able or willing partners in the private sector. Conversely, study participants acknowledged that several factors facilitated the privatization process including: an involved community; a partnering history with the private sector; and a local health official with a strong vision of the role of public health.
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A very broad term--but most simply, privatization is the transfer of assets or service delivery from the government to the private sector. Privatization runs a very broad range, sometimes leaving very little government involvement, and other times creating partnerships between government and private service providers where government is still the dominant player.
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