A. Background
1. The benefits to be obtained should be framed with reference
to optimum municipal needs, rather than focused on what public or private providers can
offer.
a. Each should be challenged to provide the same services, and the
performance evaluated objectively on the same criteria at the same time.
2. The methodology for procurement should be a standard and
unambiguous one, so that
a. public sector costs to conduct the procurement do not
proportionately exceed the benefits to be obtained;
b. evaluation may be conducted on a transparent and objective basis;
and
c. the time required for negotiation (as a result of undefined issues)
does not consume the economic benefits to be obtained.
3. The persons responsible for the selection process should be entirely
disinterested in the process.
a. no interest in the possibility in the procurement of providing the
same services as are being evaluated either in the municipality in question or elsewhere;
b. no interest in providing other operating services to the same
client; and
c. no general interest in future comparative economic standing of
evaluator and competitors.
4. The contract should be one reflecting arrangements which have a high
likelihood of sustainability over the contract term, as a consequence of
a. adequate cash flow to cover objective estimates of operating costs;
b. allocation of contingent risks consistent with the returns available
from the contracts;
c. contemplation of consequences of growth or decline in future
operating requirements; and
d. few change orders should be required because forecast management is
good.
a. correspondence to objectives;
b. limits to complexity;
c. emphasis on total balanced contract procurement package, not simply
lowest price
d. maintenance of public control of accountability.
6. The procurement should address the key issues which could otherwise
distinguish public and private procurements unless addressed specifically
a. treatment of benefits of employees;
b. working standards; and
c. net after tax cost of service (considering e.g. finance costs
property taxability)
B. Ten Commandments
A first cut at "decaloguing" these observations might be
something like the following:
1. Clear and sustained definition of the hurdles privatization
procurement must meet to replace public provision of service and the benefits sought to be
obtained from it.
2. Transparent procurements on the basis of commonly recognized
objective standards, designed to elicit contractor creativity.
3. No direct or indirect conflicts of interest of advisors to public
with competitors for procurement, or its subsequent operation.
4. Cost control of the process of procurement development through use
of demonstrated objective models.
5. Cost control of the procurement negotiation process through defined
timetables.
6. Direct address of potential differences in public and private
costing, e.g. labor; taxation.
7. Sustainable contracts for public and private participants, based on
industry standards, with respect to margins, risk allocation and adaptability to future
change.
8. Change order control through realistic appraisal during procurement
of feasibility of contractor and public proposals.
9. Municipal - not consultant - assessment of the net benefits of all
aspects of privatization packages, relative to objective standards initially established.