Privatization, also known as “full divestiture” occurs when all or most of the interests of a government agency in an asset is transferred to the private sector (for example, electrical utilities being turned over to private companies). Full privatization is different than a joint venture between public and private parties (see Joint Ventures for more information on the roles of joint venturers).
Privatization has increasingly been seen as an approach to improve efficiencies, as government bureaucracies are notoriously inefficient and wasteful of public funds. Privatization provides governments a way to use public funds to set up needed public works projects, then allow private companies to carry out the daily operations of those activities. Similarly, privatization can apply to transferring government properties to private owners, like selling off lands formerly occupied by government buildings or military bases.
Laws regarding privatization provide the authority and procedural requirements for ensuring that transfers occur in an open and responsible manner. For example, these laws often prohibit deals between those with political influence and companies with which they have a financial interest. They may also specify the requirements of any public entity taking over responsibility for formerly public services to ensure that prices do not become prohibitive for consumers and that the same or comparable levels of service are provided to the consumers after transfer.
The resources provided below on this page provides additional information on legal issues arising in the course of privatization. Additionally, should you be interested in participating in the acquisition of privatized government resources, you can find an attorney to assist you under the “Law Firms” tab on the menu bar, above.
Privatization Law - US
- ABA - Privatization, Outsourcing and Financing Transactions Committee
Reviews, monitors, and comments on developments and issues in government efforts to transfer control or ownership of government assets to private entities and to transfer activities performed by government entities to private contractors pursuant to OMB Circular - A76 and other methods. Addresses issues relating to the structuring of financing, through the private financial market, of government contracts and any related agreements, including, for example, risk allocation through government indemnities and/or insurance, risk limitation through legislation, termination liability coverage, budget scoring, and assignment of rights to proceeds under contracts..
- Federal Funding Accountability and Transparency Act (FFATA)
The Federal Funding Accountability and Transparency Act (FFATA) was signed on September 26, 2006. The intent is to empower every American with the ability to hold the government accountable for each spending decision. The end result is to reduce wasteful spending in the government. The FFATA legislation requires information on federal awards (federal financial assistance and expenditures) be made available to the public via a single, searchable website. Federal awards include grants, subgrants, loans, awards, cooperative agreements and other forms of financial assistance as well as contracts, subcontracts, purchase orders, task orders, and delivery orders.
- Local Government Restructuring - Privatization
Privatization is a worldwide phenomenon. In recent years all levels of government, seeking to reduce costs, have begun turning to the private sector to provide some of the services that are ordinarily provided by government. The spread of the privatization movement is grounded in the fundamental belief that market competition in the private sector is a more efficient way to provide these services and allows for greater citizen choice. In practice, however, concerns about service quality, social equity, and employment conditions raise skepticism of privatization.
- National Council for Public-Private Partnerships
The National Council for Public-Private Partnerships is a non-profit, non-partisan organization founded in 1985. The Council is a forum for the brightest ideas and innovators in the partnership arena. Its growing list of public and private sector members, with experience in a wide variety of public-private partnership arrangements, and its diverse training and public education programs represent vital core resources for partnering nationwide. The Council's members bring an unmatched dedication to providing the most productive and cost-effective public services.
- Privatization - Definition
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector (the state or government) to the private sector (businesses that operate for a private profit). In a broader sense, privatization refers to transfer of any government function to the private sector - including governmental functions like revenue collection and law enforcement.
- The White House - Office of Federal Financial Management
The Federal Government has a fundamental responsibility to be effective stewards of the taxpayers' money. We must be responsible with money that comes in to the government, money that is spent, and money that is used in running the government itself. Decision makers and the public must have confidence in financial management in order to make informed decisions about managing government programs and implementing policy. Created in 1990, the Office of Federal Financial Management (OFFM) is responsible for the financial management policy of the Federal Government. OFFM responsibilities include implementing the financial management improvement priorities of the President, establishing government-wide financial management policies of executive agencies, and carrying out the financial management functions of the CFO Act.
- World Bank - Privatization Transactions
This site provides information on privatization transactions of at least US$1 million in developing countries from 2000 to 2008. The site was created in response to growing demand for updated and consolidated information on privatization transactions in developing countries. Prior to this effort the most comprehensive information could be found in the World Bank’s Privatization Transactions database, which covered the years 1990 through 1999.
Organizations Related to Privatization Law
- American Federation of State, County, and Municipal Employees (AFSCME)
Driven by wrong-minded public officials and corporate greed, contracts for public services are doled out without regard to cost effectiveness or quality. Time and time again, the public pays more and gets lower quality of services while public workers are laid off and corruption scandals make the news. AFSCME is fighting hard to preserve quality public services, ensure that public service employees are treated fairly and hold elected officials accountable to the public.
- In the Public Interest
In the Public Interest is a Resource Center on privatization and responsible contracting. It is committed to equipping citizens, public officials, and public interest groups with the information, ideas, and other resources they need to ensure that public contracts with private entities are transparent, fair, well-managed, and effectively monitored, and that those contracts meet the long-term needs of communities.
- Privatization Watch
Privatization Watch is a joint project of the Center for Study of Responsive Law and Essential Information. Founded in 1982 by Ralph Nader, Essential Information is a nonprofit, tax-exempt organization. We are involved in a variety of projects to encourage citizens to become active and engaged in their communities. We provide provocative information to the public on important topics neglected by the mass media and policy makers. Essential Information publishes a monthly magazine, books and reports, sponsors investigative journalism conferences, provides writers with grants to pursue investigations and operates clearinghouses which disseminate information to grassroots organizations in throughout the world.
- Project on Government Oversight (POGO)
The Project On Government Oversight (POGO) is an independent nonprofit that investigates and exposes corruption and other misconduct in order to achieve a more effective, accountable, open, and ethical federal government. Founded in 1981, POGO (which was then known as Project on Military Procurement) originally worked to expose outrageously overpriced military spending on items such as a $7,600 coffee maker and a $436 hammer. In 1990, after many successes reforming military spending, including a Pentagon spending freeze at the height of the Cold War, POGO decided to expand its mandate and investigate waste, fraud, and abuse throughout the federal government.
- Public Works: The Demos Center for the Public Sector
Public Works: the Demos Center for the Public Sector is dedicated to building broad understanding of and support for the essential roles of government in this country. America requires a public sector that acts effectively for the common good, that plans for our future, and that builds and maintains the structures and systems necessary to confront the challenges we face together as a nation. To achieve these competencies, the public sector must be actively supported by Americans who think and act as citizens, who understand that public structures are the linchpin of our security, prosperity and quality of life and whose engagement in these questions promotes accountability to the public good.
Publications Related to Privatization Law
- Money Watch - Privatization in the United States
MoneyWatch.com is the premier destination for smart, practical personal finance advice about your retirement, investing, savings, career and real estate. A joint effort between the news powerhouse CBS and the business experts at BNET, MoneyWatch.com is the place to go for personal financial insight you can trust.
- Progressive State Network - Privatization
The Stateside Dispatch is Progressive States Network's twice weekly email of state policy news and analysis. It chronicles the victories and setbacks of the progressive movements in America's states; shine a light on the best practices and the worst schemes; and help legislators, activists, and journalists across the country connect what is happening in their own backyard and across the country.
- Reason Foundation - Privatization
Founded in 1968, Reason Foundation is a nonprofit organization advancing "free minds and free markets." Reason Foundation advances a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law.
Articles on HG.org Related to Privatization Law
- All Business and Industry Law Articles
Articles written by attorneys and experts worldwide discussing legal aspects related to Business and Industry including: agency and distributorship, agency law, business and industry, business formation, business law, commercial law, contracts, corporate governance, corporate law, e-commerce, food and beverages law, franchising, industrial and manufacturing, joint ventures, legal economics, marketing law, mergers and acquisitions, offshore services, privatization law, retail, shareholders rights and utilities.