Naked Capitalism has the article Quelle Surprise! New Report Show How Outsourcing State and Local Government Services is About Looting.

As we’ve seen with mortgage servicers, and the Out of Control [report] confirms, one of the approaches used by private companies to meet their profit targets is to cut corners on compliance with the rules and with service levels. And when outsourcing is motivated not by ideology or a belief that savings can be achieved, but by service problems, all too often there’s reason to suspect that the legislation that the supposedly underperforming bureau is executing is cumbersome or poorly thought out. In other words, the problem is being treated as one of government execution, when it’s actually one of bad drafting or overly complicated requirements that won’t go away by fobbing them off to a private company.

Read the full report here – Out of Control.

Keep this in mind when your government local, state, or federal claims that it can save money by outsourcing.  It defies all logic that a private company can perform a service more cheaply and also make a huge profit without taking unconscionable shortcuts.  If it were possible to do this, then the government ought to be able to figure out how to perform the service more cheaply by eliminating the profit and doing the job itself.  If a government run service is not meeting legitimate efficiency criteria, then it should be fixed rather than outsourced.  Whatever incompetence was originally responsible for the failure of the government provider will just be repeated in the letting of the outsourcing contract.  Moreover, the outsourcing contract will be used to hide the malfeasance that could not be hidden under whatever sunshine laws apply to the government entity.