A large city faced with a major budget deficit decided to privatize its water services rather than to double the fees charged customers and address itself the system's many issues. Those issues included water supply, water quality, and a poorly staffed and poorly managed water department. Over the years, the water department had become a dumping ground for incompetent employees whose managers and supervisors in other city departments had been unable to separate them from city employment. Politicians over the years had also gotten into the habit of getting jobs in the water department for their friends and supporters. In addition, several interested firms were lobbying the mayor, a declared opponent of privatization, with talk of the opportunity to save tens of millions of dollars annually in operational and maintenance costs by contracting out to a private firm. The city was under a mandate from the federal government to upgrade its three water treatment plants. Following two years of deliberation and analysis, and an ostensibly competitive procurement process, the city contracted out the supply of its water to a large multinational firm. The contract was awarded for a twenty year term. Four years into the contract, the city and the contractor announced that the contract was being terminated by mutual consent. The contract had been a disaster. During the same time period, two other cities of similar size contracted out their water services to private firms successfully. Please answer the following: 1. What would you speculate were the reasons the contracted-out water services failed? 2. If you were going to contract out such a critical function as water services in a major city, what steps would you take in all three phases of the procurement process to assure that the results of the procurement were in the best interest of the City and its customers - short, mid, and long term? 3. If you had been the mayor of the city where the contract for water services failed, would you have allowed or required the incumbent management of the city water services department to compete for the right to continue managing the department and its operations? 4. If you were going to set up a process in which a city water services department would be required to compete against outside firms to deliver the city's water services, how would you structure that process, in order to assure that it would be as equitable as possible and the resulting contract in the city's best interests