Contracting Out
We divide contracting out into contracting to profit-making firms and contracting
for services provided by nonprofit organizations. In the past, private firms
mostly provided services to government, while government itself provided the final
product or service to the public (for example, private firms built the airplanes, but the
government provided the air force), but increasingly, the private sector provides services
directly to consumers. Nonprofits generally deliver services to clients, patients,
or customers. Because nonprofits often deliver services to clients under informal,
long-term contracts, and because they also derive revenue from nongovernmental
sources such as donations and fees, the contractual nature of the relationship is obscured and, sometimes, attenuated.