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Municipalities can realize cost savings and achieve more efficient operation of their water and wastewater treatment plants through contracts with private firms. This article describes typical services provided by private firms. The present condition of U.S. water systems and the need for funds for the construction of new distribution systems and the rehabilitation of older systems is addressed. Trends that will continue to affect public infrastructure and the future cost of water services to consumer are identified. Contract operations as cost effective alternatives and benefits from privatization of operation and maintenance functions are discussed.