According to Harold Sullivan, the U.S. Constitution provides many protections to citizens against arbitrary action of the government that may infringe upon their rights and privileges, however, the Constitution does not provide these same types of protections to individuals against actions of the private sector. This article reviews the judicial decisions concerning the scope and applicability of national constitutional protections on privatization. It also examines and identifies a number of arrangements between the government and private service providers that immunize both the government and private entities from constitutional restraints. In Sullivans opinion, privatization threatensconstitutional rights.

Sullivan identifies the distinction between privatization of service provision (deciding whether a service will be provided at all, and if so, who shall have it and how much of it), and privatization of production (operating, running, doing, selling, delivering and administering). If production were the only service privatized, the main issue of concern would be loss of jobs. However, the distinction between provision and production is often blurred. Sullivan believes that the determination of the merits of privatization must be informed by a real understanding of the different legal positions of the public and private sectors.

The State Action Doctrine mandates that protection afforded by the Constitution can only be invoked against laws or actions of the state. Before the Civil Rights laws were the courts were more willing to acknowledge the direct involvement of the state in private abuses. But Civil Rights laws have reversed this trend, and it is now harder to hold the state accountable for infringement upon rights by the private sector. In a time when privatization is increasing, this threatens the civil rights of individuals who are receiving more and more services from the private sector.

Court cases such as Burton v. Wilmington and Jackson v. Metropolitan Edison serve as examples of instances where a private owner or operator that was regulated in some way by the state, was not bound in its actions by the Constitution. Rendel Baker v. Kohn and Blum v. Yaretsky are both cases where private owners and operators that were funded by the state but were not bound in their actions by the Constitution. These cases provide evidence that by turning public services over to private agencies, the state evades Constitutional restraints.

The Public Functions Doctrine states that when a private entity a "public" or state function, that it is subject to constitutional restraints. However, examples of cases show that this law is limited only to those cases where the actions of the private entity consist of powers that were traditionally and exclusively reserved to the state. In Flagg Brothers v. Brooks it was established that before a function is labeled a public function, it must be shown that:

1. the power in question is one which has been traditionally exercised by the government alone; and
2. the government must have abdicated total and unreviewable control over the exercise of the exclusive governmental function to a private party (i.e. only if the government no longer has any role at all in provision or production of the good or service).

The set of exclusive functions recognized by the government is actually quite (e.g. elections, management of town, eminent domain, education, fire and police, tax collection, etc.)

Any successful challenge to an action of a private agency hinges upon showing that the specific decision or action under attack was a direct product of state initiative and compulsion and/or was implemented by state officials.

The government could, through legislation, require private goods and service providers to extend to their clients constitutional protections, but the most needed services are most often the least politically influential. Government must restrict the discretion permitted private agencies.