How did this happen? The meter deal passed the city council just four days after then-Mayor Richard Daley—desperate to fill a recession-caused budget hole—presented it. There were no public hearings, and the aldermen never saw the bid documents. Afterward, some aldermen who voted for it said they wished they'd known more of the details, but it was too late. "We're stuck with it for the next 71 years," Alderman Roderick Sawyer told me recently.

Sawyer, a South Side Democrat who was not in office when the meter deal passed, is trying to ensure similar proposals will get more scrutiny in the future. He has introduced an ordinance that would require more transparency, including public hearings and a comprehensive economic analysis, for any proposed city partnership with a private entity.

"This is just about the process," Sawyer said. "We're not saying all privatization deals are bad. But if we're going to do this, let's be honest with the public and let them know what's going to occur: It's going to save this much money, it's going to cost this many jobs."

Sawyer is not alone. In states and cities across the country, lawmakers are expressing new skepticism about privatization, imposing new conditions on government contracting, and demanding more oversight. Laws to rein in contractors have been introduced in 18 states this year, and three—Maryland, Oregon, and Nebraska—have passed legislation, according to In the Public Interest, a group that advocates what it calls "responsible contracting."

"We're not against contracting, but it needs to be done right," said the group's executive director, a former AFL-CIO official named Donald Cohen. "It needs to be accountable, transparent, and held to high standards for quality of work and quality of service." Cohen's organization, a national clearinghouse exclusively devoted to privatization issues, is the first advocacy group of its kind.

Doing it right, according to Cohen, means ensuring that contractors are subject to standards of transparency and accountability. Private companies doing government work and their contracts should be subject to open-records laws: In 2011, the city of Truth or Consequences, New Mexico, hired a contractor to videotape city meetings, then claimed the tapes weren't public records. (A state appeals court eventually ruled otherwise.) Companies should be held responsible for cost overruns, and governments should be making sure they're actually saving money: Many private prisons cost more to operate than public ones, the group claims.

"We are definitely seeing a wave of states and some cities passing laws to get control of contracting," Cohen said. "There's still a lot of pressure to outsource, but the trend we see is people trying to fix the process and do it better, because of some of the high-profile failures at the federal and state levels."