Title: Emerging Issues on Privatized Prisons.
Series: Monograph
Author: Bureau of Justice Assistance
Published: February 2001
Subject: privatization; prison industries
72 pages
172,032 bytes

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U.S. Department of Justice
Office of Justice Programs
Bureau of Justice Assistance

Monograph

Emerging Issues on Privatized Prisons

BJA Bureau of Justice Assistance

----------------------------

U.S. Department of Justice
Office of Justice Programs
810 Seventh Street NW.
Washington, DC 20531

John Ashcroft
Attorney General

Office of Justice Programs
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www.ojp.usdoj.gov

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This document was prepared by the National Council on Crime and
Delinquency, under grant number 97-DD-BX-0014, awarded by the Bureau of
Justice Assistance, Office of Justice Programs, U.S. Department of Justice. The
opinions, findings, and conclusions or recommendations expressed in this
document are those of the authors and do not necessarily represent the official
position or policies of the U.S. Department of Justice.

The Bureau of Justice Assistance is a component of the Office of Justice
Programs, which also includes the Bureau of Justice Statistics, the National
Institute of Justice, the Office of Juvenile Justice and Delinquency Prevention,
and the Office for Victims of Crime.

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BJA Bureau of Justice Assistance

Emerging Issues on Privatized Prisons 

James Austin, Pd.D.
Garry Coventry, Ph.D.

National Council on Crime and Delinquency

Monograph
February 2001
NCJ 181249

----------------------------

Foreword

One of the most daunting challenges confronting our criminal justice system
today is the overcrowding of our nation's prisons. The past decade has
witnessed a doubling of the number of adult offenders brought before our
courts. According to one estimate, as we begin the new millennium, the nation's
inmate population approaches the 2 million mark. Securing and humanely
housing such a large population has placed an enormous burden on prison
administrators as well as the federal, state, and local jurisdictions that must
finance the institutional confinement of so many inmates.

In the 1980s, the public's frustration over a perceived failure of the penal
system to rehabilitate offenders and a reluctance to provide more funding for
correctional institutions, coupled with the increasing demand for more jail
space, precipitated a crisis. One proposed solution that emerged was the
privatizing of prisons and jails by contracting out, in part or in whole, their
operations. In 1987, the number of inmates incarcerated in privately operated
correctional facilities worldwide was 3,100; by 1998 the number had risen to
132,000. In the United States today there is a total of 158 private correctional
facilities. Proponents of privatization have suggested that allowing the facilities
to be operated by the private sector could result in cost reductions of 20
percent.

To explore the issues pertaining to the privatization of prisons, the Bureau of
Justice Assistance funded a nationwide study that has resulted in this
monograph, Emerging Issues on Privatized Prisons. The monograph examines
the historical factors that gave rise to the higher incarceration rates, fueling the
privatization movement, and the role played by the private sector in the prison
system. It outlines the arguments, both in support of and opposition to,
privatized prisons, reviews current literature on the subject, and examines issues
that will have an impact on future privatizations. An appendix provides practical
guidelines for policymakers who are considering privatizing a facility.

The study resulted in some interesting conclusions. For example, it was
discovered that, rather than the projected 20-percent savings, the average
saving from privatization was only about 1 percent, and most of that was
achieved through lower labor costs. Nevertheless, there were indications that
the mere prospect of privatization had a positive effect on prison administration,
making it more responsive to reform. It is hoped that this monograph will prove
enlightening to those involved with the issue of privatized prisons and promote
a greater discussion about it.

----------------------------

Contents

Executive Summary

o Current Trends in Privatization
o Prior Research Findings on Privatization
o National Survey Results
o Future Trends

Chapter 1 Introduction 

Chapter 2 The History of and Key Debates Over Privatization

o Privatization of Corrections: A Historical Overview
o The Debate

Chapter 3 Recent Research Regarding Privatization

o Background
o Costs
o Inmate Services, Quality of Confinement, and Public Safety
o Health Care    
o Additional Literature
o Summary

Chapter 4 The National Survey of State Prison Privatization

o Background
o Survey of Public and Private State Facilities
o Reanalysis of Survey Data Controlling for Facility Security Level

Chapter 5 Summary

o The Diminishing Returns on Privatization
o The Future of Privatization

Notes

References 

Appendix Guidelines for Contracting for a Private Prison

Sources for Further Information

----------------------------

Tables

Table 1 Number of Persons Held in State or Federal Prisons or Local Jails,
1985, 1990-1997

Table 2 Prison Operating Costs, Fiscal Years 1980-1994

Table 3 Private Adult Correctional Firms, December 31, 1998

Table 4 Geographic Distribution of Privately Operated Correctional Facilities,
December 31, 1998

Table 5 Geographic Distribution of Privately Operated Correctional Facilities
Outside the United States, December 31, 1998

Table 6 Public Strategies for Private Prisons

Table 7 Financial Data for Corrections Corporation of America, 1987 and
1997

Table 8 Inmate Characteristics at Public Facilities at Midyear 1995 and Private
Facilities as of December 31, 1997

Table 9 Characteristics of Private Facilities by Level of Security as of
December 31, 1997

Table 10 Types and Rates of Participation in Institutional Programs at Public
Facilities at Midyear 1995 and at Private Facilities as of December 31, 1997

Table 11 Persons Employed in Public State Facilities at Midyear 1995 and at
Private State Facilities as of December 31, 1997

Table 12 Characteristics of Employment in Private Facilities, January 1-
December 31, 1997

Table 13 Major Incidents in Public Facilities (July 1, 1994-June 30, 1995) and
in Private Facilities (January 1-December 31, 1997)

Table 14 Disciplinary Resources at Private Facilities, January 1-December 31,
1997

Table 15 State Facilities Under Court Order or Consent Decree: Public
Facilities at Midyear 1995 and Private Facilities on December 31, 1997

Table 16 Characteristics of Inmates at Public Medium- and Minimum-Security
Facilities at Midyear 1995 and Private Medium- and Minimum-Security
Facilities on December 31, 1997

Table 17 Characteristics of Public Medium- and Minimum-Security Facilities at
Midyear 1995 and Private Medium- and Minimum-Security Facilities on 
December 31, 1997

Table 18 Types and Rates of Participation in Institutional Programs at Public
and Private Medium- and Minimum-Security Facilities

Table 19 Characteristics of Persons Employed in Public Medium- and
Minimum-Security Facilities at Midyear 1995 and Private Medium- and
Minimum-Security Facilities on December 31, 1997

Table 20 Major Incidents in Public Medium- and Minimum-Security Facilities
(July 1, 1994-June 30, 1995) and Private Medium- and Minimum-Security
Facilities (January 1, 1997-December 31, 1997) 

----------------------------

Tables are not included in this ASCII plain-text file. To view this document in
its entirety, download the Adobe Acrobat graphic file available from this Web
site or order a print copy from BJA at 800-688-4252.

----------------------------

Executive Summary

The state of corrections has come under attack by many during the past
decade. Many contend that the current state of affairs will not work in the 21st
century. Some argue that the public sector is incapable of handling the complex
and changing dynamics associated with corrections, and therefore more prisons
need to be handed over to the private sector; others argue that private industry
should not be a part of the public matter of penalizing offenders of crime.
Although the private sector has had a long history of involvement in corrections,
private prisons make up less than 5 percent of the current market. This study
offers a review of the history of privatization, presents a review of relevant
research on the issues involved, and compares some of the major findings from
the National Survey of State Prison Privatization, 1997, conducted by the
National Council on Crime and Delinquency (1998) and the Census of State
and Federal Correctional Facilities, 1995, conducted by the Bureau of Justice
Statistics (1997a), on the benefits and costs associated with private- and
public-managed prison facilities.

Although private prisons tend to house mostly minimum-security inmates, the
findings from this report suggest that private prisons operate much the same as
public facilities. Private prisons offer only modest cost savings, which are
basically a result of moderate reductions in staffing patterns, fringe benefits, and
other labor-related costs. No evidence was found to show that the existence of
private prisons will have a dramatic effect on how nonprivate prisons operate. 

Current Trends in Privatization

o It is estimated that worldwide there are 184 privately operated correctional
facilities, which hold 132,346 inmates.

o Within the United States, a total of 158 private correctional facilities are
operating in 30 states, Puerto Rico, and the District of Columbia. Texas has the
most facilities (43), followed by California (24), Florida (10), and Colorado
(9). Most private correctional facilities tend to be concentrated in the Southern
and Western United States.

o Another 26 private facilities operate in 3 other countries, with Australia (12)
and the United Kingdom (10) topping the list.

o Total revenues allocated to private prisons and jails are estimated at $1
billion. 

o Despite rapid growth in the number of private correctional facilities, they
represent only a small share of the entire correctional facilities market. With jail
and prison populations totaling approximately 1.7 million in the United States,
the estimated 116,626-bed capacity of private correctional facilities makes up
less than 7 percent of the U.S. market. Less than 5 percent (52,370 inmates) of
the total 1.2 million U.S. prison population is housed in private facilities. 

Prior Research Findings on Privatization

o Few studies have been completed regarding the impact that privatizing
prisons has on costs, protection from harm, recidivism, and conditions of
confinement.

o A major conclusion reached from the few studies completed is that privately
operated prisons function as well as publicly operated prisons.

o With respect to operating costs, privately operated prisons can reduce
expenditures in those markets in which public employee benefit rates are
relatively high in comparison to national rates.

o Management problems that have occurred with privatized prisons can usually
be linked to poorly drafted contracts, lack of oversight by contracting agencies,
and transferring inmates with classification level requirements to private prisons
that do not have the resources and capabilities to handle these inmates.

o Evidence shows that the presence of private prisons has encouraged public
facilities to adopt similar cost-saving strategies in staff deployment and
procurement policies.

o Evidence also shows that private entities can construct new facilities faster
and cheaper than can be done by firms in the public sector. 

National Survey Results

o Most privately operated prisons (not including jails or detention centers) are
relatively new, with bed capacities of 800 or less, and designed for medium-
and minimum-security custody inmates.

o Results from previous studies show that privately operated prisons function
similarly to publicly operated prisons with respect to program and work
participation by inmates and the distribution of staff by key functional areas.
Three exceptions to these findings are in the areas of staffing levels,
management information system (MIS) support, and critical incidents. Privately
operated facilities have a significantly lower staffing level than publicly operated
prisons and lack MIS support. They also report a significantly higher rate of
assaults on staff and inmates.

o The differences mentioned above may be related to factors such as reporting
standards or the fact that most correctional facilities experience management
difficulties when newly opened. However, insufficient training and lack of
qualified staff in key positions may also be valid reasons for these differences.
Nonetheless, the assumption that privately operated prisons are safer or better
managed than publicly operated facilities is not supported by the results
presented in this report.

Future Trends

o The number of privatized prisons is likely to increase, but not at the pace
exhibited during the past decade.

o The number of companies operating privatized prisons is likely to decrease
as competition and the costs of doing business increase, thus forcing a
consolidation of firms within the industry.

o It is unlikely that privatized prisons will develop a strong market in the
high-security inmate population market due to the recent flurry of
well-publicized disturbances. However, important inroads can be expected for
the private sector within low-security medical, mental health, and geriatric
inmate populations. 

o Speculative prisons will face the greatest scrutiny and resistance by state and
federal correctional agencies. These facilities are the most difficult to monitor
and regulate.

o Unless there is a sharp reduction in major incidents at private prisons,
litigation directed at facilities that are immune from the Prison Litigation
Reform Act will likely increase. 

----------------------------

Chapter 1

Introduction

Prison overcrowding is one of the most burdensome problems plaguing our
criminal justice system and a major catalyst for privatizing correctional facilities.
Over the past decade the number of adult offenders under the jurisdiction and
control of the United States justice system has doubled. Between 1980 and
1995, the probation, parole, and jail populations grew almost as rapidly as the
prison population. In 1995, more than 5.4 million adults-approximately 1 out of
every 46-were under some form of correctional supervision (Bureau of Justice
Statistics, 1997a). The public has witnessed an increase in the nation's prison
and jail populations from nearly 750,000 in 1985 to more than 1.7 million in
1997 (table 1). This rise in prison and jail populations and the corresponding
need for additional bed space have been accompanied by similar increases in
alternative forms of correctional supervision.

As the number of inmates in prisons and jails and on probation and parole
increased, a corresponding surge in prison spending has occurred. According
to a report issued by the U.S. General Accounting Office (1996a), prison
operating costs grew steadily between fiscal years 1980 and 1994, due in part
to the continuous growth in the inmate population. Total U.S. prison operating
costs (federal and state) grew from about $3.1 billion in fiscal year 1980 to
more than $17 billion in fiscal year 1994. This is an increase of nearly 550
percent based on constant or inflation-adjusted dollars (table 2).

The National Council on Crime and Delinquency (NCCD) has estimated that
up to $15 billion will be needed to construct additional prisons to accommodate
the anticipated growth in the inmate population by the year 2000, with an
additional $21.9 billion needed to operate these prisons. This combined $37
billion does not include the additional billions of dollars required to service the
debt associated with the loans necessary to pay for additional prison
construction (Clark, 1998). Based on current trends, NCCD estimates that
prison and jail populations will reach 2 million by the end of 2000. 

Compounding the problems created by the growing demand for prison space
and funding is the lack of public confidence in the quality of correctional
services provided by federal, state, and municipal governments. Penal programs
designed to rehabilitate offenders have not demonstrated a significant reduction
in crime or recidivism and have thus lost credibility with the public and
policymakers. In short, the belief that government is not equipped to meet the
challenges of contemporary institutional confinement is spreading. 

In the 1980s, private prisons and jails were seen as part of the solution to meet
the increasing pressure for prison bed space at a time when taxpayers were
reluctant to pay for correctional services and were not supportive of divestiture
of resources from other areas of state responsibilities and services (Travis et al.,
1985). To confront escalating prison populations and costs, an increasing
number of policymakers are now turning to the private sector for assistance.

Privatization is commonly defined as a contract process that shifts public
functions, responsibilities, and capital assets, in whole or in part, from the public
sector to the private sector. Privatization in correctional services can assume a
number of institutional characteristics. For instance, the most common form of
privatization in corrections is the contracting out (or outsourcing) of specific
services that entails a competition among private bidders to perform
governmental activities. Over the past two decades, the practice of state and
local correctional agencies contracting with private entities for medical, mental
health, educational, food services, maintenance, and administrative office
security functions has risen sharply. Under these circumstances, the correctional
agency remains the financier and continues to manage and maintain policy
control over the type and quality of services provided. 

A more radical approach is to have government transfer ownership of assets,
commercial enterprises, and management responsibilities to the private sector.
This approach, called an "asset sale," leaves the government with a limited or
nonexistent role in the financial support, management, or oversight of the sold
asset (U.S. General Accounting Office, 1997). This form of privatization was
not adopted by governments in operating correctional facilities until the 1980s.

A dramatic increase in the use of private correctional facilities has
occurred-initially in the United States and more recently in the United Kingdom,
Australia, and South Africa.[1]

In 1987, the total number of inmates in privately operated prisons and jails
worldwide was approximately 3,100. By December 31, 1998, that number had
increased to more than 132,000 (table 3). Although 14 private correctional
facility firms existed at that time, 2 companies (Corrections Corporation of
America and Wackenhut Corrections Corporation) accounted for more than
three-fourths of the entire worldwide market (Thomas, 1998).

In the United States, a total of 158 private correctional facilities are operating in
30 states, Puerto Rico, and the District of Columbia (table 4). Texas has the
most facilities (43), followed by California (24), Florida (10), and Colorado
(9). Most private correctional facilities tend to be concentrated in the Southern
and Western United States. Another 26 private facilities operate in 3 other
countries, with Australia and the United Kingdom topping the list (table 5).
There are another 530 nonsecure, privately operated facilities, such as halfway
houses, residential drug treatment, and other juvenile correctional facilities in
the United States. Total revenues allocated to private prisons and jails in 1998
are estimated at $1 billion (McDonald et al., 1998).

Despite the rapid growth in the number of private correctional facilities, they
represent only a small share of the entire correctional facilities market, at least
within the United States. With jail and prison populations totaling
approximately 1.7 million in the United States, the estimated 116,626-bed
capacity of private correctional facilities makes up less than 7 percent of the
U.S. market. The recently completed Abt Associates Inc. report (McDonald et
al., 1998) found that less than 5 percent (or 52,370 inmates) of the total 1.2
million United States prisoner population was housed in private prisons. 

In terms of prison facilities, the Abt study identified no more than 65 facilities
that could house state prisoners, which is a small percentage of the more than
1,500 prisons in the United States. Furthermore, indications show that growth
in privatization may be slowing. For example, Lanza-Kaduce and colleagues
(1998) report that private facility bed capacity has not increased since January
1, 1998. Additionally, stock prices for most of the major firms have dropped
substantially in the past year. There have also been a number of highly
publicized management problems with several privately operated facilities.

This report gives attention to issues surrounding the current debate on
privatization. The privatization of correctional operations and services has
resurfaced as a controversial topic, yet its antecedents developed early in this
country's history. Chapter 2 examines the factors, particularly demographic
shifts, sentencing law changes, and the political backdrop that gave rise to
increased incarceration rates since the early 1980s, leading to the recent
privatization movement for incarceration. Another section of chapter 2
investigates the historical role of private-sector involvement in the provision of
correctional services in the United States. This chapter also briefly outlines the
various arguments in favor of and against privately operated prisons.

Chapter 3 reviews the current research literature on prison privatization, with
particular attention given to recent federal, state, and local experiences with
privatization. Chapter 4 outlines the methodology used by the NCCD to
conduct a national survey of private prison facilities in late 1997 and reports the
findings of this survey. Chapter 5 summarizes the major findings of the study
and examines the most critical issues that will likely have an impact on
privatization of the nation's prison systems.

Finally, the appendix contains practical guidelines for state and local
policymakers to consider should they decide to privatize a facility. These
guidelines were developed by the Oklahoma Department of Corrections, which
has been very active in the privatization movement. 

----------------------------

Chapter 2

The History of and Key Debates Over Privatization

Privatization of Corrections: A Historical Overview

Private enterprise in the United States has an extensive history of involvement in
the provision of correctional services. According to Feeler (1991), the
involvement of the private sector in corrections stems, in part, from an
Anglo-American political culture that is somewhat skeptical of governmental
authority yet promotes private initiative. Feeler traces the private-sector
involvement back to shortly after the first English colonists arrived in Virginia in
1607. The colonists were followed by a handful of convicted felons, who were
transported by private entrepreneurs to America as a condition of pardon to be
sold into servitude.[2]

The overseas transportation of these felons was organized by private
entrepreneurs. Merchants transported convicts in exchange for the privilege of
selling them as indentured servants (Ammon et al., 1992). Transporting convicts
to America (and later many more to Australia following the American
Revolution) was an innovation that radically transformed the administration of
criminal justice. This innovation expanded the power of the state to impose
sanctions without the need to increase its administrative structure. In other
words, transportation of felons increased the state's penal capacity at a low
cost to the government.

During the 18th century, the modern prison emerged in America as a viable
alternative to servitude or the death penalty. Also during this time, the use of
privately operated facilities became popular. In the colonies, criminal justice
procedures were copied from English custom, which had a long history of
private involvement in operating jails. Privately operated jails date back to
medieval England (Pugh, 1968).

For a fixed fee states allowed private contractors to supervise prisoners inside
prison walls (Ethridge and Marquart, 1993). Although appointed by the
government, a head jailer was considered an independent operator of a
profit-making enterprise functioning as a government contractor. Often, jailers
employed prisoners (McCrie, 1993). In privately operated facilities, inmates
were often engaged as laborers and craftsmen in private-sector activities. Early
American jails may be characterized as exploitative. Cripe (1997: 378)
describes the conditions:

There was seldom any separation of types of prisoners-women and children
were often confined with hardened criminals. Many jails were very crowded;
most were unsanitary. Payments were extracted for special services, such as
better meals or other privileges. Some money was given to the jailer (often the
sheriff) for basic services. But it was widely accepted that jailers could charge
additional money for virtually any type of special benefit.

By 1885, 13 states had contracts with private enterprises to lease out prison
labor (McCrie, 1993: 24). One of the more interesting situations occurred in
California at the San Quentin prison, which was the first facility constructed and
operated by a private provider in the 1850s. Private entrepreneurs persuaded
state officials that the facility could best be operated under a long-term lease
arrangement with an entity that had experience in law enforcement. Even back
then the debate centered on costs, with the argument made that a private-sector
entity would be less expensive and less corrupt than the government. However,
after a number of major scandals surfaced surrounding the mismanagement of
the facility by the private provider, the state decided to turn the facility over to
the control of state government. Eventually, the government turned out to be as
ineffective and corrupt as the private provider (Lamott, 1961: 74, 78):

As the year [1856] went on it became increasingly clear to more and more
people that, regardless how much money it might save the taxpayers, a private
contract was no way to run the state prison. The Bulletin was not alone when it
demanded that, whatever it cost, a final end had to be put to the system of
farming out the management of the state convicts. . . . After the final ejection of
[Warden] McCauley, however, the prison fell into the hands of men who were
primarily professional politicians rather than pirates. The distinction is a nice
one, and the change was more a matter of style than of substance. The prison
remained a rich piece of political spoils, but the looting was now carried on
more in line with the ancient traditions of American state politics. 

Even back then, private contractors were claiming that they could both manage
prisons and employ convicts in labor, arguing that the practice would be both
rehabilitative and financially rewarding.[3] Prison models of convict labor took
various forms. At some, companies outside the prison provided raw materials
that were refined in prison workshops and later sold by private companies. At
others, prisons leased their inmates out to private farms or other businesses if
they could not produce salable items within the prison. In a number of states,
contractors paid the prison a fee or a percentage of the profits for the right to
employ convicts. For example, in the 1860s the Texas legislature directed state
correctional administrators to contract out inmate labor to the private sector.
Even when prisons were not operated entirely by private entrepreneurs, inmates
were used as a cheap source of labor. Prisoners often worked on farms,
railroads, and mines, in addition to other public work programs.[4]

For most of the correctional history of the United States, prison labor was
expected to generate a profit for the institution. If generating a profit was not
feasible, it was incumbent upon the prisoner to pay the costs of incarceration
and become self-supporting. The "managers" of early detention facilities
charged their inmates for food and clothing, while providing substandard
service. The income generated by inmate labor, however, was not sufficient to
cover the high costs of operating correctional systems, despite persistent and
intense efforts to make the system pay for itself (Feeler, 1991). Without
independent oversight and monitoring, the convict labor system eventually
succumbed to bribery and corruption.

Moreover, organized labor, manufacturers, and farmers strongly opposed the
convict lease system. This broad constituency opposed what it considered was
unfair competition and pressed for legislation restricting the use of convict labor
and convict-produced goods. Public opposition was also mobilized by
reformers and religious groups that protested the scandalous conditions found
at many of the privately run facilities and in labor lease systems. State
legislatures began investigating alleged incidents of mismanagement and cruelty
within privatized institutions, resulting in modifications to the leasing system.[5]

An executive order signed by President Theodore Roosevelt in 1905 prohibited
the use of convict labor on federal projects. In 1929 Congress passed the
Hawes-Cooper Act permitting states to ban the importation of inmate products
from other states (Ammon et al., 1992: 4-5). During the Great Depression,
Congress and state legislatures also passed laws that further curtailed the use of
inmates in private enterprise.

By the 1920s, the prevailing practice in American correctional agencies was to
increase governmental involvement. The subsequent demise of the convict lease
system eventually gave way to state-run institutions. The operations and
administrative functions in correctional facilities were delegated to
governmental agencies, authorized by statute, staffed by government
employees, and funded solely by the government (Cripe, 1997: 380).

Beginning in the early 20th century and until more recently, the custom in
American correctional agencies was to provide virtually all correctional services
as governmental functions in institutions constructed and maintained at the
government's expense.[6] In some program areas, rehabilitative services were
provided by volunteer associations (religious and educational). Generally,
however, private involvement in the provision of correctional services was
diminished. 

To manage escalating costs associated with supporting the many functions
required to effectively run penal institutions, a trend gradually developed in the
1900s for the contracting out of prison services to both profit-making and
not-for-profit firms. Prisons added services such as food preparation,
vocational training, and inmate transportation to the list of provisions that were
contracted out (which already included medical, dental, and mental health
services). By the mid-1970s, federal, state, and municipal governments were
again willing to expand their association with the private sector, moving beyond
the conventional contractual relationship that had become common in the early
20th century, and private enterprise began to play an influential and expanded
role in the functioning of correctional facilities. According to Durham (1993:
33), the 1970s ushered in a new phase in the development of private
corrections, beginning with juvenile correctional operations:

In 1976 RCA Services, a private company, assumed control of the
Weaversville Intensive Treatment Unit located in North Hampton,
Pennsylvania. This facility was designed to handle male delinquents. Although
the private sector had long been involved in providing a wide range of
correctional services . . . this was the first modern institution for serious
offenders to be completely operated in what has become an increasingly lengthy
line of such institutions in the American correctional system. 

The Weaversville Intensive Treatment Unit for Juvenile Delinquents is widely
regarded as the first high-security institution that was entirely privately owned
and operated under contract to the state. The second such institution did not
open until 1982, when the state of Florida turned the operation of the
Okeechobee School for Boys over to the Eckerd Foundation (Logan and
Rausch, 1985: 307). 

The trend toward privately operated juvenile correctional facilities has
continued, with more than 40,000 youth now housed in privately operated
juvenile facilities. It is noteworthy that these operations have not received nearly
the level of scrutiny and criticism as have their adult counterparts. This may be
due to the fact that some, but not all, are not-for-profit operations. 

The U.S. Immigration and Naturalization Service (INS) was among the first
governmental agencies to take advantage of the emerging market of private
prison operators. At the end of 1984, INS had contracts with two private
companies for the detention of illegal aliens; by the end of 1988, the number of
private INS detention facilities had grown to seven, housing roughly 800 of the
2,700 aliens in INS custody (McDonald, 1994). Also during this period, the
Corrections Corporation of America (CCA) was awarded a contract to
manage the Hamilton County Jail in Chattanooga, Tennessee. This was
followed by the first state-level contract award in 1985, when Kentucky
contracted with the U.S. Corrections Corporation to manage a correction
facility.

According to McDonald (1994), these developments initially provoked little
controversy or even notice, most likely because private-sector involvement in
correctional management was still limited in size and scope.[7] The importance
of these early contracts has been noted by Thomas (1997b), a strong advocate
of private prisons. 

The importance of these contract awards to the subsequent development of
correctional privatization would be difficult to over-estimate and the fact that all
remain still in force today with the same management firms is not
inconsequential for those who would be willing to accept this fact as at least an
oblique performance indicator. Each provided a real world opportunity to test
the hypothesis that contracting could yield meaningful benefits to government.
Each also provided a valuable model that subsequent units of government could
examine and improve upon in such critical areas as procurement strategies, the
formulation of sound contracts, and the creation of effective means of contract
monitoring. 

Security adult institutions, once considered the near exclusive and inextricable
preserve of government, emerged as a central issue debated among
correctional agencies. Finally, in the last few years, governments have sought to
contract out capital expenditure costs and operational services, including prison
design, construction, and management (Yarden, 1994). 

Thus, the pressure of increased incarceration rates, combined with rising
correctional costs, has enabled privatization of penal facilities to reemerge as an
acceptable political and correctional system operational concept. This
reemergence, however, has stirred considerable debate over the viability of
privately operated prison facilities. The current enthusiasm for privatization is
fueled by the prospect of more innovative, cost-effective prison management,
including the anticipated private-sector involvement in the financing of new
prison construction. This enthusiasm is not shared by all. Much of the
contention is reflected in the literature, especially with regard to the alleged
advantages and disadvantages to private facility management.

The Debate

Many claims have been made by observers on the advantages and
disadvantages of privatization. Cunningham (1999) has summarized the major
reasons either to accept or reject the privatization concept (table 6). These
reasons can be reduced to the overriding desire of many states and local
governments to rapidly increase desperately needed prison bed capacity and to
reduce prison operational costs. Others have raised the issue of whether private
prisons can enhance the quality of care for inmates (including enhanced
protection from harm for inmates and staff) and reduce litigation. Thus far, there
has been little need on the part of private providers to argue that inmates
incarcerated in privately operated prisons are more likely to be rehabilitated
and less likely to recidivate, although such a claim was recently made in a
Florida study (Thomas, 1998). These claims, which form the core of the debate
on whether to privatize, are discussed in this section. 

Faster and Cheaper Bed Capacity

The dramatic increase in prison and jail populations and the associated need to
construct prison and jail facilities quickly and cheaply have often been cited as a
major impetus behind the move toward privatization. Contracting with the
private sector allows prospective prisons to be financed, located, and
constructed quicker and cheaper than government prisons. This flexibility is
especially advantageous when a new facility is under consideration. Based on
experience, governments take 5 to 6 years to build a facility, whereas some
private companies claim they can do it in 2 to 3 years (or less). 

For example, CCA built a 350-bed detention center in Houston, Texas, for
INS. CCA completed the project in 5  months at a cost of $14,000 per
bed. INS calculated construction to take 2  years at a cost of $26,000 per
bed (Yarden, 1994: 328). In a comprehensive study of privatizing the District
of Columbia's Department of Corrections, Clark (1998) estimated that
rebuilding several prison facilities would take the public sector 5 to 6 years,
whereas it would only take the private sector 3 to 4 years. 

Based on these and other reports, it seems clear that the private sector can add
prison bed capacity faster and cheaper than most public entities. Cripe (1997:
384) cited the numerous advantages advocates assert in support of private
prison construction:

Because private firms are not bound by governmental rules that tend to slow
down prison construction, such as political pressures from unhappy neighbors,
environmental hassles, and requirements of competed bidding and construction
contracting, private firms have shown an ability to open new facilities more
quickly. They claim they can also get the money to build new institutions more
quickly from private investors or from lenders, while the government has to
work more slowly, getting appropriations from the legislature or going through
a bond issue process.[8]

On the other hand, Robbins (1997) points out that privatization allows prisons
to be built without the approval of the public. For example, the construction
costs of a privately operated facility can be lumped together in the state's prison
operating budget whereas the state must seek voter approval on a construction
bond for a publicly operated facility, as is usually the case.

Reduced Operational Costs

Representatives of private-sector firms assert that they can save taxpayers
money by providing correctional services traditionally supplied by government
at less cost. As already noted, private entrepreneurs can build facilities faster
and cheaper than the government. However, the next claim is that they are also
able to operate facilities more efficiently than the government. This can be
achieved by reducing the costs of labor associated with operational costs.
Labor costs are controlled by reducing one or more of the following personnel
cost factors: (1) number of staff, (2) wages, or (3) fringe benefits. The private
sector alleges that these costs can be contained or that, for the same dollar, it
can provide more or at least better services (Travis et al., 1985: 13).

This point of containing labor costs is the crux of the privatization movement.
Prisons are extremely labor intensive, with approximately 65 to 70 percent of
the costs of operating a prison going to staff salaries, fringe benefits, and
overtime. Controlling these costs is more difficult to achieve with unionized
government workers. Private firms typically use nonunion labor, allowing for
the lowest benefit packages. Overall, private firms claim that they can save 10
to 20 percent in prison operations due largely to efficient handling of labor
costs. 

Another, less powerful argument in favor of private contracting is that the
private sector has greater flexibility in the procurement process. It is argued that
private-sector contractors are not bound by the cumbersome and rigid
government procurement system. Consequently, private vendors can purchase
goods and services quicker; maintain lower food, supplies, and equipment
inventories; and negotiate better prices for these goods (Ammon et al., 1992:
10). 

It is not uncontested that a private institution would be more cost effective. The
incentive to contain costs is directly related to the type of contract structured
(Travis, Latessa, and Vito, 1985: 14).

A public utilities or "pentagon" model reimbursement where a contractor
receives costs plus a profit percentage would not necessarily provide an
incentive to contain costs of service. On the other hand, a client charge may
result in cost-overruns or even bankruptcy should the initial estimate prove
wrong.

One expense not normally included in the financial calculation of private firms is
the cost to the government for monitoring contract performance. Constant
monitoring of all aspects of internal performance is essential to a good
contractual relationship, which may become expensive over time. If continual
federal or state monitoring of private institutions is required for accountability
purposes, the costs of monitoring ultimately raise the price of privatized
services. The potential costs of increased prison litigation is also rarely
discussed by private prison advocates.

As a policy matter, opponents to privatization also claim it is inappropriate to
operate prisons based on a profit motive. In many instances, private prison
operators are paid according to the number of inmates housed. Arguably, it is in
the operator's financial interests to encourage lengthier sentences for inmates to
keep bed spaces filled. If the private vendor enters into a contract based on a
per-client charge, the profit margin and even the continued operation of the
private facility depend upon total population size. Firms driven by the profit
motive could adversely influence prison population size by lobbying for longer
sentences and stricter sentencing guidelines. Similarly, as private firms are in
business to make a profit, high returns on their investments are important.
Critics of prison privatization argue that firms will cut corners, from
construction materials to hiring inexperienced personnel, forsaking security and
quality of service in the process of making a profit.

Improved Quality of Service

In addition to the proposed cost savings and associated efficient services, one
must also remember that the nation's prison and jail systems were facing
widespread allegations about the lack of quality of care afforded to staff and
inmates. Since the 1980s, most of the state prison systems as well as the major
urban jails have been under far-reaching consent decrees regarding medical,
mental health, education, overcrowding, and protection-from-harm issues.
There have also been major prison disturbances in California, Illinois, New
Mexico, and New York, to name a few, that have added to the public
perception that public agencies have not been doing a good job in managing
prisons.

However, one of the central concerns raised by critics of correctional
privatization is that firms motivated by financial gain might make decisions that
enhance profits at the expense of the rights and well-being of inmates (Durham,
1994). History shows that privately operated prison facilities were plagued by
problems associated with the quest for higher earnings. The profit motive
produced such abominable conditions and exploitation of the inmates that
public agencies were forced to assume responsibility. The lack of contract
supervision contributed, in part, to the squalid and inhumane living conditions in
privately run prisons. 

The current movement to reprivatize primary facility management assumes that
modern entrepreneurs are somehow more benevolent and humanistic so that
the exploitations of the past will not reoccur (Walker, 1994). Critics, however,
contend that privately managed facilities will bring new opportunities for
corruption. Given poorly paid, undereducated, and inadequately trained staff,
opponents question the professionalism and commitment that privatized staff
will bring to the job.

Proponents, on the other hand, suggest that present-day judicial activism
provides oversight over private prison operations. The threat of inmate lawsuits
and court-mandated consent decrees act as a deterrent to abusive behavior.
Further arguments suggest that tolerance of abusive behavior by staff defeats
the long-term interests of private contractors and can be avoided with careful
monitoring mechanisms. Moreover, it is presumed that competition between
firms will hold down costs and provide for superior service because contract
renewals will depend on job performance. To date, the limited experience with
privately managed prisons does not allow a thorough evaluation of public and
private prisons in terms of overall quality of inmate services.

Legal Issues

Disagreements surrounding cost and efficiency may eventually be resolved with
more complete data. Better contract monitoring and judicial oversight should
curtail instances of exploitation and abuse of the inmate population. However,
the legal ramifications of privatization pose challenging questions not easily
rectified. Three complex issues stimulate heated debate on correctional
privatization: 

o The propriety of private firms taking over state functions.

o Inmate rights and due process considerations.

o Liability and accountability for state actions. 

A fundamental issue is public responsibility for the well-being of society. It is
taken for granted that the apprehension and conviction of offenders are public
responsibilities. Hence, the notion that convicted offenders should be the
responsibility of private entrepreneurs motivated by profit seems contradictory
(Walker, 1994: 582). The central question should be whether government has
the authority to contract out what is now widely regarded as a public function.
Commenting on the issue, Durham (1993: 43) states with some urgency that, "if
the transfer of responsibility to penal institutions is not carefully executed, the
consequences may be disastrous. Beyond inconvenience and unanticipated
costs, both public safety and inmate well-being may be at stake." 

The courts have clearly decided that private prisons can be assigned the same
management responsibilities as those undertaken by state and local
governments. This is not to say that state and local governments can wholly
delegate their functions and duties to a private provider. Indeed, based on a
number of recent infractions committed in private facilities, the courts will hold
government responsible for actions taken by a private provider that violate an
inmate's constitutional rights or that put the prison staff, inmates, or
surrounding community in harm's way (Schosser, 1998; Clark, 1998). 

What has not yet been resolved is whether privatization will undermine or
enhance prisoners' rights as compared to publicly operated systems (Thomas,
1991). The U.S. Constitution protects individuals against the violation of due
process (5th and 14th amendments) as well as the related issue of cruel and
unusual punishment (8th amendment). Recent decades have witnessed a large
volume of prison litigation concerning inmate rights and prison conditions that
has resulted in most state correctional systems (or a facility within a state)
operating under an imposed consent decree. The concern is whether private
prisons can operate in such a manner that the exposure to litigation against
government is reduced. 

A number of U.S. Supreme Court cases have held that a person can only assert
a denial of due process rights if that deprivation resulted from "state action"
(Yarden, 1994: 331). The ultimate issue in determining whether an entity is
subject to suit for violation of an individual's rights is whether the alleged
infringement is attributable to an action by the state. 

A person acts or purports to act under the "color of state law" when in the
performance of official duties under any state, county, or municipal law,
ordinance, or regulation (42 U.S.C. 1983) (Robbins, 1986). Federal civil rights
law prohibits state officials or agencies from being named as defendants in civil
suits while operating in their official capacities if a plaintiff seeks monetary
damages. The question remains whether the actions of private corrections
facilities regulated by the state can be considered transformed into state actions
under "color of state law." 

Thus far, the courts have decided that persons who provide services to inmates
under contract are not immune from litigation for constitutional violations.[9]
What is yet to be settled is the propriety of private firms running entire
correctional facilities and the broad legal or constitutional questions that might
apply (Cripe, 1997: 394).

The issues raised heretofore have practical implications in the day-to-day
operations of a private correctional facility. Before entering into a contractual
agreement with a private firm for the operation of a prison or jail, it would be
necessary to identify whether the private company can be authorized to
exercise force (including deadly force) to prevent escapes, to imprison citizens
against their will, and to impose penalties on those who violate the regulations
and rules of the institution. In the event that staff of private facilities are not
allowed to enforce the rules and regulations of the institution, the likelihood of
success of these corporations is obviously diminished. However, allowing a
private prison to punish inmates who have violated institutional rules (which
may differ from publicly operated facilities) without oversight by the state could
be a denial of due process, especially if the punishment entails the loss of good
time, which would serve to lengthen an inmate's period of imprisonment. 

The other area of concern deals with actual prison conditions, such as access to
medical care, mental health services, work, vocational and educational services,
overcrowding, and protection from harm. Travis and colleagues (1985) pose a
series of questions to be considered before full privatization of correctional
facilities becomes commonplace. These issues include whether the contracting
government agency would be liable for any illegal actions of the contractor; if
conditions in the contracted penal facility are found to violate constitutional
requirements, who would ultimately be responsible for their correction and held
liable for damages; whether the contracting governmental agency could be
rendered immune to the actions of the contractor, any negligence that results in
the escape of prisoners, or the financial mismanagement of the facility; and
whether the contracting agency would be responsible for bailing out a bankrupt
contractor. With no clear court precedent on whether private prisons will come
under the state action doctrine, prisoners' rights may ultimately depend on the
nature of the contractual agreement between the state and the private operator. 

----------------------------

Chapter 3

Recent Research Regarding Privatization

Background

The debate over whether private-sector involvement in corrections should be
increased has generated an extensive body of literature, comprising for the most
part essays and position papers that reflect the author's stance on the issue.
Often the ideological and political predispositions of the researchers seem to
have shaped the interpretation of the data. However, as stated by Thomas
(1997a):

[I]t is equally clear that a rapidly growing body of literature is accumulating
within which one finds highly repetitive themes. The core theme is that properly
conceptualized, properly managed, and properly monitored privatization
initiatives can serve the public interest. . . . Sound performance presupposes
competent and qualified people from both the public and the private sector
coming together cooperatively to attack important public policy problems.

Much of the discourse on correctional privatization entails an introduction to
the topic, a review of the circumstances that gave rise to the demand for
increased private-sector involvement, followed by a discussion of the issues
involved (see for example, Bowman et al., 1993). The discussion of issues is
invariably cast in favor of or in opposition to privatization. As discussed in
chapter 2, there are a number of reasons why advocates support the use of the
private sector in the provision of institutional correctional services. Most are
related to the potential cost savings and efficient service that the private sector
can achieve over the public sector. On the other hand, the movement against
privatizing prisons is gaining momentum by attacking such issues as the transfer
of services from a public to private provider, the potential decline in the quality
of inmate services, the propriety of private-sector operation of correctional
facilities, and the legal liability surrounding privatization. 

There are literally hundreds of documents related to privatization of correctional
services, and a few dozen studies have attempted an empirically based
comparison of public and private facilities. This chapter examines the results of
some of the more well-known comparative institutional studies, rather than the
numerous essays and position papers that comprise the bulk of the publications
in the field. 

Costs

As noted previously, one of the most often debated issues in privatization
literature is whether private facilities are more cost-efficient than
government-operated institutions. The first and foremost argument in favor of
privatizing prisons is that private managers will be more effective and efficient
than public managers of prison facilities. It is argued that unlike state and
federal governments, private firms are free (to some extent) from politics,
cumbersome bureaucracies, and costly union contracts. Private contractors are
accountable to their investors and, therefore, are presumably more motivated to
satisfy the terms of their financial obligations to return a profit, which, in turn,
would lead to more cost-effective operations.

There is no consensus among academics and professionals in the field
concerning the potential cost savings that privately managed operators can
provide. Some researchers looking at privatization initiatives proclaim "a
realistic expectation of cost savings as a result of contracting is probably in the
range of 5 to 15 percent," whereas others declare that the evidence
accumulated thus far is not yet persuasive (Thomas and Logan, 1993).

The National Institute of Corrections Study: Okeechobee, Florida 

One of the first evaluation studies of costs was funded by the National Institute
of Corrections (1985) to assess the transfer of a state-operated juvenile facility
to private management by a private, not-for-profit organization. In August
1982, the Jack and Ruth Eckerd Foundation was awarded a contract to
manage the Florida School for Boys at Okeechobee. The Arthur G. Dozier
Training School for Boys in Marianna, Florida, was chosen as the comparison
facility. 

Essentially, two questions were posed by the National Institute of  Corrections
study: 

1. Would Florida's Department of Health and Rehabilitative Services (which
manages the juvenile training school system) realize substantial cost savings
under the new management structure? 

2. Would the Eckerd Foundation deliver a program that was equal to or
exceeded that provided by the state?

Data pertaining to client characteristics, managerial and administrative
functions, and staff morale were collected and compared. Bearing in mind that
the Eckerd Foundation is a private, not-for-profit foundation that may not have
cost-efficiency profit motives, the Okeechobee study concluded: 

Management data collected during the project indicated that a number of
state-required procedures were streamlined by the Eckerd Foundation; e.g., a
more expeditious operation was initiated in such areas as purchasing and
personnel procedures. However, the transfer brought with it additional
expenses which the state-operated facility met at a less costly level; e.g.,
insurance, overhead charges, etc. In response to the first question: on balance,
the fiscal data seem to indicate that the Eckerd Foundation achieved no
significant reduction in operational costs. (National Institute of Corrections,
1985: xiii).

The study also found that no fundamental program differences were found when
comparing Eckerd Foundation and Dozier clients, although staff morale was
significantly lower at the Eckerd Foundation. The study noted a number of
improvements in the delivery of services at the Eckerd Foundation. It also
concluded that after 2 years, the Eckerd Foundation did not exceed the overall
services provided by the state at the Dozier Training School.

The National Institute of Justice Studies: Tennessee, Kentucky, and
Massachusetts

Two earlier studies completed for the National Institute of Justice (NIJ) 
analyzed the issue of cost savings and reached varied conclusions. In the first
study, research conducted by Logan and McGriff in 1989 estimated that by
contracting out prison management to the Corrections Corporation of America,
located in Hamilton County, Tennessee, saved at least 4 to 8 percent annually
over a 3-year period on operating costs for the Hamilton County Penal Farm.
Potential cost savings were estimated at 5 to 15 percent (Logan and McGriff,
1989). The Hamilton County study provided an illustrative analysis that can
serve as a guide for calculating accurate cost comparisons. 

The Hamilton County Penal Farm shifted from public to private management in
1984. The physical structure of the facility was in a state of deterioration that
required extensive renovation by CCA. The private contractor's claim to lower
operating costs while renovating the physical aspects of the facility, expanding
inmate capacity, and improving the quality of correctional services was tested. 

The Hamilton County auditor supplied the data for the study and also assessed
the hidden costs.[10] Despite the hidden costs, which were estimated to be as
high as 20 to 30 percent above direct agency costs, CCA was able to
demonstrate an overall savings. 

A second 1989 study reached a different set of conclusions. The Urban
Institute compared a public adult minimum-security institution with a privately
operated prison in Kentucky and compared two pairs of public and private
facilities for violent youth in Massachusetts (Urban Institute, 1989). In
Kentucky, the Marion Adjustment Center, which began operation in 1986
under private contract, was compared with the state-run Blackburn
Correctional Complex. In Massachusetts, the Connelly Secure Treatment Unit
(public) was matched with Boston Secure Treatment (private) and the
Westboro Secure Treatment Program (public) was matched with the Delany
School (private). The selection of private and public juvenile facilities in
Massachusetts was based on similar offender characteristics and facility
conditions. In each of the three sets of facilities, the Urban Institute found that
the costs were similar.

The unit costs of the private Kentucky adult facility were approximately 10
percent higher than the publicly operated facility. The authors of the Urban
Institute report suspect that this 10-percent difference is likely to have occurred
because of (1) the inclusion of capital costs in the private organization price and
(2) economies of scale achieved by the public facility, which had an inmate
population that was approximately 50 percent larger than the private facility
population. The program costs in Massachusetts were all within 1 percent of
one another. 

The study on juvenile facilities in Kentucky and Massachusetts also examined
quality-of-confinement issues. Using survey information, physical observation,
interviews, and agency records, the study appraised the quality of service based
on a number of key dimensions, or performance indicators (confinement,
internal security and control, participation of inmates in and the quality of
programs aimed at social adjustment and rehabilitation, management issues, and
health care). For most of these performance indicators, the privately operated
facilities had a small advantage. Overall, both staff and inmates gave better
ratings to the services and programs provided at the privately operated
facilities. In addition, escape rates were lower, there were fewer inmate
disturbances, and, in general, both staff and clients felt more comfortable at the
privately operated facilities.

The Sellers Study 

Sellers (1989) compared three privately operated detention and jail facilities
with three publicly operated prison facilities to learn which type operates more
efficiently.[11] Due to the limited number of private correctional facilities in
operation at the time, well-known privately operated institutions were selected
first before matching them with comparable public facilities.

The criteria used to select public facilities included similarity in size, location,
structure, age, type, capacity, and average daily occupancy. Site visits
consisted of structured interviews with executive and custodial personnel, as
well as other key staff (such as chaplains and nurses). The structured interview
questions focused on management's view of privatization, barriers to
privatization, program and service availability, program goals, and relevant cost
elements. 

Sellers concluded that the three private facilities operated at a lower cost per
inmate than the three comparable public facilities ($46.75 per day in the private
facilities versus $73.76 in the public facilities)[12] even though the private
facilities had more programs available than their public counterparts. In two of
the three private facilities, the overall prison conditions were notably better than
the comparable public facilities. With such compelling information, Sellers
concluded that public prison facilities do not operate with the same motives and
incentives as private prison facilities. Sellers further argued that the public
sector operates its facilities less efficiently than the private sector. His findings
support the argument for government to seriously consider private prisons as an
alternative to public operation of correctional services. However, Sellers' failure
to control for key factors that directly affected costs, such as facility design and
inmate characteristics, severely limits his pro-privatization conclusions.

Texas Sunset Advisory Commission Study

In 1987, the 70th Texas Legislature enacted legislation authorizing the Texas
Department of Corrections to contract with private vendors to finance,
construct, operate, maintain, and manage correctional facilities (Texas Sunset
Advisory Commission, 1991). One legislative mandate was that the state could
not enter into a private contract unless the contract provided a savings of 10
percent or more over an equivalent state-run program. The Texas legislation
directed the Legislative Budget Board (LBB) to establish an estimate of the
financial costs for a state-run facility that would be equivalent to those proposed
by the private vendor. LBB developed costs based on a hypothetical prison
facility that complied with the conditions set forth by the state senate bill,
existing prison operation policies, and other relevant court requirements. 

The Texas Sunset Advisory Commission report calculated the total cost to the
state of operating four private prisons (contract costs plus indirect costs)[13]
and compared this figure with the costs the Texas Department of Criminal
Justice would incur if it took over operation of the four private units. The report
concluded that at the end of fiscal year 1990, the price of operating the private
prisons was close to 10 percent less than if the state were to operate equivalent
facilities. In addition to operating at a cost savings, the private prisons
contributed to state and local economies by paying an estimated $400,000 per
prison in state and local sales taxes, franchise taxes, and payments in lieu of
property taxes. 

The results of this study have received some criticism. A U.S. General
Accounting Office (GAO) report places little faith in these hypothetical
comparisons, which do not allow for unanticipated changes in components such
as staffing levels, rate of occupied bed space, or other factors that could affect
actual costs (U.S. General Accounting Office, 1996a). The GAO report also
noted that any changes in any assumption, or set of assumptions, for the
hypothetical institution could change the size, or even the direction, of the
difference in comparative operational costs. The GAO report is discussed in
greater detail later in this chapter.

California Community Correctional Facilities

Sechrest and Shichor (1993) attempted a different type of public/private
evaluation. Their preliminary study examined two types of correctional 
facilities in California: a facility operated by a private, for-profit corporation
(private proprietary) and two facilities operated by municipal governments for
profit (public proprietary). Public proprietary facilities are a relatively new
concept in corrections. In California, these types of facilities are generally
located in small cities that do not have strong economic bases. These public
proprietary community correctional facilities (CCFs) have the potential to
generate income and employment opportunities.

The three facilities were chosen based on their progress in establishing
programs for inmates (e.g., work, education, drug/alcohol counseling, family
and individual counseling, vocational evaluation and training). The study
demonstrated that private proprietary CCFs cost less when considering startup
costs but appear to cost about the same as public proprietary facilities in the
second year. Both types of CCFs cost about $16 less per inmate per day than
the California Department of Corrections (CDC) prisons. 

The results of the study, however, were inconclusive due to methodological
problems. Costs could not be compared with any precision because of a lack
of data on capital construction for CDC facilities. The inclusion of capital costs
in proprietary facility estimates, in addition to the lack of uniformity in overhead
cost figures, also made comparisons between public and private facilities
difficult. Nevertheless, the study is instructive for its examination of the public
proprietary concept and for highlighting the problems related to gathering
incomparable data elements for analysis. 

The U.S. General Accounting Office Review

One of the more comprehensive reviews of comparative studies was completed
by the U.S. General Accounting Office (1996a). GAO reviewed five studies
completed since 1991 on correctional facilities in California, New Mexico,
Tennessee, Texas, and Washington. The preliminary results of the California
and Texas studies in the GAO analysis are cited previously. Four of the five
studies (with the exception of New Mexico) assessed the operational costs of
private versus public facilities. In their assessment of the studies, GAO
researchers concluded that the "studies reported little difference and/or mixed
results in comparing private and public facilities" (U.S. Government Accounting
Office, 1996a: 7). On the basis of this appraisal, GAO "could not conclude
whether privatization saved money."

Three of the studies (California, Tennessee, and Washington) made
comparisons of costs between reasonably matched private and public facilities.
In Sechrest and Shichor's (1994) California study, the private facility's average
annual cost per inmate was $15,578. This amount was higher than comparable
costs for one of the government-run facilities but lower than the other
government-run facility ($16,627). With respect to cost efficiency, the study
was inconclusive. The Tennessee study found little difference in the average
daily operational costs per inmate between the one private and two state-run
prisons (Logan and McGriff, 1989). The daily operational costs were $35.39
for the private facility versus $34.90 and $35.45 for the two public facilities.

Thomas and Logan (1993) disagree with the GAO 1997 report. They level the
following criticisms of the report:

o The authors of the GAO report knew that the statutes of several
jurisdictions defined contracting as unlawful (such as with the Texas study).

o The authors of the GAO report disregarded the cost benefits that have
justified more than a decade of federal-level contracting experience.

o The authors chose to ignore recent reports from Australia, Florida, Texas,
and the United Kingdom concerning the cost benefits of privatization.

o The authors shielded the draft version of the report they were circulating
around the country from prepublication comments by well-established experts
in the area of privatizing prisons. 

The Washington State Review of the Tennessee, Texas, and Louisiana Studies

Similar to the GAO review, the Washington State Legislative Budget
Committee analyzed information from the Tennessee and Louisiana studies to
help the state determine the feasibility and benefits of privatization (State of
Washington, 1996). Operational costs for the three Tennessee facilities
mentioned previously, as well as operational costs of three multicustody
facilities in Louisiana (two private and one state-run), were reexamined. For
Tennessee, the private facility's average daily operational cost per inmate
($33.61) was approximately 7 percent lower than comparable costs per inmate
for the two public facilities studied ($35.82 and $35.28).

For Louisiana, the average inmate costs per day for the two private facilities
studied were $23.75 and $23.74, and the comparable daily operational cost
for the public facility was $23.55 per inmate. 

Similar to the GAO review, the Washington state review also found very little
difference in the costs of private and public facilities. 

Only the Texas study, whose preliminary findings are previously cited, reported
findings of substantially lower (14 to 15 percent) operational costs for private
versus public correctional facilities. The results of the Texas study, however,
raise skepticism because the results were based on estimates rather than actual
costs. 

The Arizona Study

Thomas (1997b) conducted a cost analysis of a minimum-security private
prison in Arizona with several publicly operated minimum-security prisons.
During fiscal year 1995-1996, the privately run Marana Community
Correctional Treatment Facility, managed by Management and Training
Corporation, housed both male and female inmates. Although it was not
possible to find a similar state-run prison in the state with respect to
architectural design and inmate population, Thomas aggregated the costs of all
public/state-run minimum-security prisons in the state and compared the
average of these costs with the costs of the Marana facility. He found that the
Marana operating costs were 13 to 17 percent less than the average for the
state-operated facilities. However, some of the public facilities had costs equal
to or below those of the Marana unit. It is not clear whether the lower costs of
the Marana facility were more a function of its facility/architectural design and
inmate population attributes than a result of privatization.

Disclosed Corporate Financial Reports

In addition to examining these individual reports, it is possible to assess the
earnings of the private correctional corporations, most of which are publicly
traded. By far the most detailed and favorable information on finances has been
provided by Corrections Corporation of America. For example, CCA (1997)
reports that the average cost per day of incarceration was $30.51 per inmate.
In fact, since the organization has been in existence, it has kept its per diem
operating cost per inmate near the $30 to $32 level while its level of
compensation has increased from $32.71 per inmate in 1987 to $42.72 in
1997. CCA was compensated by its clients per inmate in 1997 for $42.72.
With 10.5 million billable man-days in 1997, the corporation had revenues of
more than $460 million and a net profit of well over $400 million using the cost
figures shown in table 7. 

Despite this positive financial picture, there may be problems ahead. For
example, CCA announced on October 10, 1998, that it would not be renewing
four contracts in Texas because the terms of the proposed new contracts had
become less profitable (Wall Street Journal, October 10, 1998). Furthermore,
the average share value for all private corrections companies had declined
sharply since April 1998. Wackenhut's stock had dropped by more than 25
percent from its high to its close in April 1998 due to lower than expected
revenue growth rates. 

Much of the disillusion with these stocks involves concern over the lack of
future growth. Few announcements have been made of major new contracts;
most of the "added capacity" has occurred when larger firms merged with
smaller firms. For example, CCA bought U.S. Corrections Corporation and the
facilities and contracts formally managed by the Bobby Ross Group.

Correctional Services Corporation has announced it will merge with Youth
Services International. All of these transactions suggest a consolidation of
private-sector firms and, more significantly, little growth in overall bed capacity
as the public sector becomes more wary about the benefits of privatization.

In summary, the cost benefits of privatization have not materialized to the
extent promised by the private sector. Although there are examples of cost
savings, there are other examples in which such benefits have not been realized.
Moreover, it is probably too early to determine if the initial cost savings can be
sustained over a long time period. It only takes one major disturbance for such
costs to greatly accelerate. 

Inmate Services, Quality of Confinement, and Public Safety

A central issue raised by critics of privatization is that firms motivated by
financial gain might make decisions that enhance profits at the expense of the
rights and well-being of inmates (Durham, 1993). Privatization opponents are
concerned about possible deterioration in the quality of inmate services. History
shows that privately operated facilities are often plagued by problems
associated with the quest for higher earnings. Proponents argue that abusive
behavior and poor service would defeat the long-term interests of private
contractors and can be avoided with careful monitoring and legislation to hold
the contractor accountable.

Studies comparing the quality of inmate confinement are less common than
studies comparing costs, although a number of studies attempt both. To date,
the limited experience with privately managed prisons does not allow a
thorough evaluation of inmate services provided by public and private prisons.
However, the limited number of studies that systematically evaluate the
performance of private and public facilities regarding the quality of confinement
yield insight into methods of improving future research in this area.

The Silverdale Study

One of the first of its kind, the Silverdale Study (Brakel, 1988) surveyed
inmates at the Silverdale Detention Center in Chattanooga, Tennessee. This
facility has been under contract with CCA since fall 1984. The study used a
series of interviews with prison inmates and staff and close observation of
institutional conditions and procedures to provide documentary evidence of
various aspects of prison life. A questionnaire was given to a sample of 20
inmates. The 16 questions on the questionnaire covered topics such as
conditions of confinement, programs and services, due process procedures,
and opportunities for inmate contact with outside community groups. For each
primary question the inmates were also asked two subsidiary comparative
questions. One question asked inmates to compare a specific area of CCA's
private management with the county's management. The second question was
included because relatively few inmate respondents had experienced living
conditions at Silverdale under county management and therefore could not
properly evaluate the difference between the two. Inmates were asked to
compare the operation of the Silverdale facility with any other prison facility in
which they had served time (typically the county jail in downtown
Chattanooga).

The inmates rated the Silverdale facility under the management of CCA highly
on most issues (e.g., physical improvements, upkeep and cleanliness, staff
competence and fairness, work assignments, request and grievance procedures,
counseling and religious services, visitation and telephone privileges, and
outside contacts). In other areas there was an equal balance of positive and
negative responses (e.g., safety, security, classification, medical care, food,
education, and legal access). Recreation and release procedures received
mostly negative ratings.

Brakel (1988) concluded that "the evidence is overwhelming that the private
takeover of Silverdale has resulted in substantial improvements in the
institution's physical conditions and upkeep, as well as several critical areas of
inmate service and institutional procedure."

Thomas and Logan (1993), however, asserted that, although some may argue
that Silverdale was a case of a poorly managed county operation that CCA
could not fail to improve, prisoners with relevant experience favorably
compared the private operation with a local jail or the state penitentiary. In this
regard, the results of the study could not be considered conclusive.

The New Mexico Study

Logan (1991) compared the quality of confinement in a state-operated
women's prison in 1988 with a privately operated version of the same prison in
1989 and a federal women's prison in New Mexico. Defined along eight
dimensions, quality of confinement is measured using 333 indicators (131 of
which were available also for the federal prison). The sample consisted of 132
inmates and 112 staff members at the state prison, 134 inmates and 76 staff
members at the private facility, and 78 staff members at the federal institution.
Results of all possible pairing comparisons between prisons were summarized
(for each prison on each dimension) in a comparative score called the Prison
Quality Index. The quantitative data were supplemented with qualitative
information from survey comments and site visits.

Logan concluded that the private prison outperformed its state and federal
counterparts on all dimensions except care (where the state scored slightly
higher) and justice (where the federal prison matched the private).[14] Logan
found that both the state and private prisons were good-quality institutions,
using the federal prison as a standard of good quality. Although each prison had
different strengths and weaknesses, on most dimensions the state had improved
the quality of confinement for its female felons by contracting with a private
operator.

The U.S. General Accounting Office Review

The U.S. General Accounting Office (1996a: 9) also examined measures of
confinement quality. With regard to comparisons of quality, the report stated:

Of the five studies reviewed, two (New Mexico and Tennessee) assessed the
comparative quality of service between private and public institutions in great
detail. Both studies used structured data-collection instruments to cover a
variety of quality related topics, including safety and security, management,
personnel, health care, discipline reports, escapes, and inmate programs and
activities. The New Mexico study reported equivocal findings, and the
Tennessee study reported no difference between the private and public
institution.

On the basis of correctional staff surveys and reviews of institutional records,
the New Mexico study reported that the private prison "outperformed the
public facility on most of the measured quality dimensions." On the other hand,
inmate surveys showed the public facility outperforming the private facility on
every dimension except inmate work and training program activities. 

The Tennessee study of one private and two public facilities reported that "all
three facilities were operated at essentially the same level of performance." The
results were based upon an operational audit of the facilities by a team of
inspectors.

Florida Correctional Privatization Commission Recidivism Study

A study conducted by the Florida Correctional Privatization Commission
implemented a different approach to comparing public and private prisons
(Lanza-Kaduce, et al., 1998). The study matched 198 inmates from both 
private and public prisons in several categories and compared their rates of
recidivism. The study compared inmates in the areas of rearrest, technical
violations of terms of release, resentencing on a new offense, and
reincarceration. In virtually every category the private prison outperformed the
public facility. The major findings of the study include:

o Ten percent of the private prison inmates were rearrested during the 12
months following release versus 19 percent of the public prison inmates.

o Six percent of the private releases were resentenced for a new offense versus
10 percent of the public inmates.

o Ten percent of private inmates were reincarcerated within 12 months
compared with 14 percent of public inmates.

o Overall the indicators revealed that 17 percent of the private releases have
an indication of recidivism versus 24 percent of public releases.

The only area in which public prisons outperformed private prisons was in
technical violations. The study found that technical violations of the terms of
release were lower for public releases than for private ones.

The study has come under criticism by researchers at the Florida Department of
Corrections (FDOC). The study was criticized for its small sample size (396
total); equivalencies based on racial identity, age, and prior incarceration and
offenses that did not provide true matches of inmates; and the fact that many of
the inmates in private prisons also spent time in public prisons, thus tainting the
comparison group. Other areas FDOC would have liked to see factored into
the results were sentence length, time served, custody level, and true matches of
prior records, all of which would influence recidivism.

Logan (1991), however, earlier suggested that, although such a study cannot
definitively conclude that recidivism rates are lower at private prisons because
of the problems with the equivalency of matches, the results do show that
private facilities had more of an incentive to develop antirecidivism programs
because they could lose support from the legislature if they performed poorly.

Health Care

Although not comparative in nature, the issue of privatized health care for
correctional institutions was the focal point of two additional studies-one
conducted by the Joint Legislative Audit and Review Commission (JLARC) of
the Virginia General Assembly and the other by KPMG Peat Marwick, a
private management consulting firm. Both studies examined the potential
benefits of a shift to private health providers in the District of Columbia. In both
Virginia and Washington, D.C., the state of correctional health care was in
crisis, due primarily to budgetary constraints. Not surprisingly, the two agencies
reached different conclusions concerning the feasibility of privatized health care. 

The Virginia study concluded that the Virginia Department of Correction's
(VDOC's) experiment with privatization of inmate health-care delivery at the
Greensville Correctional Center was a failure at the time the study was
conducted (Joint Legislative Audit Review Commission, 1994). Among the
problems cited were:

o Documentation of health-care services was poor, including medical records,
sick-call logs, and tuberculosis testing documentation and followup.

o Physician coverage was uneven and medical segregation units at Greensville
had problems obtaining adequate physician coverage.

o Respiratory isolation rooms and x-ray equipment problems were not
addressed in a timely manner.

o The contractor at Greensville had not complied with the contract
requirements for implementing quality improvement activities.

o Costs of the contract exceeded appropriated amounts by 50 percent in
fiscal year 1992; communications on contract modifications were poor; and
contract compliance issues remained unresolved during the contract period.

JLARC indicated that although VDOC had contracted with a vendor to
provide services at Greensville, the department was still responsible for ensuring
inmate access to adequate care, monitoring the provision of services at the
facility, documenting services rendered, and ensuring adequate monitoring of
contract costs.

The second private health-care study was conducted by management
consultants KPMG Peat Marwick (1994) in response to deficiencies found in
the mental and medical care that the District of Columbia's Department of
Corrections (DOC) provided at the District's jail and at the Lorton Correctional
Facility. Four privatized health-care delivery options were analyzed using three
criteria identified by the District as goals for privatization. The options by type
of services covered were:

Option 1: Contractor covers medical outpatient, dental, medical inpatient, and
mental health services. 

Option 2: Contractor covers medical outpatient, dental, and medical inpatient
services.

Option 3: Contractor covers medical outpatient and dental services.

Option 4: Contractor covers medical outpatient services.

The criteria used to analyze these options were:

1. Cost: Does the option reduce costs?

2. Incentives: Does the option avoid cost shifting to other health-care
providers?

3. Accreditation and quality of care: Does the option ensure high-quality care
and the best chance for accreditation at all DOC health-care facilities?

Each option carried with it the assumption that one contractor would provide
services at all DOC facilities and the District would continue to cover any
services that the contractor does not cover.

KPMG Peat Marwick (1994: v) recommended that a "comprehensive contract
for all services-medical, mental, and dental-at all DOC facilities is the best
privatization option for the District." Option 1 was considered the best
alternative, for it met all three criteria mentioned above.

Option 1 meets the costs, incentive, and accreditation criteria. Using the
average cost for privatization, Option 1 reduces District costs by 7.3 percent
annually (this excludes one-time severance costs). One bid shows savings that
exceed 10 percent over the life of the contract. Option 1 avoids the costs
shifting that occurs when one party is responsible for outpatient care and
another is responsible for inpatient care. Finally, because Option 1 covers all
services, including mental health, the District's chances for achieving
accreditation for all facilities is greater.

KPMG's analysis of privatization alternatives failed to address the
disadvantages and potential problems that may arise during the process of
privatization because privatized health care was viewed as the best solution to
the legal requirements mandated by District law. Yet, given the experiences in
Virginia, adequate monitoring mechanisms must be in place to ensure that the
advantages of privatized services are achieved.

Additional Literature 

Additional sources on privatization are worth noting. These studies are
primarily informative in nature but do not offer a comparative analysis of public
versus private services on the issues relating to costs and quality of services. 

An often cited seminal study in the field of privatization was conducted by
Camp and Camp (1984). This study reviewed literature on private-sector
involvement in corrections and gathered data from interviews with correctional
administrators, researchers, and private vendors. Interviews with correctional
administrators focused on the benefits and liabilities of privatization, as well as
their concerns about monitoring, accountability, and control. The study also
based its findings on information collected from various state adult and juvenile
correctional systems in the District and in the federal prison system. Among the
information gathered was which agencies do the most contracting (juvenile
agencies), the variety of contracts reported, and how much is spent on
contracted services.

GAO produced a study on lessons learned from privatization experiences of
state governments in Georgia, Massachusetts, Michigan, New York, and
Virginia, as well as the city of Indianapolis, Indiana (U.S. General Accounting
Office, 1997). The study did not specifically address the topic of correctional
privatization, although many guidelines were proposed for successful
privatization in the field of corrections. On the basis of their review of the
literature, interviews with privatization experts, and the combined practical
experiences with privatization efforts in each jurisdiction, GAO made the
following observations:

o Privatization requires a political champion. When introducing and sustaining
privatization initiatives, political and administrative leaders should anticipate the
need to develop and communicate a privatization philosophy and attempt to
garner outside support.

o Once privatization has been introduced, a formal structure to ensure
effective implementation must be designed. Such a structure can include a
commission to identify privatization opportunities and set privatization policy, a
staff office that can support agencies in their privatization efforts and oversee
implementation, and a framework for making privatization decisions. 

o Government agencies may need to enact resource changes to encourage or
facilitate the use of privatization. These changes are necessary to signal to
managers and employees that privatization efforts are resolute. 

o Reliable and complete cost data on government activities are needed to
ensure a sound competitive process and to assess overall performance. Reliable
data can simplify the privatization decisions and make these decisions easier to
implement and justify.

o Strategies are needed to manage workforce transitions. These include, but
are not limited to, encouraging employee involvement in the privatization
process, providing skills training for either competing against the private sector
or monitoring contract performance, and creating a safety net for displaced
employees.

o Monitoring and oversight that not only evaluate compliance with the terms of
the privatization agreement but also evaluate compliance with the private firm's
performance in delivering services are needed when the government's direct
role in the delivery of the service is reduced through privatization. This is
necessary to ensure that the government's interests are protected and that
accountability of both government and the private party is maintained.

One other report should be noted, although it is not a traditional research report
(Clark, 1998). This report takes a look at the troubled CCA facility in
Youngstown, Ohio, referred to as the Northeast Ohio Correctional Center.
This facility was constructed in 1996 as a "spec prison." Soon after it opened, it
was largely filled with sentenced felons from the District's DOC. Under the
terms of the contract between CCA and the District, all inmates transferred to
the facility were to be classified no higher than medium security. However,
according to the Clark report, maximum-custody inmates were transferred to
the facility with the knowledge and approval of both the District and CCA. The
Clark report listed the following major incidents that had occurred within the
first 15 months of operation (Clark, 1998: 7):

o Six inmates escaped.

o Two homicides occurred, including one between known enemies in the
high-security unit, involving breakdowns in a number of critical procedures.

o Seventeen inmates were stabbed and numerous other serious assaults
against staff and inmates occurred.

o Homemade weapons were discovered.

o For long periods of time the facility was forced to operate under full or
partial lockdown to prevent further incidents of unrest.

The U.S. District Court in the District on March 1, 1999, granted preliminary
approval of a $1.6 million settlement on behalf of the District inmates who
claimed that they were abused, denied adequate medical care, and not properly
separated from other inmates. CCA has been ordered to pay $756,000 in legal
fees toward this judgment. These costs do not include the costs incurred by
CCA and the District to defend themselves in the lawsuit. Furthermore, families
of the inmates who were killed or died at the correction center from other
causes can sue CCA and the District separately. One family has already filed a
multimillion-dollar lawsuit against the former District Director of Corrections,
CCA, and the District for the death of a family member. The Federal Bureau of
Investigation has opened an investigation into allegations of abuse of inmates by
CCA staff.

The Youngstown situation is a sobering illustration of how badly things can go
in a contract. There have been other recent examples of private prisons having
major operational difficulties. In a recent article in The Atlantic Monthly,
Schosser notes a number of major scandals and examples of bad management
in private prisons (Schosser, 1998). This is not to say that situations like those
in Youngstown are typical of most private prisons. Indeed, the national survey
results reported in chapter 4 suggest that the functions of private prisons are
similar to those of public prisons. However, if the basic management structures
are not in place, serious problems can quickly erupt that will have severe
litigation, public safety, protection-from-harm, and cost consequences.

Summary

Only a few studies can be relied upon in a debate over cost efficiency of
prisons. It is generally accepted that the best research conducted to date was
the Tennessee study that showed no or very minimal differences with respect to
costs. The remaining studies had serious methodological flaws that limit their
ability to reach firm conclusions. In general, these flaws pertain to an inability to
control for factors known to be associated with inmate conduct and costs in
making comparisons between public and privately operated facilities. For
example, facilities chosen for comparisons often had inmates that differed on
key attributes such as inmate age and classification level-factors known to be
associated with inmate conduct. 

In some studies impact or outcome data used for analysis either were flawed or
may have been contaminated by staff because they knew the results would be
used to reach unflattering conclusions by the researchers studying the facility.
Information on measures such as inmate assaults and even escapes can be
easily manipulated by staff unless rigorous controls are applied to ensure inmate
behavior is being measured in a standard and reliable manner.

Studies of public and private facilities must include comparable facility types,
institutional capacity, and inmate demographics. In addition, the dimension of
time must be considered. The studies thus far are essentially one-time studies
that measure the attributes of private and public facilities at a given time. To
date, no long-term studies have been conducted to determine whether privately
operated facilities can sustain their cost savings or quality of confinement over
an extended period of time, especially if staff salaries and fringe benefits
increase as their service tenure lengthens.

As pointed out by Gaes and colleagues (1998), a coherent theory of why 
privately operated prisons would outperform public facilities has yet to emerge.
Instead, one could argue that the private sector has simply drawn upon the
methods used by the public sector with respect to inmate management and
staffing and only attempted to reduce the costs associated with that model. In
effect, the private sector may be applying a more efficient model that is
essentially mimicking the public sector. This is most obvious in facilities at
which former public-sector managers have been recruited by the private sector
to manage the private facilities. Should this approach be considered by
policymakers, the future of privatization may be very limited as the public sector
in turn copies the private sector's methods.

For these reasons it may be concluded that there are no data to support the
contention that privately operated facilities offer cost savings over publicly
managed facilities. Similarly, no definitive research evidence would lead to the
conclusion that inmate services and the quality of confinement are significantly
improved in privately operated facilities. It is clear that private prisons can
function as well as public-sector prisons for certain types of inmates (such as
minimum security) and that they are aggressively pursuing a share of the
multibillion-dollar prison and jail industrial complex.

----------------------------

Chapter 4

The National Survey of State Prison Privatization

Background

A major conclusion one can draw from the research review is that limited
information exists on the performance of most privately operated facilities. The
National Council on Crime and Delinquency (1998) estimates that only 13
privately operated facilities have undergone contemporary evaluations of their
performance in comparison to public facilities. This is less than 1 percent of all
prisons now operating in the United States and about 20 percent of the private
prisons. To secure a more comprehensive overview of all privately operated
prisons, a national survey was funded by the Bureau of Justice Assistance
(BJA), U.S. Department of Justice, to develop a more comprehensive review
of the private prisons. The methodology and results of the survey are presented
in this chapter. 

Survey of Public and Private State Facilities

Methodology

In late 1997, private correctional management firms were asked to participate
in the national survey of state prison privatization. The firms received copies of
the survey instrument for distribution at their facilities.[15] The survey was
based on a format used by the Bureau of Justice Statistics (BJS) in its Census
of State and Federal Correctional Facilities, 1995 (Bureau of Justice Statistics,
1997b).[16] By using the BJS survey, comparisons could be made directly
between the public prison population for midyear 1995 and the private prison
population as of December 31, 1997. 

Information from privately operated state facilities was gathered during the first
quarter of 1998. Survey respondents were asked to provide information from
calendar year 1997 and, in many instances, details specifically for December
31, 1997. Ten private companies were identified as managing at least one
operational state prison. Three of the ten firms chose not to participate in the
survey.[17] These three firms operated five state facilities. The seven remaining
management firms were identified as managing 76 state facilities either in
operation or under construction. Of those 76 state prison facilities, 4 were not
open during the timeframe covered by the survey instrument and 7 of the
facilities did not return questionnaires before data collection and analysis began.
Three international facilities were originally identified as juvenile confinement
facilities in the data analysis, bringing the final tally to 7 operators of 65 private
prisons. The Corrections Corporation of America and Wackenhut Corrections
Corporation manage 49 of the 65 private state facilities identified.

Inmate and Facility Characteristics

Table 8 summarizes inmate characteristics for the 65 private facilities included
in the survey. A total of 46,120 inmates were housed in privately operated state
prisons on December 31, 1997. More than 90 percent were male, a
percentage comparable to the inmate population at federal and state public
facilities at midyear 1995. As in public facilities, a total of more than 60 percent
of all persons held in private state facilities were black or Hispanic.

Data provided in table 8 and table 9 also indicate that the private sector has yet
to penetrate the market for housing maximum/close-custody prisoners. More
than 93 percent of incarcerated inmates at private state prisons were medium-
and medium/low-custody inmates (table 8). Only 2 facilities out of 65 were
identified as maximum-security institutions, with 1 located outside of the United
States (table 9).[18] Medium-security institutions accounted for the largest
number of private state facilities sampled: 38 of 62 were medium security, and
25 were minimum or low-level security. Approximately three out of four
facilities housed exclusively male inmates--not surprising given the composition
of public prison populations. Seventeen percent of the private state facilities
housed both sexes; 8 percent housed females only. Approximately 75 percent
of the male inmate population was housed in exclusively male facilities; the other
approximately 25 percent was housed in facilities for both sexes. The female
private prison population was split evenly between females-only institutions
(50.6 percent) and mixed housing (49.4 percent).

The two maximum-security facilities were large institutions, housing 1,000
inmates or more. Minimum-security facilities tend to be much smaller, with 72
percent housing fewer than 500 inmates. The average daily populations of
medium-security prisons ranged from as low as 106 inmates to as high as
1,600. About 50 percent of all inmates in private facilities (22,674) were
housed in medium-security institutions; 44.2 percent (20,379) were detained in
minimum-security institutions. Only 4.6 percent of the inmates (2,111) were
confined in maximum-security prisons and all were male.

Table 9 provides information about the age, average daily population, and
function of private state facilities. The majority of institutions (83.1 percent)
were confinement institutions that manage general adult populations. Substance
abuse treatment and work release/prerelease were named in 21.5 percent of
the cases as the primary facility function; persons returned to custody was a
primary facility function in 18.5 percent of cases. Data on the ages of the
facilities attest to the recent emergence of the private corrections industry; for
example, nearly 90 percent of state facilities sampled were constructed within
the last 10 years. 

Programming

The 65 private state facilities surveyed produced an impressive record of
programming activities (table 10). All of these facilities maintain some type of
work, education, and counseling program for inmates. Facility support projects
such as office work, food service, laundry, and building repair engaged inmates
at all institutions surveyed. In addition, public works assignments were reported
for 43 percent of the facilities. Nearly 22 percent of the private facilities
reported other types of work programs, most notably work in education and
community service. A number of facilities support private industry joint
ventures or free world industry projects that have the potential to aid inmates in
postrelease transition. About 64 percent of all inmates at private facilities
participated in one or more work programs as of December 31, 1997, a similar
percentage to those who participated in work programs in public institutions at
midyear 1995.

More than 96 percent of the private facilities provide both secondary
educational programs (including the general equivalency diploma) and basic
adult education. A large percentage (81.5 percent) also provide some type of
vocational training. Special educational programs for inmates with learning
disabilities were available at 47.7 percent of the private facilities, and 43.1
percent offer college-level coursework. Overall, 38.3 percent of private facility
inmates were participating in some form of educational programming on
December 31, 1997. This finding indicates a higher private facility participation
rate on December 31, 1997, than that at public facilities (23 percent) in
midyear 1995 (table 10).

Drug and alcohol awareness programs were available at almost every private
institution surveyed, as were life skills/community adjustment counseling.
A high percentage of the private institutions also provide employment
consultation (81.5 percent), psychological or psychiatric counseling (70.8
percent), and parenting and child-rearing skills (53.8 percent). Data from public
facilities also reveal a high percentage of facilities that maintain a variety of
counseling programs. Corresponding completion or attrition rates were not
available; thus the participation figures can be misleading about the positive
influence of such programs.

Staffing and Employment

Private facilities reported a total of 13,344 regular and nonpayroll support staff
(table 11). The number of full-time, or regular, staff ranged from as low as 19 at
the smallest institution to 532 at the largest. Correctional officers accounted for
63.2 percent of employees at private facilities in 1997; a similar percentage
were employed as security staff at public correctional facilities. Professional
treatment staff accounted for 12 percent of private correctional employees,
followed by clerical (7.9 percent), educational (5.8 percent), and maintenance
and food service (5.5 percent).

Private state prisons have higher proportions of minority employees compared
with public prisons. Fifty-three percent of the staff at private facilities were
white (table 11), whereas 31.7 percent (table 8) of the inmate population was
white. At public facilities, the corresponding figures in 1995 were 71.3 percent
(table 11) and 35.5 percent (table 8), respectively. The racial composition of
staff to inmates was similar for blacks at both types of facilities. Blacks
comprise 22.4 percent of the staff and 43.9 percent of inmates at private state
prisons versus 20 percent of staff and 47.7 percent of inmates at public
facilities.

Hispanics, on the other hand, comprise 14.4 percent of the inmate population at
federal and state public facilities but only 6.3 percent of the correctional staff.
Among the 65 private state facilities surveyed, Hispanics made up 20.7 percent
of the inmate population and 18 percent of the staff. When the three facilities
located in Puerto Rico were excluded from the analysis, the private facilities still
had a larger percentage of Hispanic staff (13 percent staff and 17 percent
inmate population) than those employed at public facilities.[19]

Table 12 displays, by private state facility, basic salary information and the
number of employees hired, terminated, tested for drugs, and unionized. The
average starting salary for correctional officers in 1997 was $17,514.[20] U.S.
Corrections Corporation reported the lowest average starting salary at
$14,824; Wackenhut Corrections Corporation had the highest at $18,785. The
number of staff hired and terminated is largely driven by the number of facilities
in operation and facility size--large and medium-sized institutions tend to have
higher staff turnover rates. Only one private facility in the United States is
unionized. In contrast, three of the four unionized facilities were international
prisons operated by Wackenhut Corrections Corporation and located in
Australia and the United Kingdom. CiviGenics is the only operator that does
not have an employee drug testing policy. 

Inmate Violations and Deaths

Table 13 compares the number of major infractions at public and private
institutions per 1,000 inmates, including staff assaults, riots, fires, and other
disturbances. The table reveals a greater number of inmate-on-inmate assaults
per 1,000 inmates at private prisons (35.1 percent) than at public facilities
(25.4 percent). Assaults resulting in inmate deaths were extremely rare at both
types of institutions. Rates of assaults on staff, riots, fires, and other
disturbances are comparable for private and public facilities. A total of 45
escapes occurred at 14 private facilities between January 1, 1997, and
December 31, 1997. The rate of escapes per 1,000 inmates for the 62 private
facilities is 1.06 percent. BJS's Census of State and Federal Correctional
Facilities, 1995 reported that the number of inmate deaths rose from 2.4 per
1,000 state inmates in 1990 to 2.7 in 1995. The death rate at privately
operated prisons is considerably lower at 0.7 per 1,000 inmates for the same
time period. However, as with all of these comparisons, they cannot be used to
conclude that either a private or a public prison is superior to the other as this
analysis cannot control for all factors that influence these performance
measures. However, later in this chapter a reanalysis of private and public
facilities is conducted controlling only for medium- and minimum-security
facilities.

Disciplinary Resources

Data on disciplinary resources are limited due to the absence of automated data
collection systems at the facilities. Only 23 facilities maintained an automated
data collection system to count the number of assaults, escapes, deaths,
disturbances, staff turnover, inmate participation in programs, and so on.
Twenty of those 23 facilities had performance monitoring capabilities. Two
private management firms, CiviGenics and Management Training Corporation,
operated minimum-security, specialty-function prisons that did not maintain
disciplinary, protective custody, or administrative segregation units (table 14).
Most Corrections Corporation of America facilities operate disciplinary and
administrative segregation units, as do the majority of Wackenhut Corrections
Corporation facilities. On December 31, 1997, 95 percent of the inmates
consigned to disciplinary action units and 90 percent held in administrative
segregation were housed in either a CCA or Wackenhut Corrections
Corporation institution. A smaller number of facilities (20) operated a distinct
protective custody unit. All inmates within protective custody were housed in a
CCA or Wackenhut Corrections Corporation institution.

Lockdowns were not a primary means of discipline or control at the majority of
privately operated institutions surveyed. The 65 facilities together reported 67
lockdowns for a total of 394.5 days between January 1 and December 31,
1997. However, the majority of the days in lockdown (282) occurred at only
three medium-security facilities. One Corrections Corporation of America
institution reported three facility lockdowns for 50 days each and two
Wackenhut institutions reported nine facility lockdowns for a total of 232
days. The remaining facilities together averaged about 1.8 days in lockdowns
over the course of the year.

Court Orders and Consent Decrees

As of December 31, 1997, five private facilities were under a state or federal
court order or consent decree to limit the number of inmates they could house;
one was a women's medium-security prison. Seven facilities were reported to
be under court order or consent decree for the totality of conditions at their
facilities,[21] with an additional two facilities under court order or consent
decree for specific conditions (table 15).

Education was the most frequently cited specific consent decree condition,
affecting seven private facilities, followed by medical facilities (6), administrative
segregation (6), staffing policies (6), inmate classification (6), and grievance
policies (6). At public state facilities, crowding was the most often cited
condition (213), followed by medical facilities (139), library services (129), and
staffing (118).

Reanalysis of Survey Data Controlling for Facility Security Level

The previous analysis suggests that private facilities do not differ substantially
from publicly operated facilities, with three possible exceptions. First, the
number of staff assigned to private facilities is approximately 15 percent lower
than the number of staff assigned to public facilities (28 per 100 inmates in
private facilities versus 32 per 100 inmates in public). Second, management
information system (MIS) capabilities appear to be lacking in private facilities.
Third, the rate of major incidents is higher at private facilities than at public
facilities.

Recognizing that the 1995 public facility survey includes all types of facilities
and that the private facilities are primarily medium- and minimum-security
facilities, a better analysis would be to attempt to make direct comparisons
between medium-security and minimum-security public facilities with the same
type of private facilities. 

Tables 16-20 reinforce the earlier analyses and show that it cannot be
concluded that a private or a public prison is superior to the other. In these
tables, responses from public and private facilities that identified themselves as
maximum or higher custody levels have been eliminated. The results are similar
to the original analysis with one major exception: in this comparison, the
privately operated facilities have a much higher rate of inmate-on-inmate and
inmate-on-staff assaults and other disturbances. These differences may be
related to other factors such as reporting standards or the fact that correctional
facilities often experience management difficulties when they are newly opened.
The CCA Youngstown facility is a good example of such difficulties (Clark,
1998). However, insufficient training for and lack of qualified staff in key
positions may also be a valid explanation for these differences. This would be
consistent with the claims of critics of privatization who charge that private
prisons are inadequately staffed by inexperienced and poorly trained
correctional officers. Coupled with a lack of programs and work assignments,
higher rates of misconduct from inmates predictably occur. Nevertheless, the
notion that privately operated prisons are safer or better managed than public
facilities is not supported by these results.

----------------------------

Chapter 5

Summary

The Diminishing Returns on Privatization

This report supports the basic premise that private facilities appear to perform
at the same level of efficiency as public facilities. Although they tend to house a
higher proportion of minimum-custody inmates in relatively new facilities,
private facilities tend to have the same staffing patterns; provide the same levels
of work, education, and counseling programs for inmates; and have the same
rates of serious inmate misconduct as public facilities. The few credible impact
studies show more similarities and fewer differences between the two methods
of operation. 

What seems to have evolved in the United States is a privatization model that
essentially mimics the public model but achieves modest cost savings, at least
initially, by making modest reductions in staffing patterns, fringe benefits, and
other labor-related costs. There is no evidence showing that private prisons will
have a dramatic impact on how prisons operate. The promises of 20-percent
savings in operational costs have simply not materialized. Even if they had, the
limited market share of less than 5 percent for private prisons would have had a
limited impact on prison budgets. For example, assume that 10 percent of a
state's prison system becomes privatized and that each private prison produced
a 10-percent savings in operational costs. Even at this level, the overall impact
on a state prison budget would be only 1 percent (10 percent of 10 percent=1
percent). This amount of savings will not revolutionize modern correctional
practices.

Today it appears that achieving even a 10-percent market share will prove to
be increasingly difficult for several reasons. The growing number of
well-publicized stories of poor performance in private prisons is growing (e.g.,
Colorado, Louisiana, Oregon, South Carolina, and Texas). The problems
associated with the CCA-operated Northeast Ohio Correction Center in
Youngstown, Ohio, have dramatized how badly a privatized prison can be
operated. In this facility, 17 inmates were stabbed, 2 were murdered, and 6
escaped in the first 15 months of operation. Operational flaws were linked to
inexperienced staff, inadequate training, and a willingness on the part of prison
authorities to accept inmates who should not have been transferred to the
facility (Clark, 1998). If nothing else, the private sector has shown that it is as
equally capable of mismanaging prisons as the public sector.

These problems suggest that the sales division of the private sector may well be
outperforming the production division. It may well be that the difficulties private
prisons are experiencing may increase simply because they, like prisons in the
public sector, are finding it increasingly difficult to recruit competent staff.

The Future of Privatization

Despite these criticisms, privatization still provides a vital function within the
correctional system. Although the private sector has been unable to keep its
promise of greatly improving prison operations, its mere presence has had a
significant impact on traditional prison operations. Gaes and colleagues (1998)
acknowledge that privatization has forced the public sector to reexamine how it
conducts business. Certainly in those markets where correctional officer salaries
and fringe benefits have been excessive, privatization has fostered a
reexamination of those costs, which has led to cost savings. In this sense,
privatization has served as a catalyst for change by demonstrating other means
for doing the business of corrections. As limited as they are, however, these
cost-saving innovations should not be the only items on the privatization
agenda.

It would be extremely interesting and productive for the private sector, in
partnership with the public sector, to become the vehicle for testing far more
substantive changes in correctional policy in a number of areas-not just prisons
and jails. For example, an extremely promising strategy would be for the private
sector to test the long-term effects of state-of-the-art correctional programming
in reducing recidivism in the areas of education, vocational training, and various
forms of counseling, both in prison and after release. One could also test the
effects of reducing prison terms and other correctional policies using the
flexibility of the private sector. Finally, new management techniques, staff
training, and facility designs could be tested by the private sector under
controlled conditions. All such innovations should be directed at reducing the
current ineffective correctional practices rather than producing a system that is
less expensive but as ineffective as the public-sector system.

----------------------------

Notes

1. The term "correctional facilities" refers to jails and detention centers that do
not house state or federal prisoners.

2. During the North American phase of transportation, some 50,000 convicts
were shipped across the Atlantic and sold as agricultural laborers.

3. The modern "penitentiary," based on the ideas of Jeremy Bentham,
18th-century English philosopher, was first established in Philadelphia and New
York in the United States. It became the prototype of prison reform efforts in
the late 18th and early 19th centuries. Solitary confinement for personal
reflection, combined with hard labor, became the cornerstones of this new
approach.

4. Ethridge and Marquart (1993) identify other forms of private inmate labor
such as the piece-rate system and public account system. Under the piece-rate
system, inmates worked inside prison walls under the supervision of state
employees. In the public account system, prisoners worked under state
supervision and produced goods for state institutions. However, the convict
lease system was considered the most profitable and the most brutal and
corrupt of all inmate labor systems.

5. McCrie (1993) refers to the case of the privatized prison in Huntsville,
Texas, which was the subject of a legislative investigation into prison
conditions. The investigation resulted in modifications to the leasing system in
which the state maintained control of the penitentiary and convicts but continued
contracting arrangements with private interests beginning in 1883.

6. Health-care services were the exceptions. Smaller jails and prisons could not
economically provide the full range of specialized care by competing for staff in
the health-care market. These services were usually contracted out to local
hospitals.

7. In addition to juvenile and INS detention centers, since the late 1960s
private firms have established sites with various low-security facilities and in the
"less visible" regions of the adult and juvenile penal systems, such as community
treatment centers and halfway houses (McDonald, 1994: 30).

8. For instance, privately operated facilities for juveniles tend to be small and
residential with flexible programming catering to individual needs (McCrie,
1992). 

9. The leading case on this is West v. Atkins, 108 S. Ct. 2250 (1988). The
case addresses whether private persons under contract with the state can be
sued under (s) 1983 or whether only public employees can be sued under this
federal law. By deciding that such persons can be held liable and are acting
under the "color of the law" when performing services, the court expanded the
number and categories of individuals who may be sued under (s) 1983. In 1997
the U.S. Supreme Court held that private prison guards employed by a private
firm are not entitled to qualified immunity from suit by prisoners charging a (s)
1983 violation (Richardson v. McKnight).

10. The hidden costs of a public correctional facility typically include external
administrative overhead, legal services, court-ordered judgments, property
insurance, staff training, and other items not usually part of the direct budget.

11. The three private correctional facilities were: (1) RCA Services'
Weaversville Intensive Treatment Unit, Pennsylvania; (2) CCA's Silverdale
Detention Center, New Jersey; and (3) Buckingham Security Limited's Butler
County Prison, New Jersey. The three public prisons were: (1) Pennsylvania
Department of Welfare's North Central Secure Treatment Unit; (2) New
Jersey's Warren County Correctional Center; and (3) New Jersey's Salem
County Prison.

12. Weighted 3-year averages were calculated by dividing each facility's 3-year
average cost by the number of services available, then multiplying the
cost-per-service figure for a particular facility by the number of services
available at the facility with the largest number of services. 

13. After the LBB report was released, the Texas Department of Criminal
Justice negotiated contracts with CCA and Wackenhut Corrections
Corporation to operate two prerelease facilities each. At the time of the Sunset
report, the four private units had been in operation for over a year and actual
cost data were available.

14. Care was defined as services of medical personnel: doctors, dentists,
psychologists, and dietitians as they perform treatment consistent with a basic,
minimum level of service. Justice referred to adherence to the rules by staff
inside the prison-sanctions were to be clear, specified in advance, and applied
consistently with due process.

15. Each firm was asked to categorize the type of facility in operation (e.g.,
state prison, jail, juvenile, detention, or community). This, combined with
information from secondary sources such as Thomas (1997b) and Camp and
Camp (1997), allowed NCCD researchers to distinguish state prisons from
other types of facilities.

16. For comparative purposes, data from the BJS 1995 census are presented
together with NCCD's 1997 figures. 

17. One operator did not participate because of pending litigation. The other
two did not respond to requests for information.

18. Both maximum-security institutions are operated by Wackenhut
Corrections Corporation. A number of other institutions, however, house
maximum-custody inmates but identify themselves at lower security levels.

19. Data from the three privately operated state facilities in Puerto Rico were
adjusted to eliminate potential bias. The three prisons consisted of 877 Hispanic
staff and 2,267 Hispanic inmates. The results again indicate a higher
staff-to-inmate ratio for Hispanics in private state prisons.

20. Based on 62 facilities reporting.

21. Four of the five facilities that reported being under court order or consent
decree for overcrowding are also under order for other specified conditions.

----------------------------

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----------------------------

Appendix

Guidelines for Contracting for a Private Prison

Public Strategies for Private Prisons* 

Types of Privatization

Option 1: State owns existing prison and hires private contractor to operate the
publicly owned facility (often used for halfway houses and proposed for the
District of Columbia).

Option 2: State owns existing prison and sells facility to private vendor. Private
vendor enters into contract with state to house inmates in the now privately
owned and operated facility (CCA contract with the District of Columbia's
Correctional Treatment Facility).

Option 3: State constructs new prison according to its specifications and then
hires private contractor to operate the publicly owned facility (Ohio and
Michigan Departments of Corrections).

Option 4: State funds construction of new prison and owns the facility. State
awards contract to private vendor to build and operate the facility according to
the vendor's specifications (often used for Texas Department of Criminal Justice
State Prisons).

Option 5: State funds construction for all facilities. State builds and operates a
portion of the facilities funded. Local government selects private vendor to build
and operate outstanding portion of facilities funded (Texas state jails).

Option 6: Private contractor constructs new prison and enters into contract with
state in which facility is located to house the state's inmates in the privately
owned and operated facility.

Option 7: Private contractor constructs new prison and enters into contracts
with states other than the one in which the facility is located to house inmates in
the privately owned and operated facility (CCA's Northeast Ohio Correctional
Facility in Youngstown, Ohio).

Option 8: Local municipality funds construction of facility through the
development of a not-for-profit corporation, which, after receiving state
approval, sells tax-exempt bonds to fund the construction and equipping of a
facility to house inmates from other jurisdictions (Texas).

Option 9: Consortium of counties owns or has private facility and operates to
house inmates from those counties (Tuscaloosa County, Alabama).

Option 10: State contracts with a private vendor to build and operate a prison
in another jurisdiction (proposed in Oregon).

Key Points

The National Institute of Justice (1987) report entitled Issues in Contracting for
the Private Operations of Prisons and Jails provides an excellent early overview
of facility privatization issues. Much has been learned about private corrections
in the United States in the years since that report. In this section, key points of
the NIJ report are updated to include recommendations and additional key
points based on present-day practices and experiences.

Public Policy Considerations

1. Before contracting with a private service provider, a state should undertake
a systematic, detailed analysis to determine if, and under what conditions,
contracting is likely to be feasible for the correctional agency. This should
include an examination of statutory authority, current state prison costs,
crowding, performance standards, legal issues, availability of vendors, ways to
reduce the likelihood and consequences of contractor defaults, and the attitudes
of political stakeholders.

2. A public policy on privatization should be developed that provides guidance
on key issues such as contract length, types of private services to be requested,
private facility purchase options, performance standards, and reassurances to
public employees.

3. If a government's goal in contracting is to obtain new beds quickly at a
lower construction cost, the private sector offers an attractive option. However,
if the government seeks a more economical operation, the evidence available to
date suggests that private contracting does not necessarily save a significant
amount of money.

4. The government should have a long-range plan that specifies how
privatization fits into the agency's plans and to what degree privatization will be
pursued, such as what percentage of agency facilities or services will be offered
to private contractors.

5. Public employees should be given the opportunity to participate in the
competitive process and to win a contract if it can be proved that the public
offer is the most suitable and the most appropriate choice.

6. A key issue that must be addressed by the public sector is What is success
and how do we determine if we are successful in the delivery of correctional
services? The current public trend of determinate sentencing policies bears
close watching to ensure that privatization does not lead to harsher sentencing
policies, increased recidivism, and further increasing of the scale of
imprisonment.

Protection of the State and the Inmates

1. Careful attention must be devoted to ensure that each contract provides
adequate protection of inmates' rights and also protects the state from liability
claims.

2. Speculative prisons, proposed by economic development proponents,
jeopardize the government's debt-incurring ability because, if a speculative
prison built with public trust bonds fails, the government ultimately becomes
responsible for repayment of the debt.

3. Private prison contractors will not be able to escape liability under Section
1983 of the Civil Rights Act, and the contracting government entity will be
unable to protect itself from lawsuits resulting from the wrongful acts of the
selected operator (Richardson v. McKnight). The government can reduce, but
not eliminate, its vulnerability to privatization-related lawsuits by specifying in
law, and subsequent-ly in the contract, that the government be indemnified
against any damage award and for the cost of litigation.

4. The government may consider requiring that a significant performance bond
be posted or a trust fund established to indemnify it in the event of a
contractor's financial or other problems. The agency will need to determine
whether the cost of the additional protection is necessary.

The Process of Privatization

1. When contracting, the use a competitive bidding process is highly
recommended. This will help to avoid accusations of favoritism or impropriety.
To improve the competitive climate the agency can: 

o Develop and maintain a list of potential bidders.

o Provide public policy and rules for procurement of private facilities and
services.

o Permit both private nonprofit and for-profit organizations to bid.

o Assist with the financing of the design and construction.

o Provide an ample window of opportunity for development of responses to
the agency's request for proposal (RFP). The RFP is sent to potential bidders
to solicit an offer.

2. The agency must identify all the cost components of the public operations
and the oversight functions so that they can be adequately addressed in
negotiations and during the agency's budget planning process.

3. The agency may mandate additional certification or credentials in critical
areas such as: firearms, chemical agents, self-defense, emergency response
apparatus/weaponry, health care, and transportation. 

4. FBI felony background investigations of vendor employees and contractors
must be required. Personnel standards and training should be comparable to the
agency's standards or American Correctional Association (ACA)
standards--whichever are higher.

5. Information about the proposal evaluation process should be included in the
RFP. Evaluation criteria include, but are not limited to:

o Vendor's experience and past success in similar undertakings.

o Design and construction details.

o Timetable and availability.

o Staff qualifications.

o Qualitative review of operational plan details and program proposals.

o Vendor's financial condition and references.

o Cost proposal.

6. The agency must specify and agree to a method for resolving any
contractual differences that may emerge before the service commencement
date.

Contract Provisions

1. RFPs and subsequent contracts should specifically state: (a) the
responsibilities of each party and (b) what levels of performance are expected
to ensure compliance with performance standard policies, procedures, and
practices. The use of nationally recognized standards like those from ACA and
the National Commission on Correctional Health Care (NCCHC) is
recommended. 

2. Governments can control contract costs by stipulating that per diems may
not rise above the urban consumer price index. 

3. Contracts should include specific staffing pattern information, inmate
activity plans, treatment plans, and detailed operational plans. For example,
staffing levels are determined by calculating the minimum personnel required for
three shifts, the number of days per week for each person, and a relief factor or
ratio. In addition, mandatory posts or pull posts (which are not always needed,
such as visiting room officers), support positions, and outside subcontractors
should also be specified in contracts.

4. RFPs and contracts should also identify sanctions or penalties that will apply
for inadequate performance. Liquidated damages may be tied to failure to meet
ACA mandatory standards and NCCHC standards, failure to staff adequately,
inmate idleness, failure to meet court orders, improper use of force, or failure to
meet any other performance standard as defined in the contract. 

5. A variable cost structure that is fair for all parties should be built into the
contract so that no misunderstanding will arise regarding cost for vacant beds
and/or additional inmates beyond the specified ceiling. 

6. The payment structure should be based on a pricing system such as single
fixed price, fixed unit-price award, or cost plus. A per diem for actual inmate
days is often preferred by states, as it addresses only beds used. There should
be a provision to contract for additional services required by the state, court
order, or other reason. Performance incentives may be desirable to include in
the payment section.

7. Prison contracts should be rebid on a relatively short basis, such as every 3
to 5 years. State laws may mandate a maximum contract length.

8. Governments should include provisions in the contracts requiring that the
contractor provide advance notification of issues that may result in a major
impact on the facility, such as the end of a union contract period, major worker
grievances that could force a work stoppage or slowdown, change of
ownership or in rating of the facility, loss of insurance coverage, and defaults by
subcontractors.

9. The contractor should rely on community resources for operating the facility
whenever possible by, for instance, hiring local people and buying supplies and
services locally.

Facility Concerns

1. Contracting for new or reoccupied facilities may entail fewer problems
(e.g., personnel problems) than turning over an existing facility to a private firm.
An important exception may be the case of trying to convert a jail into a prison.
The experiences of several states (especially Texas) clearly demonstrated the
problems with trying to manage long-term state prison incarcerates in former
county jail lockups, often with poorly trained personnel.

2. Governments contracting to replace existing facilities should take steps to
resolve personnel problems, including:

o Requiring contractor to give employment preference to displaced staff.

o Providing transfer, retraining, and outplacement services to employees not
choosing to work for the contractor.

o Carefully calculating and making provisions for disposition of benefits (e.g.,
retirement benefits and vacation and sick leave accrual).

3. Governments establishing any contract facility should develop a public
relations plan, because good public relations are crucial for community
education. The government should fully inform community leaders and should
also keep correctional employees fully informed of contract deliberations. The
media should be made aware of the contracting initiative at an early stage.

Selection of Inmates

1. The RFP and contract should explicitly describe the type and level of
offender and the main construction and security features the agency deems
necessary to confine the prisoners appropriately. The contract should be based
on the state's inmate classification policy and its operational definitions of the
privileges and level of supervision required by the custody level of the inmate
population. This will include a section on special populations such as inmates
with AIDS, the mentally ill, inmates under protective custody, and pregnant
inmates.

2. The state should contractually require the vendor to accept all prisoners in
certain categories (e.g., medium security) for the duration of the contract period
up to the agreed maximum number of inmates to be incarcerated at any given
time. The state should also mandate classification parity among public and
private facility inmate populations. This will protect the state against "cherry
picking," or the selection of only the best inmates by the private operator.

3. Selection of inmates for placement in a contract facility, and decisions about
their movement, is the government's responsibility as described in the contract.
Criteria should be mutually agreed upon to avoid misunderstandings. The
contract should include the provision that the state makes the decisions about
inmate reassignment, reclassification, and transfer to and from the facility.
Public officials should make the decisions, based on vendor input, whether to
award sentence credit and whether to release an inmate.

4. Minimum and maximum inmate population levels should be stated in the
contract to facilitate planning and cost estimates.

5. States contracting for large institutions should specify in the RFP and the
contract that the selected private vendor should use unit management--a system
of smaller population subunits within a facility.

Level of Authority

1. Government officials must ensure that disciplinary hearings conducted by
the contractor follow legally required practices when discipline problems occur.
A private firm should adopt the policies and procedures used by the agency.

Major disciplinary actions should be formally approved by the contract
monitor. 

2. Private companies should closely adhere to the same type of procedures
used by the government agency. Where necessary, contractor discretionary
actions involving inmate rights and discipline should be made in the form of a
recommendation to the agency or official for approval.

3. In the event of an escape attempt, private prison employees should use
reasonable and appropriate apprehension measures according to state law.
Generally, once an inmate has left the facility's property, law enforcement
officials should become responsible for the ultimate capture and return of the
escapee.

4. Private operators should be required to obtain an agreement with local law
enforcement or other government entities to provide assistance in the event of
an emergency. Private operators are responsible for the associated costs of
such an emergency response.

Contract Monitoring
 
1. The state should assign a full-time contract monitor to work onsite at the
private facility.

2. The state should plan for this critical task and implement an effective system
for continuous contract monitoring. Planning occurs prior to the issuance of an
RFP and is written in the contract. This should include: 

o Regular timely reports showing tabulations, analyses of performance
standards, and the results of inspections.

o Regular onsite inspections using a detailed checklist based on the contract
performance standards, rating categories, and guidelines on how to complete
the inspection.

o Periodic documented fire, safety, health, medical, and sanitation inspections.

o Participation in disciplinary hearings concerning major rule infractions,
approval of inmate classification actions, and sentence and time credit issues.

o Provision for regular interviews with inmates to obtain feedback on such
performance standards as treatment of prisoners; amount of internal security;
drug use; and helpfulness and adequacy of educational, work, treatment, and
recreational programs.

o Annual indepth, onsite inspections by a team of experts, covering the various
procedures used and the results of periodic reports on the facility's quality of
services based on performance standards.

o Provision for prompt review by government officials of the written
inspections, identification of a corrective action plan with due dates, and
followup to determine compliance.

o Provision for relating information from the monitoring process for
consideration during contract renewals.

3. The same monitoring procedures should be applied to publicly operated
and contractor-operator facilities. Governments can then use the information as
a basis for comparisons and making future privatization decisions.

Contract Evaluation

1. The government and the private operator should cooperate on systematic,
comprehensive evaluations of the cost and operational effectiveness of the
contract. The government should require that a comprehensive evaluation be
made of the degree of success of the contract within a few years of the contract
award. If possible, the contracted facility should be compared with publicly
operated facilities.

2. Agreement on the success of prison privatization is important. Although the
most discussed comparison usually involves cost of services, other variables
may have greater bearing on the overall degree of success of the privatization
efforts. Quality-of-service analyses and studies of recidivism and public safety
could become critical review components. One researcher's classification of
important dimensions of prison services and quality of confinement was defined
by Logan (1991) as: 

o Security: With respect to inmates, staff, and community.

o Activity: Assurance that inmates are not idle; promote rehabilitation.

o Safety: Environmental hazards, sanitation, freedom from disease.

o Justice: Rule of law inside prison; fairness.

o Order: Enforcement of inmate compliance; assurance of orderly running
of the institution. 

o Care: Medical, dental, psychological.

o Conditions: Crowding, health risk.

o Management: Staff capability, efficiency.

Summary

Success in privatizing prisons is highly dependent on the care taken in
developing a public policy that includes a long-range plan, a management
procurement process, identification of all of the state's costs, an RFP, a
contract that includes performance standards, guidelines for choosing a
contractor, details on executing the contract, and standards for monitoring the
contract. 

Sample Contract Performance Standards

1. Health and Safety: The facility is in compliance with all local, state, and
federal fire and health codes. The facility retains on file completed inspection
forms from these authorities that are available for review.

2. ACA Accreditation: Owner/operator will become a candidate for ACA
accreditation within 9 months of the initial contract and achieve accreditation
within 36 months of the services commencement date.

3. Emergency Procedures: The facility has in place procedures to follow in the
case of an emergency and has provided a copy of such procedures to the
department.

4. Sanitation and Hygiene: The facility provides equipment and supplies to
ensure the maintenance of a clean and healthy environment. Hygiene items are
provided to inmates for their personal use through the commissary or through
indigent services as necessary.

5. Health Services: Medical, mental health, and dental services provided are
comparable to those of the department in compliance with contractual
obligations and ACA standards. 

6. Food Services: Food services provided for inmates include a master menu
schedule, special diets meeting medical or religious requirements, and three
meals served daily at regular times during each 24-hour period with no more
than 14 hours between the evening and morning meals.

7. Property: The property matrix of the Department of Corrections (DOC) is
utilized. The facility will provide for the secure storage of inmate property. If
the property is lost or damaged while under the care of the facility, inmates can
use the facility's grievance process to seek reimbursement for the lost or
damaged property.

8. Inmate Services: Laundry services are available to inmates and the facility
provides a commissary for inmates comparable in goods and prices to DOC
facilities. Inmates are allowed correspondence and mail delivery services in
accordance with policy; telecommunication costs for inmates are comparable to
those in DOC-operated facilities; and visiting policies and practices enable
inmates to maintain ties with families.

9. Grievance Procedures: Inmates are afforded access to a reasonable,
impartial, and nondiscriminatory procedure, which includes a final level of
appeal to the state. The facility is responsible for responding to grievances on
matters occurring during the inmates' incarceration in the facility except during
sentence administration and classification to a higher or lower security facility.

10. Disciplinary Procedures: The facility follows DOC's disciplinary policy, or
one comparable with disciplinary action and reasonable sanctions proportionate
in relation to the violation. The facility provides complete, accurate, and
detailed reports to the contract monitor within 7 working days of the finalized
disciplinary action.

11. Inmate Activity: A minimum of 80 percent of eligible inmates are
productively occupied outside their cells for at least 6 hours per day or 30
hours a week in work, educational, vocational, or rehabilitative programs.
Inmate labor may be used for facility operations and maintenance but not for
the personal benefit of any employee.

12. Inmate Programs: The facility offers at least basic literacy education, adult
basic education, and general educational development; substance abuse
programs with cognitive approaches and self-help programs; opportunities for
vocational program participation; and other programs as specified in the
contract.

13. Security and Control: The facility provides security and control in
accordance with accepted operating standards. Security measures are
reviewed on a monthly basis to include tool and key control, internal and
external security, search and seizure practices, and emergency procedures.

14. Use of Force: The facility follows DOC's use-of-force policy, reports all
incidents according to policy, and provides written reports in a timely manner as
followup through the contract monitor.

15. Access to Courts: Inmates are afforded access to the courts through the
use of legal materials or a person trained in law or a combination of both. The
law library, where applicable, contains the required legal materials.

16. Case Management: Inmates receive orientation services and meet with
their case managers within the first 10 days to be assigned an earned credit
level and are reviewed every 120 days for adjustment of the level of earned
credit. Case managers have regular contact with inmates and handle requests
for staff and grievances when possible.

17. Inmate Records and Reports: The facility maintains records on individual
inmates. A case manager maintains individual files documenting each inmate's
program goals, employment, earned credit, disciplinary records, programmatic
involvement, and other significant information. Inmate records and time
calculations are monitored/audited by a sentence administration unit.

18. Racial Balance: Racial balance is maintained in accordance with DOC
policy in housing, programs, and job assignments.

19. Urinalysis Testing: Five percent of the inmates are randomly tested for
drug use monthly.

----------------------------

Resources for Appendix 

Archambeault, William G., and Donald R. Deis (1996). Cost Effectiveness
Comparisons of Private Versus Public Prisons in Louisiana: A Comprehensive
Analysis of Allen, Avoyelles, and Winn Correctional Centers. Baton Rouge,
LA: Louisiana State University School of Social Work. 

Bates, Eric (1998). "Private Prisons." The Nation January 5.

Camp, George, and Camille Camp (1997). The 1997 Corrections Yearbook.
South Salem, NY: Criminal Justice Institute.

Culp, Richard (1997). The Privatization of Prisons: The Public Policy Debate.
New York, NY: The City University of New York.

Gilbert, M.J. (1996). "Private Confinement and the Role of Government in a
Civil Society." G.L. Mays and T. Gray (eds.) Privatization and the Provision of
Correctional Services: Context and Consequences. Cincinnati, OH: Anderson
Publishing Company.

Gold, Martin E. (1996). "The Privatization of Prisons." The Urban Lawyer: The
National Quarterly on Local Government Law 28(3): 359-399. 

Greene, Judith (1998). Privatization of Correctional Services: Critical Issues for
State Policy Makers. Minneapolis, MN: Institute of Criminal Justice, University
of Minnesota Law School. May.

Hackett, Judith, Harry P. Hatry, Robert B. Levinson, Joan Allen, Keon Chi,
and Edward D. Feigenbaum (1987). Issues in Contracting for the Private
Operations of Prisons and Jails. Washington, DC: U.S. Department of Justice,
Office of Justice Programs, National Institute of Justice. 

Little Hoover Commission Reports on Crime (January 1998). Beyond Bars:
Correctional Reforms to Lower Prison Costs and Reduce Crime. Report #144.
Sacramento, CA.

Logan, Charles H. (1991). Well Kept: Comparing Quality of Confinement in a
Public and Private Prison. Washington, DC: U.S. Department of Justice, Office
of Justice Programs, National Institute of Justice. 

McDonald, Douglas C. (1992). Private Penal Institutions. Chicago, IL:
University of Chicago Press.

McDonald, Douglas C. (1994). Private Prisons by Private Means. Oxford,
UK: Clarenden Press.

National Institute of Justice (1987). Issues in Contracting for the Private
Operations of Prisons and Jails. Washington, DC: U.S. Department of Justice,
Office of Justice Programs. 

Private Prison Administration (November 1997). Public Strategies for Private
Prisons. Conference Evaluation Summary. Oklahoma City, OK: Private Prison
Administration. 

Richardson v. McKnight. Supreme Court decision June 23, 1997. Ithaca, NY:
Legal Information Institute and Project Hermes, Cornell Law School.
http://www.supct.law.cornell.edu/supct/html/96-318.ZS.html.

Sellers, Martin P. (1989). "Private and Public Prisons: A Comparison of Costs,
Programs and Facilities." International Journal of Offender Therapy and
Comparative Criminology 33: 241-256. 

Thomas, Charles W., Dianne Bolinger, and John Badalamenti (1997). Private
Adult Correctional Facility Census, 10th edition. Gainesville, FL: Private
Corrections Project, University of Florida. 

U.S. General Accounting Office (1996). Private and Public Prisons: Studies
Comparing Operational Costs and/or Quality of Services. Washington, DC.

Washington State Joint Legislative Audit and Review Committee (1996).
Legislative Budget Committee, State of Washington Department of Corrections
Privatization Feasibility Study, Report 96-2. Olympia, WA: Legislative Budget
Committee. 

Wilson, Tim (July 1996). "The United Kingdom Experience." Unpublished
paper presented at the Privatization of Correctional Services Conference,
Toronto, Canada.

----------------------------

Sources for Further Information

For more information on privatized prisons, contact:

Oklahoma Office of the Attorney General, Oklahoma Public Legal Research
System
World Wide Web: www.oklegal.onenet.net/statutes.basic.html

Oklahoma Department of Corrections
3400 Martin Luther King Avenue
Oklahoma City, OK 73111
405-962-6080

American Law Sources
World Wide Web: www.lawsource.com

For more information on correctional services and issues, contact:

Bureau of Justice Assistance
810 Seventh Street NW.
Washington, DC 20531
202-514-6278
World Wide Web: www.ojp.usdoj.gov/BJA

Bureau of Justice Assistance Clearinghouse
P.O. Box 6000
Rockville, MD 20849-6000
1-800-688-4252
World Wide Web: www.ncjrs.org

Clearinghouse staff are available Monday through Friday, 8:30 a.m. to 7 p.m.
eastern time. Ask to be placed on the BJA mailing list. 

U.S. Department of Justice Response Center
1-800-421-6770 or 202-307-1480

Response Center staff are available Monday through Friday, 9 a.m. to 5 p.m.
eastern time.

----------------------------

Bureau of Justice Assistance Information

General Information

Callers may contact the U.S. Department of Justice Response Center for
general information or specific needs, such as assistance in submitting grant
applications and information on training. To contact the Response Center, call
1-800-421-6770 or write to 1100 Vermont Avenue NW., Washington, DC
20005.

Indepth Information

For more indepth information about BJA, its programs, and its funding
opportunities, requesters can call the BJA Clearinghouse. The BJA
Clearinghouse, a component of the National Criminal Justice Reference Service
(NCJRS), shares BJA program information with state and local agencies and
community groups across the country. Information specialists are available to
provide reference and referral services, publication distribution, participation
and support for conferences, and other networking and outreach activities. The
Clearinghouse can be reached by 

o Mail 
P.O. Box 6000 
Rockville, MD 20849-6000

o Visit 
2277 Research Boulevard 
Rockville, MD 20850

o Telephone 
1-800-688-4252 
Monday through Friday 8:30 a.m. to 7 p.m. eastern time

o Fax 
301-519-5212

o Fax on Demand 
1-800-688-4252

o BJA Home Page 
www.ojp.usdoj.gov/BJA

o NCJRS World Wide Web 
www.ncjrs.org

o E-mail 
askncjrs@ncjrs.org

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