Bureau of 

Justice Assistance

Monograph

U.S. Department of Justice

Office of Justice Programs

Bureau of Justice Assistance

EMERGING ISSUES

PRIVATIZED PRISONS

ON
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.

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Office of Justice Programs

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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.
Bureau of Justice Assistance

Emerging Issues on

Privatized Prisons

February 2001 Monograph NCJ 181249

James Austin, Ph.D.

Garry Coventry, Ph.D.

National Council on Crime and Delinquency
Cover photo used with permission from The American Correctional Association.
iii

Emerging Issues on Privatized Prisons

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.
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Emerging Issues on Privatized Prisons

Executive Summary ......................................................................................ix

Current Trends in Privatization .............................................ix

Prior Research Findings on Privatization .............................. x

National Survey Results ........................................................... x

Future Trends ............................................................................xi

Chapter 1 Introduction ............................................................................... 1

Chapter 2 The History of and Key Debates Over Privatization ....... 9

Privatization of Corrections: A Historical Overview ........... 9

The Debate ................................................................................ 13

Chapter 3 Recent Research Regarding Privatization......................... 21

Background............................................................................... 21

Costs........................................................................................... 22

Inmate Services, Quality of Confinement,

and Public Safety ..................................................................... 29

Health Care ............................................................................... 33

Additional Literature .............................................................. 35

Summary ................................................................................... 37

Chapter 4 The National Survey of State Prison Privatization......... 39

Background............................................................................... 39

Survey of Public and Private State Facilities ....................... 39

Reanalysis of Survey Data Controlling for

Facility Security Level ............................................................. 52

Chapter 5 Summary .................................................................................. 59

The Diminishing Returns on Privatization .......................... 59

The Future of Privatization .................................................... 60

Notes ............................................................................................................... 61

References ...................................................................................................... 65

Appendix Guidelines for Contracting for a Private Prison.............. 69

Sources for Further Information ............................................................... 83

Contents
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Emerging Issues on Privatized Prisons

Tables

Table 1 Number of Persons Held in State or Federal

Prisons or Local Jails, 1985, 1990–1997 .................................. 2

Table 2 Prison Operating Costs, Fiscal Years 1980–1994 .................. 3

Table 3 Private Adult Correctional Firms, December 31, 1998........ 4

Table 4 Geographic Distribution of Privately Operated

Correctional Facilities, December 31, 1998............................ 5

Table 5 Geographic Distribution of Privately Operated

Correctional Facilities Outside the United States,

December 31, 1998 ..................................................................... 6

Table 6 Public Strategies for Private Prisons .................................... 14

Table 7 Financial Data for Corrections Corporation of America,

1987 and 1997 ........................................................................... 29

Table 8 Inmate Characteristics at Public Facilities at Midyear

1995 and Private Facilities as of December 31, 1997.......... 41

Table 9 Characteristics of Private Facilities by Level of Security

as of December 31, 1997 ......................................................... 42

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........................... 44

Table 11 Persons Employed in Public State Facilities at

Midyear 1995 and at Private State Facilities as of

December 31, 1997 ................................................................... 46

Table 12 Characteristics of Employment in Private Facilities,

January 1–December 31, 1997 ................................................ 47

Table 13 Major Incidents in Public Facilities (July 1, 1994–

June 30, 1995) and in Private Facilities (January 1–

December 31, 1997).................................................................. 48

Table 14 Disciplinary Resources at Private Facilities,

January 1–December 31, 1997 ................................................ 50

Table 15 State Facilities Under Court Order or Consent Decree:

Public Facilities at Midyear 1995 and Private Facilities

on December 31, 1997 ............................................................. 51
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Bureau of Justice Assistance

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 ................................................................... 53

Table 17 Characteristics of Public Medium- and MinimumSecurity Facilities at Midyear 1995 and Private

Medium- and Minimum-Security Facilities on

December 31, 1997 ................................................................... 54

Table 18 Types and Rates of Participation in Institutional

Programs at Public and Private Medium- and

Minimum-Security Facilities ................................................. 55

Table 19 Characteristics of Persons Employed in Public Mediumand Minimum-Security Facilities at Midyear 1995 and

Private Medium- and Minimum-Security Facilities on

December 31, 1997 ................................................................... 56

Table 20 Major Incidents in Public Medium- and MinimumSecurity Facilities (July 1, 1994–June 30, 1995) and

Private Medium- and Minimum-Security Facilities

(January 1, 1997–December 31, 1997) ................................... 57

Tables (continued)
ix

Emerging Issues on Privatized Prisons

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

❑ It is estimated that worldwide there are 184 privately operated

correctional facilities, which hold 132,346 inmates.

❑ 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.

❑ Another 26 private facilities operate in 3 other countries, with Australia

(12) and the United Kingdom (10) topping the list.

❑ Total revenues allocated to private prisons and jails are estimated at

$1billion.
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Bureau of Justice Assistance

❑ 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

❑ Few studies have been completed regarding the impact that privatizing

prisons has on costs, protection from harm, recidivism, and conditions

of confinement.

❑ A major conclusion reached from the few studies completed is that

privately operated prisons function as well as publicly operated

prisons.

❑ 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.

❑ Management problems that have occurred with privatized prisons

canusually 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.

❑ Evidence shows that the presence of private prisons has encouraged

public facilities to adopt similar cost-saving strategies in staff deployment and procurement policies.

❑ 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

❑ 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.
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Emerging Issues on Privatized Prisons

❑ 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.

❑ 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

❑ The number of privatized prisons is likely to increase, but not at the

pace exhibited during the past decade.

❑ 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.

❑ It is unlikely that privatized prisons will develop a strong market in the

high-security inmate population market due to the recent flurry of wellpublicized disturbances. However, important inroads can be expected

for the private sector within low-security medical, mental health, and

geriatric inmate populations.

❑ 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.

❑ 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.
1

Chapter 1 Emerging Issues on Privatized Prisons

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
2

Bureau of Justice Assistance

Total Incarceration

Year Inmates Federal State Jail Rate†

1985 744,208 35,781 451,812 256,615 313

1990 1,148,702 58,838 684,544 405,320 458

1991 1,219,014 63,930 728,605 426,479 481

1992 1,295,150 72,071 778,495 444,584 505

1993 1,369,185 80,815 828,566 459,804 528

1994 1,476,621 85,500 904,647 486,474 564

1995 1,585,586 89,538 989,004 507,044 600

1996 1,646,020 95,088 1,032,440 518,492 618

1997 1,725,842 99,175 1,059,588 567,079 645

1990–1997

percentage

increase 6.5 8.4 7.0 4.9 5.8

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

* Jail counts are for midyear (June 30). State and federal prisoner counts for 1990–1995 are for December 31. Counts for 1994–1997 exclude

persons who were supervised outside a jail facility.

† Persons in custody per 100,000 residents on July 1 of each year.

Source: Bureau of Justice Statistics (1998).

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.
3

Emerging Issues on Privatized Prisons

Fiscal Year Federal State Total

1980 $ 319,274,000 $ 2,787,369,000 $ 3,106,643,000

1981 346,517,000 3,229,234,000 3,575,751,000

1982 368,000,000 3,794,178,000 4,161,178,000

1983 435,000,000 4,346,273,000 4,781,273,000

1984 529,245,000 5,066,666,000 5,595,911,000

1985 500,941,000 5,934,160,000 6,435,101,000

1986 555,097,000 6,619,534,000 7,174,631,000

1987 580,097,000 7,601,594,000 8,181,691,000

1988 878,502,000 8,586,498,000 9,465,000,000

1989 900,334,000 9,611,020,000 10,511,354,000

1990 1,148,678,000 11,194,236,000 12,342,914,000

1991 1,318,741,000 12,514,171,000 13,832,912,000

1992 1,585,498,000 13,290,202,000 14,875,700,000

1993 1,767,019,000 14,239,710,000 16,006,729,000

1994 1,918,067,000 15,776,174,000 17,694,241,000

Table 2 Prison Operating Costs, Fiscal Years 1980–1994

Source: U.S. General Accounting Office (1996a).

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,

oroversight 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

jailsworldwide 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
4

Bureau of Justice Assistance

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

Table 3 Private Adult Correctional Firms, December 31, 1998

Outside Total

Management Firm U.S. Capacity U.S. Capacity Capacity Percentage*

Alternative Programs, Inc. 340 0 340 0.3%

Avalon Correctional

Services, Inc. 350 0 350 0.3

Bobby Ross Group 464 0 464 0.4

CiviGenics Inc. 3,563 0 3,563 2.7

Cornell Corrections, Inc. 5,794 0 5,794 4.4

Correctional Services

Corporation 6,727 0 6,727 5.1

Correctional Systems, Inc. 272 0 272 0.2

Corrections Corporation

of America 65,748 2,244 67,992 51.4

Group 4 Prison Services Ltd. 0 4,510 4,510 3.4

GRW Corporation 362 0 362 0.3

Management and Training

Corporation 7,465 0 7,465 5.6

Maranatha Production

Company 500 0 500 0.4

Securicor 0 800 800 0.6

Wackenhut Corrections

Corporation 25,041 8,166 33,207 25.1

Total 116,626 15,720 132,346 100.0

* Discrepancy in total is due to rounding.

Source: Thomas (1998).
5

Emerging Issues on Privatized Prisons

Jurisdiction Number of Facilities Percentage of Facilities*

Texas 43 23.4 %

California 24 13.0

Florida 10 5.4

Colorado 9 4.9

Oklahoma 8 4.3

New Mexico 7 3.8

Tennessee 6 3.3

Mississippi 6 3.3

Arizona 6 3.3

Georgia 5 2.7

Kentucky 4 2.2

Puerto Rico 4 2.2

Arkansas 2 1.1

North Carolina 2 1.1

Louisiana 2 1.1

Missouri 2 1.1

Ohio 2 1.1

Kansas 2 1.1

13 other states and D.C. 14 7.6

U.S. total 158 85.9

Non-U.S. total 26 14.1

Total 184 100.0

* Discrepancy in total is due to rounding.

Source: Thomas (1998).

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).

Table 4 Geographic Distribution of Privately Operated Correctional Facilities,

December 31, 1998
6

Bureau of Justice Assistance

Table 5 Geographic Distribution of Privately Operated Correctional Facilities Outside the

United States, December 31, 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

7percent 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, LanzaKaduce 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.

Country Facilities Capacity by Country Percentage

South Africa 2 3,000 19.1%

U.K. 12 8,061 51.3

Australia 12 4,659 29.6

Total 26 15,720 100.0

Source: Thomas (1998).
7

Emerging Issues on Privatized 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.
9

Emerging Issues on Privatized Prisons

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 privatesector 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

along 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

aprofit-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:

Chapter 2

The History of and Key Debates

Over Privatization
10

Bureau of Justice Assistance

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
11

Emerging Issues on Privatized Prisons

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
12

Bureau of Justice Assistance

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

toplay 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,

thenumber 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.
13

Emerging Issues on Privatized 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

asan acceptable political and correctional system operational concept. This

reemergence, however, has stirred considerable debate over the viability

ofprivately 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.
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Bureau of Justice Assistance

Table 6 Public Strategies for Private Prisons

Source: Cunningham (1999).

Reasons To Privatize Reasons Not To Privatize

1. Private operators can provide construction 1. There are certain responsibilities that only the

financing options that allow the government government should meet, such as public safety

client to pay only for capacity as needed in and environmental protection. To provide incarceralieu of encumbering long-term debt. tion, the government has legal, political, and moral

obligations. Major constitutional competition among

both public and private issues revolves around the

deprivation of liberty, discipline, and preserving the

constitutional rights of inmates. Related issues

include use of force, loss of time credit, and

segregation.

2. Private companies offer modern state-of-the-art 2. Few private companies are available from which to

correctional facility designs that are efficient to choose.

operate and built based upon value engineering

specifications.

3. Private operators typically design and construct 3. Private operators may be inexperienced with key

a new correctional facility in half the time of a corrections issues.

comparable government construction project.

4. Private vendors provide government clients with 4. Operator may become a monopoly through

the convenience and accountability of one political ingratiation, favoritism, etc.

entity for all compliance issues.

5. Private corrections management companies are 5. Government may lose the capability to perform

able to mobilize rapidly and to specialize in the function over time.

unique facility missions.

6. Private corrections management companies 6. The profit motive will inhibit the proper performance

provide economic development opportunities of duties. Private prisons have financial incentives

by hiring locally and, to the extent possible, to cut corners.

purchasing locally.

7. Government can reduce or share its liability 7. Procurement process is slow, inefficient, and

exposure by contracting with private corrections open to risks.

companies.

8. The government can retain flexibility by limiting 8. Creating a good, clear contract is a daunting task.

the contract duration and by specifying facility

mission.

9. Adding other service providers injects 9. Lack of enforcement remedies in contracts

competition among both public and private leaves only termination or lawsuits as recourse.

organizations.
15

Emerging Issues on Privatized Prisons

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 1

/2 months at a cost of $14,000 per

bed. INScalculated construction to take 2 1

/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
16

Bureau of Justice Assistance

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
17

Emerging Issues on Privatized Prisons

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 protectionfrom-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.

Todate, the limited experience with privately managed prisons does not
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Bureau of Justice Assistance

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:

❑ The propriety of private firms taking over state functions.

❑ Inmate rights and due process considerations.

❑ 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

afacility 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.
19

Emerging Issues on Privatized Prisons

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
20

Bureau of Justice Assistance

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.
21

Emerging Issues on Privatized Prisons

Recent Research Regarding

Privatization

Chapter 3

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,

asstated 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.
22

Bureau of Justice Assistance

Costs

As noted previously, one of the most often debated issues in privatization

literature is whether private facilities are more cost-efficient than governmentoperated 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:
23

Emerging Issues on Privatized Prisons

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.
24

Bureau of Justice Assistance

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
25

Emerging Issues on Privatized Prisons

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) toestablish 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

tothe 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
26

Bureau of Justice Assistance

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

alack 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.”
27

Emerging Issues on Privatized Prisons

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:

❑ The authors of the GAO report knew that the statutes of several

jurisdictions defined contracting as unlawful (such as with the Texas

study).

❑ The authors of the GAO report disregarded the cost benefits that have

justified more than a decade of federal-level contracting experience.

❑ The authors chose to ignore recent reports from Australia, Florida,

Texas, and the United Kingdom concerning the cost benefits of

privatization.

❑ 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.
28

Bureau of Justice Assistance

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

thelower 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.
29

Emerging Issues on Privatized Prisons

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

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

Financial Item 1987 1997

Revenues $17,011,000 $462,249,000

Beds under contract 1,715 52,890

Compensated man-days 520,101 10,524,537

Available man-days 614,098 11,293,228

Percentage capacity 84.7 93.2%

Revenue per man-day $32.17 $42.72

Cost per man-day $28.18 $30.51

Stock price range $31/2 – 33/4 $457/8 – $281/2

Source: Corrections Corporation of America (1997).
30

Bureau of Justice Assistance

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

aspecific 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.”
31

Emerging Issues on Privatized Prisons

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
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Bureau of Justice Assistance

“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:

❑ Ten percent of the private prison inmates were rearrested during the

12months following release versus 19 percent of the public prison

inmates.

❑ Six percent of the private releases were resentenced for a new offense

versus 10 percent of the public inmates.

❑ Ten percent of private inmates were reincarcerated within 12 months

compared with 14 percent of public inmates.

❑ 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
33

Emerging Issues on Privatized 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:

❑ Documentation of health-care services was poor, including medical

records, sick-call logs, and tuberculosis testing documentation and

followup.

❑ Physician coverage was uneven and medical segregation units at

Greensville had problems obtaining adequate physician coverage.

❑ Respiratory isolation rooms and x-ray equipment problems were not

addressed in a timely manner.

❑ The contractor at Greensville had not complied with the contract

requirements for implementing quality improvement activities.

❑ 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
34

Bureau of Justice Assistance

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.
35

Emerging Issues on Privatized Prisons

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,

andVirginia, 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:

❑ 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.

❑ 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.

❑ 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.

❑ 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.
36

Bureau of Justice Assistance

❑ 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.

❑ 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):

❑ Six inmates escaped.

❑ Two homicides occurred, including one between known enemies in the

high-security unit, involving breakdowns in a number of critical

procedures.

❑ Seventeen inmates were stabbed and numerous other serious assaults

against staff and inmates occurred.

❑ Homemade weapons were discovered.

❑ 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
37

Emerging Issues on Privatized Prisons

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, protectionfrom-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
38

Bureau of Justice Assistance

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.
39

Emerging Issues on Privatized Prisons

The National Survey of State

Prison Privatization

Chapter 4

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,
40

Bureau of Justice Assistance

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.
41

Emerging Issues on Privatized Prisons

Table 8 Inmate Characteristics at Public Facilities at Midyear 1995 and Private Facilities as of

December 31, 1997

Public Facilities* Private Facilities

Inmate Characteristics Number of Percentage Number of Percentage

Inmates Inmates

Number of inmates 1,023,572 46,120

Gender

Males 961,210 94.0% 42,215 91.5%

Females 62,362 6.0 3,905 8.5

Under age 18 5,309 0.5 180 0.4

Custody level

Maximum/close/high 202,174 19.8 2,111 4.6

Medium 415,688 40.6 22,674 49.2

Minimum/low 366,277 35.8 20,379 44.2

Not classified 39,433 3.8 956 2.1

Racial or ethnic identity†

White 363,918 35.5 14,620 31.7

Black 488,222 47.7 20,268 43.9

Hispanic 147,365 14.4 9,550 20.7

American Indian/Alaska

Native 10,519 1.0 494 1.1

Asian/Pacific Islander 8,436 0.8 291 0.6

Not reported 5,112 0.5 897 1.9

* Data for midyear 1995 include federal and state correctional facilities.

†

 The number of inmates of Hispanic origin is underreported for public facilities. In 28 federal facilities, racial identity but not ethnic

identity was reported for 21,563 inmates.

‡

 Discrepancies in totals are due to rounding.

Sources: Bureau of Justice Statistics (1997b) and National Council on Crime and Delinquency (1998).
42

Bureau of Justice Assistance

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

Facility Total Maximum Medium Minimum

 Characteristic N % N % N % N %

All Facilities 62 100.0% 2 3.1% 38 58.5% 25 38.0%

Sex of Inmates Housed

Males only 49 75.4 2 3.1 29 44.6 18 27.7

Females only 5 7.7 0 0 3 4.6 2 3.1

Both sexes 11 16.9 0 0 6 9.2 5 7.7

Function*

General adult

population 54 83.1 1 1.5 37 56.9 16 24.6

Boot camp 0 00 0 0 00 0

Reception/

diagnosis 5 7.7 0 0 3 4.6 2 3.1

Medical

treatment/hospital 3 4.6 0 0 2 3.1 1 1.5

Alcohol/drug

treatment 14 21.5 1 1.5 6 9.2 7 10.8

Youthful offenders 2 3.1 1 1.5 1 1.5 0 0

Work release/

prerelease 14 21.5 0 0 6 9.2 8 12.3

Returned to

custody 12 18.5 0 0 6 9.2 7 10.8

Other 5 7.7 1 1.5 3 4.6 1 1.5

Age of Facility (in yrs)§

< 10 58 89.2 2 3.1 36 55.4 20 30.8

10–19 0 0 0 0 0 00 0

20–49 5 7.7 0 0 1 1.5 4 6.2

50–99 1 1.5 0 0 0 0 1 1.5

≥ 100‡ 1 1.5 0 0 0 0 1 1.5
43

Emerging Issues on Privatized Prisons

Table 9 Characteristics of Private Facilities by Level of Security as of December 31, 1997 (Cont.)

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

* Figures may add to more than the total number of facilities because some facilities may have more than one function.

§

 Refers to the number of years between the date of original construction and the survey year.

‡

 The oldest privately operated facility is operated by CiviGenics, which originally opened as a hospital in 1896.

‡ ‡ Discrepancies in totals due to rounding.

Source: Bureau of Justice Statistics (1997b).

Facility Total Maximum Medium Minimum

Characteristic N % N % N % N %

Average daily pop. (number of inmates)

< 500 28 43.1 0 0 10 15.4 18 27.7

500–999 27 41.5 0 0 22 33.8 5 7.7

1,000–2,499 10 15.4 2 3.1 6 9.2 2 3.1

≥ 2,500 0 0 0 0 0 0 0 0
44

Bureau of Justice Assistance

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*

Facility Public Private

Characteristics N % N %

All Facilities 1,500 100.0% 65 100.0%

With Work Programs 1,404 93.6 65 100.0

Prison industries 560 37.3 8 12.3

Facility support services 1,348 89.9 65 100.0

Farming/agriculture 371 24.7 9 13.8

Public works assignments 781 52.1 28 43.1

Other work programs 149 9.9 14 21.5

With education programs 1,311 87.4 65 100.0

Basic adult education 1,118 74.5 63 96.9

Secondary education† 1,115 74.3 64 98.5

Special education 496 33.1 31 47.7

Vocational training 806 53.7 53 81.5

College courses 498 33.2 28 43.1

Study releases 161 10.7 5 7.7

With counseling programs 1,451 96.7 65 100.0

Drug counseling 1,327 88.5 64 98.5

Alcohol counseling 1,345 89.7 65 100.0

Psychological counseling 1,028 68.5 46 70.8

Employment counseling 897 59.8 53 81.5

Life skills, community

adjustment counseling 999 66.6 64 98.5

Parenting 576 38.4 35 53.8

Other 296 19.7 13 20.0

Inmates participating in

Work programs 662,807 64.8 29,668 64.3

Educational programs 234,966 23.0 17,685 38.3

* Inmate participation numbers are based on reporting from 95 percent or more of the facilities. Totals for public facilities include federal

and state confinement institutions.

†

 Includes general equivalency diploma (GED).

Sources: Bureau of Justice Statistics (1997b) and National Council on Crime and Delinquency (1998).
45

Emerging Issues on Privatized Prisons

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
46

Bureau of Justice Assistance

Table 11 Persons Employed in Public State Facilities at Midyear 1995 and at Private State

Facilities as of December 31, 1997

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-oninmate assaults per 1,000 inmates at private prisons (35.1 percent) than

at public facilities (25.4 percent). Assaults resulting in inmate deaths were

Personnel Public Private

Characteristics N % N %

All facilities 247,320 100.0% 13,344 100.0%

Administrative 9,509 2.8 554 4.2

Correctional/security 220,892 65.4 8,427 63.2

Clerical support 27,383 8.1 1,060 7.9

Educational 11,020 3.3 774 5.8

Professional treatment 45,291 13.4 1,604 12.0

Maintenance and food

service 23,605 7.0 735 5.5

Other 0 0 190 1.4

Racial or ethnic identity†

White 232,382 71.3 6,954 53.0

Black 65,513 20.0 2,964 18.0

Hispanic 20,702 6.3 2,364 18.0

Native American/Other‡ 6,576 2.0 131 1.0

Asian/Pacific Islander NA NA 60 0.5

Not reported 974 0.3 669 5.1

* A total of 241 employees were not designated by employment category at 20 of the facilities.

†

 Includes only payroll staff for public facilities. Private facilities data include nonpayroll staff when given by private operator: 21 private

facilities included 200 nonpayroll staff in their racial breakdowns. Two private facilities with 669 payroll staff could not provide a racial

breakdown of staff.

‡

 Figures for public facilities include Alaska Natives, Asians, Native American, and Pacific Islanders.

Sources: Bureau of Justice Statistics (1997b) and National Council on Crime and Delinquency (1998).
47

Emerging Issues on Privatized Prisons

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

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

Facilities Employees

Co-Starting Staff Staff That Test Tested for Unionized

Contractor Facilities Salary Hired Terminated for Drugs Drugs Facilities

Min: $14,580

Cornell Max: $16,598

Corrections 3 Avg: $15,537 58 33 1 125 0

Correctional Min: $14,040

Services Max: $20,800

Corporation 3 Avg: $17,333 224 132 3 150* 0

Corrections Min: $13,200

Corporation Max: $24,600

of America 27 Avg: $17,246 4,454† 1,327‡ 24 3,029§ (U.S.) 1

Min: $16,000

Max: $16,000

CiviGenics 2 Avg: $16,000 9 0 0 0 0

Management Min: $16,640

Training Max: $22,425

Corporation 3 Avg: $18,665 111 89 3 223 0

U.S. Min: $14,040

Corrections Max: $17,200

Corporation 5 Avg: $14,824 271 257 4 342 0

Wackenhut Min: $12,958

Corrections Max: $35,173 3,022 1,750 20 2,735†† (Aus.) 2

Corporation 22 Avg: $18,785** (U.K.) 1

* Based on 2 facilities reporting.

† Based on 25 facilities reporting.

‡ Based on 24 facilities reporting.

§ Based on 17 facilities reporting. Three facilities do not test, and 7 facilities were missing data.

**Based on 21 facilities reporting. One international facility reported data in British pounds.

†† Based on 19 facilities reporting. Two facilities do not test, and 1 facility was missing data.

Source: National Council on Crime and Delinquency (1998).
48

Bureau of Justice Assistance

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

Table 13 Major Incidents in Public Facilities (July 1, 1994–June 30, 1995) and in Private

Facilities (January 1–December 31, 1997)*

* Excludes tickets, official warnings, and other minor incidents.

† Based on average daily population.

‡ Includes only incidents that had five or more inmates participating, that required the intervention of additional or outside assistance, and

that resulted in serious injury or significant property damage.

§ Other causes include accidents and other deaths.

Sources: Bureau of Justice Statistics (1997b) and National Council on Crime and Delinquency (1998).

 Number of Violations per

Inmate Number of Violations 1,000 Inmates†

Violation Public Private Public Private

Assaults on inmates 25,948 1,617 25.4 35.1

Resulting inmate deaths 82 1 0.1 0.0

Assaults on staff 14,165 584 13.8 12.7

Resulting staff deaths 14 0 0.0 0.0

Riots‡ 317 12 0.3 0.3

Fires 816 29 0.8 1.2

Other disturbances 1,808 56 1.8 1.2

Total 43,054 2,298 42.3 50.5

 Number of Deaths per

Inmate Number of Deaths 1,000 Inmates†

Deaths Public Private Public Private

Homicides by other inmates 82 1 0.1 0.0

Suicides 169 1 0.2 0.0

AIDS 1,111 4 1.1 0.1

Natural causes 1,186 21 1.2 0.5

Other causes§ 113 3 0.1 0.1

Total deaths 2,661 30 2.9 0.7
49

Emerging Issues on Privatized Prisons

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

atotal 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).
50

Bureau of Justice Assistance

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

Lockdowns Days

Inmates Inmates Inmates Jan. 1, 1997– Locked

Contractor Facilities DAU in DAU PCU in PCU ASU in ASU Dec. 31, 1997 Down

Cornell

Corrections 3 1 21 0 0 2 17 7 3

Correctional

Services

Corporation 0 3 2 13 1 0 2 21 7*

Corrections

Corporation

of America 27 25 374† 12 182‡ 25 199§ 23 102.5**

CiviGenics 2 0 0 0 0 0 0 0 0

Management

Training

Corporation 3 0 0 0 0 0 0 5 9

U.S.

Corrections

Corporation 5 2 4 0 0 3 20 0 0

Wackenhut

Corrections

Corporation 22 14 367†† 7 614‡‡ 15 306§§ 25 280***

Total 65 44 779 20 796 47 563 67 394.5

Note: DAU=Disciplinary Action Unit; PCU=Protective Custody Unit; ASU=Administrative Segregation Unit.

* One facility reported 7 lockdowns, each of short duration.

† Based on 22 facilities reporting: 2 facilities do not have a disciplinary unit; 3 facilities have disciplinary units but did not provide the

number of inmates.

‡ Based on 11 facilities reporting: 15 facilities do not have a protective custody unit; 1 facility has a protective unit but did not provide

number of inmates.

§ Based on 22 facilities reporting: 2 facilities do not have an administrative segregation unit; 3 facilities have administrative segregation

units but did not provide number of inmates.

**One facility reported 3 lockdowns for a total of 50 days.

†† Based on 12 facilities reporting: 8 facilities do not have a disciplinary action unit; 2 facilities had disciplinary action units but did not

provide the number of inmates.

‡‡ Based on 6 facilities reporting: 1 facility is considered a protective custody prison and reports 438 protective custody inmates; 15 facilities

do not have a protective custody unit; 1 has a protective custody unit but did not provide the number of inmates.

§§ Based on 14 facilities reporting: 7 do not have an administrative segregation unit; 1 facility has an administrative unit but did not provide

the number of inmates.

*** One facility reported 6 lockdowns for a total of 154 days; another reported 3 lockdowns for a total of 78 days.

Source: National Council on Crime and Delinquency (1998).
51

Emerging Issues on Privatized Prisons

Table 15 State Facilities Under Court Order or Consent Decree: Public Facilities at Midyear

1995 and Private Facilities on December 31, 1997*

Public Private

Court Order Status of Facilities N % N %

Not under court order 1,054 76.7% 56 86.2%

Under court order for specific

conditions 378 27.5 9 13.8

Overcrowding 213 15.5 5 7.7

Medical facilities 139 10.1 6 9.2

Administrative segregation 76 5.5 6 9.2

Staffing 118 8.6 6 9.2

Food service/nutrition 83 6.0 5 7.7

Education 96 7.0 7 10.8

Disciplinary policies 78 5.7 5 7.7

Recreation 100 7.3 5 7.7

Visiting/mail 88 6.4 4 6.2

Fire hazards 78 5.7 3 4.6

Counseling programs 69 5.0 4 6.2

Inmate classification 76 5.5 6 9.2

Library services 129 9.4 4 6.2

Grievance policies 74 5.4 6 9.2

Religion policies 74 5.4 5 7.7

Search policies 30 2.2 4 6.2

Other 88 6.4 5 7.7

* A total of 238 state public and private facilities were under court order or consent decree to limit population, for specific conditions, or for

both reasons in 1995. These reasons are not mutually exclusive and therefore do not sum to 100 percent.

Sources: Bureau of Justice Statistics (1997b) and National Council on Crime and Delinquency (1998).
52

Bureau of Justice Assistance

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 minimumsecurity 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.
53

Emerging Issues on Privatized Prisons

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

Public* Private

Inmate Characteristics N % N %

Number of inmates 654,891 100.0% 43,828 100.0%

Gender

Males 607,547 92.8 39,933 91.1

Female 47,344 7.2 3,895 8.9

Custody level

Maximum/close/high 0 0 1,225 2.8

Medium 463 39.1 21,942 50.1

Minimum/low 721 60.9 20,262 46.2

Not classified 0 0 399 0.9

Racial or ethnic identity†

White 234,894 35.9 13,235 30.2

Black 300,339 45.9 19,454 44.4

Hispanic 106,062 16.2 9,504 21.7

American Indian/Alaska

Native 6,871 1.0 494 1.1

Asian/Pacific Islander 6,532 1.0 254 0.6

Not reported 193 0 887 2.0

* Data for midyear 1995 include federal and state correctional facilities.

†

 The number of inmates of Hispanic origin is underreported for public facilities. In 28 federal facilities, racial identity but not ethnic

identity was reported for 21,563 inmates.

Sources: Bureau of Justice Statistics (1997b) and National Council on Crime and Delinquency (1998).
54

Bureau of Justice Assistance

Table 17 Characteristics of Public Medium- and Minimum-Security Facilities at Midyear 1995

and Private Medium- and Minimum-Security Facilities on December 31, 1997

Public Private

Facility Characteristics N % N %

All facilities 1,184 100.0% 63* 100.0%

Function**

General adult population 864 73.0 53 84.1

Boot camp 44 3.7 0 0

Reception/diagnosis 91 7.7 5 7.9

Medical treatment/hospital 111 9.4 3 4.8

Alcohol/drug treatment 194 16.4 13 20.6

Youthful offenders 30 2.5 1 1.6

Work release/prerelease 420 35.5 14 22.2

Returned to custody 83 7.0 13 20.6

Other† 208 17.6 4 6.3

Age of facility (in years)‡

< 10 327 27.6 56 88.9

10–19 239 20.2 0 0

20–49 336 28.4 5 7.9

50–99 245 20.7 1 1.6

≥ 100§ 28 2.4 1 1.6

Average daily population

(number of inmates)

< 500 778 65.7 28 44.4

500–999 200 16.9 27 42.9

1,000–2,499 180 15.2 8 12.7

≥ 2,500 26 2.2 0 0

* Two facilities failed to provide sufficient data for inclusion in this table.

** Figures may add to more than the total number of facilities because some facilities may have more than one function.

†

 Includes U.S. Marshals Service, pretrial/posttrial federal offenders, prearraignment, and community service.

‡

 Refers to the number of years between the date of original construction and the survey year.

§

 The oldest privately operated facility is operated by CiviGenics, which originally opened as a hospital in 1896.

Source: National Council on Crime and Delinquency (1998).
55

Emerging Issues on Privatized Prisons

Table 18 Types and Rates of Participation in Institutional Programs at Public and Private

Medium- and Minimum-Security Facilities

Public* Private

Facility Characteristics N % N %

All facilities 1,184 100.0% 63** 100.0%

With work programs

Prison industries 368 31.1 8 12.7

Facility support services 1,049 88.6 63 100.0

Farming/agriculture 267 22.6 9 14.3

Public works assignment 661 55.8 28 44.4

Other work programs 128 10.8 13 20.6

With education programs

Basic adult education 839 70.9 61 96.8

Secondary education* 906 76.5 62 98.4

Special education 342 28.9 29 46.0

Vocational training 582 49.2 51 81.0

College courses 363 30.7 26 41.3

Study releases 150 12.7 5 7.9

With counseling programs

Drug counseling 1,039 87.8 62 98.4

Alcohol counseling 1,053 88.9 63 100.0

Psychological counseling 746 63.0 44 69.8

Employment counseling 720 60.8 51 81.0

Life skills, community

adjustment counseling 783 66.1 62 98.4

Parenting 462 39.0 33 52.4

Other programs 205 17.3 13 20.6

Inmates participating in

Work programs 438,016 66.9 28,856 65.8

Educational programs 161,877 24.7 16,760 38.2

* Includes GED.

** Two facilities failed to provide sufficient data for inclusion in this table.

Source: Bureau of Justice Statistics (1997b).
56

Bureau of Justice Assistance

Table 19 Characteristics of Persons Employed in Public Medium- and Minimum-Security

Facilities at Midyear 1995 and Private Medium- and Minimum-Security Facilities

onDecember 31, 1997

Public Private

Characteristics N % N %

All facilities 206,126 100.0% 12,420 100.0%

All staff

Administrative 6,015 2.9 530 4.3

Correctional/security 127,395 61.7 7,912 63.7

Clerical support 17,147 8.3 894 7.2

Educational 7,147 3.7 717 5.8

Professional treatment 27,042 13.0 1,514 12.2

Maintenance and food

service 15,395 7.5 686 5.5

Other 5,985 2.9 167 1.3

Racial or ethnic identity

White 137,831 66.9 6,315 50.8

Black 37,206 18.1 2,683 21.6

Hispanic 13,698 6.6 2,344 18.9

Native American/other 1,654 0.8 131 1.1

Asian/Pacific Islander 3,063 1.5 57 0.4

Not reported 12,674 6.2 890 7.2

Source: Bureau of Justice Statistics (1997b).
57

Emerging Issues on Privatized Prisons

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)*

Number of Violations

Number of Violations* per 1,000 Inmates†

Inmate Violations Public 1995 Private 1997 Public 1995 Private 1997

Assaults on inmates 12,721 1,469 20.2 33.5

Resulting inmate deaths 29 1 0.6 0

Assaults on staff 5,182 537 8.2 12.2

Resulting staff deaths 12 0 0.3 0

Riots‡ 172 12 3.7 0.3

Fires 444 29 0.7 0.7

Other disturbances 150 56 0.2 1.3

Total deaths 1,711 29 2.7 0.7

Homicides committed by

other inmates 31 1 0.7 0

Suicides 65 1 0.1 0

AIDS 565 4 0.9 0.1

Natural causes 1,001 20 1.7 0.5

Other causes§ 49 3 1.1 0.1

* Excludes tickets, official warnings, and other minor incidents.

†

 Based on average daily population.

‡

 Includes only incidents that had five or more inmates participating, that required the intervention of additional or outside assistance, and

that resulted in serious injury or significant property damage.

§

 Other causes includes accidents, homicides, and other deaths.

Source: Bureau of Justice Statistics (1997b).
59

Emerging Issues on Privatized Prisons

Summary

Chapter 5

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

torecruit competent staff.
60

Bureau of Justice Assistance

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.
61

Emerging Issues on Privatized Prisons

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).
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Bureau of Justice Assistance

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 § 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

§ 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 § 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.
63

Emerging Issues on Privatized Prisons

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.
65

Emerging Issues on Privatized Prisons

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Saylor (1998). “Appendix 2: Comparing the
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Sechrest, Dale, and David Shichor (1993). “Corrections Goes Public (and Private) in California.”

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the Little Hoover Commission of the State of

California. Sacramento, CA.

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and Performance of Public and Private Prisons in

Arizona: An Overview of the Study and its Conclusions. Gainesville, FL: Private Corrections

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America.” G. Bowman, S. Hakim, and P.

Seidenstat (eds.) Privatizing Correctional Institutions. New Brunswick, NJ: Transaction Publishers, 213–240.

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Emerging Issues on Privatized Prisons

Guidelines for Contracting

for a Private Prison

Appendix

*This Appendix was prepared by Dennis Cunningham, Private Prisons Administrator,

Oklahoma Department of Corrections. It is based on a presentation by James Austin, Research

Professor, Department of Sociology, The George Washington University, presented at the National

Conference of Privatization, March 1998.

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.
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Bureau of Justice Assistance

 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.
71

Emerging Issues on Privatized Prisons

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).

Thegovernment can reduce, but not eliminate, its vulnerability to

privatization-related lawsuits by specifying in law, and subsequently 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:
72

Bureau of Justice Assistance

❏ Develop and maintain a list of potential bidders.

❏ Provide public policy and rules for procurement of private facilities

and services.

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

❏ Assist with the financing of the design and construction.

❏ 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:

❏ Vendor’s experience and past success in similar undertakings.

❏ Design and construction details.

❏ Timetable and availability.

❏ Staff qualifications.

❏ Qualitative review of operational plan details and program

proposals.

❏ Vendor’s financial condition and references.

❏ 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,
73

Emerging Issues on Privatized Prisons

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.
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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 longterm 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:

❏ Requiring contractor to give employment preference to displaced

staff.

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

❏ Carefully calculating and making provisions for disposition

ofbenefits (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 theselection of only

the best inmates by the private operator.
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Emerging Issues on Privatized Prisons

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

theagency 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
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Bureau of Justice Assistance

occurs prior to the issuance of an RFP and is written in the contract.

This should include:

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

❏ Regular onsite inspections using a detailed checklist based on the

contract performance standards, rating categories, and guidelines

on how to complete the inspection.

❏ Periodic documented fire, safety, health, medical, and sanitation

inspections.

❏ Participation in disciplinary hearings concerning major rule infractions, approval of inmate classification actions, and sentence and

time credit issues.

❏ 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.

❏ 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.

❏ 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.

❏ 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
77

Emerging Issues on Privatized Prisons

components. One researcher’s classification of important

dimensions of prison services and quality of confinement was

defined by Logan (1991) as:

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

Activity: Assurance that inmates are not idle; promote

rehabilitation.

Safety: Environmental hazards, sanitation, freedom from

disease.

Justice: Rule of law inside prison; fairness.

Order: Enforcement of inmate compliance; assurance of orderly

running of the institution.

Care: Medical, dental, psychological.

Conditions: Crowding, health risk.

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
78

Bureau of Justice Assistance

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

thefacility, 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

ahigher 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

or30 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.
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Emerging Issues on Privatized Prisons

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.
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Emerging Issues on Privatized Prisons

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.
82

Bureau of Justice Assistance

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.
83

Emerging Issues on Privatized Prisons

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.

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