When the modern correctional privatization movement started, it was widely believed that any private role would be limited to small facilities housing low-security prisoners. Today, however, it is common to see contract awards for facilities with rated capacities of between 1,000 and 2,000 prisoners and for prisoners requiring medium or high security. A growing body of research finds that contracting out corrections reduces costs, improves service quality and yields other benefits as well. Critics who initially argued that contracting with private companies could not save money have been proved wrong. First, the fact that contracts exist implies that the contracting agencies are confident that cost savings are being realized.
Many statutes even require tangible evidence of savings before contracts can be awarded.
Second, private sector fringe benefits, especially retirement contributions, are less generous for private employees than for government employees. Third, the private sector does not have the costly bureaucratic requirements that government imposes on itself in employee hiring, firing, promotion and procurement of goods and services. Fourth, private prisons are designed to operate efficiently with fewer personnel in a way public prisons are not. The precise magnitude of cost savings is difficult to determine because governmental accounting systems generally do not show the total cost of public operations. For-profit firms must account for all costs.