A Tale of Two Systems: Cost, Quality, and Accountability in Private Prisons

Private prisons are on the rise. Privately operated juvenile facilities — mostly community-based group homes or halfway houses — and federal adult halfway houses have been common in the United States since the 1960s. In 1979, private firms began contracting with the Immigration and Naturalization Service to detain illegal immigrants pending hearings or deportation. Private, large-scale investment in the construction and management of conventional prisons and jails dates from the mid-1980s. Prison privatization has been driven not only by the growing support among lawmakers and the public for private provision of traditional government services, but also by exploding prison populations resulting from stricter drug and immigration laws and changes in sentencing procedures.By the end of 2000, there were 87,369 state and federal prisoners in private detention facilities in the United States — 6.3% of all state and federal prisoners, and 22.7% more than in 1999. Of these, 15,524 were federal prisoners (10.7% of all federal prisoners) and 71,845 were state prisoners (5.8% of all state prisoners). The use of private facilities is concentrated in the South and the West. Texas and Oklahoma have the greatest numbers of inmates in private facilities; only six states — Alaska, Hawaii, Montana, New Mexico, Oklahoma, and Wisconsin, which combined account for approximately one-fifth of all state inmates — house over 20% of their prison population in private facilities. Privatization has been less widespread in local jails than in state prisons — only about 2% of jail beds are private — but jail privatization has been called the “next frontier” of privatization.Comparative studies on the cost and quality of private and public prisons give reason to be cautiously pleased with private prison performance. The empirical evidence is consistent with economic theory, which predicts that with privatization, costs will fall and quality (however defined) may rise. The idealist could ascribe the satisfactory performance of private prisons to the power of market incentives; the cynic could point out that given public prisons’ bleak history and patchy present, private prisons perform satisfactorily compared to a rather low baseline. Each would be right.Public prisons are not the most accountable of government systems; in fact, under certain circumstances, private prisons may be more accountable. In the qualified immunity context, recent Supreme Court decisions such as Richardson v. McKnight and Correctional Services Corp. v. Malesko have held private prisons to at least as high a standard of constitutional protection as public prisons. Judges’ and juries’ greater skepticism of private agencies than of government may also make private prisons more accountable; moreover, government oversight of private prisons may be less deferential than government oversight of its own operations. In addition, private prisons have substantially greater market accountability because they are concerned with winning new contracts and renewing old ones, and with avoiding both adverse publicity and drops in stock price. The continued promise of private prisons requires three concurrent innovations. First, evaluators must develop a rich set of performance measures, and prison data must be gathered and publicized. Second, the government must implement performance-based contracts that tie compensation to actual results. Finally, the government should maximize the efficiency gains from privatization and minimize opportunities for capture by institutionalizing competition between public correctional departments and private prison firms and making contract monitoring independent of both the public and the private sectors.