Cost of Prisons: Bureau of Prisons Needs Better Data to Assess Alternatives for Acquiring Low and Minimum Security Facilities
Published: 2007-10-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the last 10 years, the cost to confine federal Bureau of Prison (BOP) inmates in non-BOP facilities has nearly tripled from about $250 million in fiscal year 1996 to about $700 million in fiscal year 2006. Proponents of using contractors to operate prisons claim it can save money; others question whether contracting is a cost-effective alternative. In response to Conference Report 109-272, accompanying Pub. L. No. 109-108 (2005), this report discusses the feasibility and implications of comparing the costs for confining federal inmates in low and minimum security BOP facilities with those managed by private firms for BOP. GAO reviewed available data on a selection of 34 low and minimum security facilities; related laws, regulations, and documents; and interviewed BOP and contract officials.
section_title: What GAO Found
paragraphs: A methodologically sound cost comparison analysis of BOP and private low and minimum security facilities is not currently feasible because BOP does not gather data from private facilities that are comparable to the data collected on BOP facilities. GAO's past work has shown that generally accepted evaluation criteria for comparing private and public prisons calls for the comparison to be based on a variety of factors, including selection of facilities with similar characteristics (i.e., staffing levels and educational programs offered) and quality of service (i.e., levels of safety and security for staff, inmates, and the general public). However, according to BOP officials, BOP and private facilities differ in characteristics and quality of service, and BOP does not collect or maintain sufficient data on private facilities to account or adjust for these differences in a cost comparison. According to private contractors, some characteristics data are maintained for their own purposes, but at present the data are not in a format that would enable a methodologically sound cost comparison. BOP officials stated that there are two reasons why they do not require such data of contractors. First, federal regulations do not require these data as a means for selecting among competing contractors. Second, BOP believes collecting comparable data from contractors could increase the cost of the contracts, but BOP officials did not provide support to substantiate these concerns. Without comparable data, BOP is not able to evaluate and justify whether confining inmates in private facilities is more cost-effective than other confinement alternatives such as building new BOP facilities. The Office of Management and Budget (OMB) requires agencies to consider and weigh various alternatives using analyses that help determine the benefits and costs of making decisions about the acquisition of assets, such as prisons. According to OMB requirements, selecting alternatives to meet capacity needs without adequate analysis by federal agencies has resulted in higher costs than expected. OMB provides guidance to help federal agencies analyze and weigh the costs and benefits of alternatives, which is important for BOP because BOP officials stated that the population for low and minimum security facilities continues to grow. OMB staff also added that they need more and better cost comparison information on the various alternatives for BOP's low and minimum security facilities to help them better understand the long-term costs and benefits of owning versus the short-term costs and benefits of privatization. Without analyses consistent with OMB requirements, it is difficult to know whether BOP is deciding on the most cost-effective alternative for acquiring low and minimum security facilities to confine inmates, including whether to contract, build, or expand.

section_title: Letter
paragraphs: At the end of fiscal year 2006, approximately 83,000 federal, adult male  inmates within the Department of Justice’s Federal Bureau of Prisons  (BOP) were housed or confined in low or minimum security facilities, and  in recent years BOP has relied on means other than building and operating  its own facilities to confine many of these inmates, such as contracts with  private sector firms. BOP’s operating budget nearly doubled over the last  decade from approximately $2.6 billion in fiscal year 1996 to just under  $5 billion in fiscal year 2006. In fiscal year 1996, BOP received  approximately $250 million of its $2.6 billion for contract confinement,  including confining inmates in facilities owned and operated by private  contractors and by state and local governments under intergovernmental  agreements (IGA) with BOP. By fiscal year 2006, the amount for contract  confinement, including the cost of confining about 19,000 inmates housed  in private and IGA facilities, had nearly tripled to $700 million of BOP’s  $5 billion operating budget.
There has been an ongoing debate over the privatization of prisons, that is,  contracting for the management of prisons by private firms, whether the  prisons are owned by the private sector or by the government. In  particular, proponents of privatization claim it can save money without  reducing the levels or quality of service such as safety and security (i.e.,  levels of safety and security for staff, inmates, and the general public),  whereas others have questioned whether privatization is a cost-effective  alternative to publicly run facilities. Federal guidance from the Office of  Management and Budget (OMB) requires that economic and cost  comparison analyses be conducted to demonstrate the benefits of  privatization, including how it would reduce the government’s long-term  costs. BOP’s use of contracting to meet inmate bed space needs at low and  minimum security facilities, in particular, has generated significant interest  in the comparative costs of confining federal inmates in BOP, private, and  IGA facilities. Conference Report 109-272, accompanying the Science,  State, Justice, Commerce, and Related Agencies Appropriations Act of  2006, directed GAO to compare the costs of confining federal inmates in  BOP, private, and IGA low and minimum security facilities.
Regarding IGA facilities, BOP has used IGAs for a number of years to  confine low and minimum security inmates on a short term basis—less  than 45 days—for the purposes of transferring them between facilities or  as halfway houses when inmates are released from prison. These IGAs are  in hundreds of locations throughout the country. However, according to  BOP officials, over time four of the IGAs—located in western Texas, in the  cities of Big Spring and Eden, Texas, and Garza County and Reeves  County, Texas—evolved into facilities confining inmates on a long-term  basis, similar to BOP-owned and -operated low and minimum security  facilities. BOP officials told us that these four facilities confined  approximately 83 percent of BOP’s total IGA inmate population. During  the course of our review, BOP did not renew the four Texas IGAs. Instead,  BOP awarded five contracts to confine inmates in facilities with  approximately 10,000 beds, which are about 3,000 more beds than the  capacity provided under the four IGAs. According to BOP officials, BOP  chose to compete the bed space associated with these former agreements  partly because the four Texas facilities outgrew their original purpose of  confining small populations for short periods of time. BOP officials also  stated that acquiring bed space via contracts rather than IGAs enhances  their ability to oversee operations at the facilities. Because BOP no longer  plans to use IGAs to confine inmates on a long-term basis, we shifted the  focus of our review to BOP and private facilities only. Also, we did not  include the five new contracts in the scope of our review because no  federal inmates were housed under the new contract arrangements during  fiscal years 2002 through 2006, the period covered by our review.
This report discusses the feasibility of comparing the cost of confining  inmates in low and minimum security facilities owned and operated by  BOP with the cost of confining these inmates in private facilities and the  implications this has for making decisions on low and minimum security  confinement.
To address this objective, we reviewed applicable laws, regulations, and  studies on BOP programs, prison management, and contracting  requirements. We also examined available BOP and private facility  documents on the management of low and minimum security facilities. In  addition, we met with BOP officials and worked with them to identify  potential BOP and private facilities that could be compared considering  basic criteria, including inmate gender (male or female inmates, assuming  that costs for programs and services might be different depending on  gender) and whether cost data might be available on the individual facility  level for a 5-year period covering fiscal years 2002 through 2006. Our  discussions with BOP officials resulted in the selection of 34 low and  minimum security facilities managed by BOP and private operators that  confined federally sentenced male inmates on a long-term basis over the  5-year period. Specifically, we focused on (1) 27 BOP-owned and -operated  low and minimum security facilities that are not on the same campus as  medium and high security prisons (BOP does not isolate the costs of  operating individual low and minimum security facilities located on the  same campus with high and medium security facilities), and (2) 7 facilities  operated by private firms under contract to BOP.
Once we selected facilities, we interviewed BOP officials in Washington,  D.C. and private contractors at their corporate headquarters to determine  what data on prison costs and characteristics would be available. Where  possible, we gathered and analyzed available data on the facilities and  examined whether the data would lend themselves to a comparison based,  in part, on key factors—such as similar facility characteristics and levels  of service—needed to do a methodologically sound comparison as  outlined in our 1996 report that provides lessons learned for comparisons  of private and public correctional facilities. In addition, we examined BOP  efforts within the context of OMB requirements for capital planning and  space acquisition. We also met with OMB staff responsible for BOP budget  review and preparation to discuss BOP’s efforts to acquire space to  confine inmates in low and minimum security facilities in order to  determine what information BOP provides OMB on capital investments,  how this information is used to inform decisions, and what additional  information OMB needs to make informed decisions. In addition, we met  with officials from the Department of Justice’s National Institute of Justice  (NIJ) to discuss NIJ’s current and past work on prison privatization and  we met with experts from Florida State University College of Criminology  and Criminal Justice and from the JFA Institute—a nonprofit agency  conducting justice and corrections research for effective policy making— to further our understanding about prisons and the complexities of  comparing the cost of operating private and public prisons. Appendix I  contains more detailed information on our scope and methodology.
We conducted our work from May 2006 through August 2007 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: BOP was established in 1930 to provide progressive and humane care for  federal inmates in the 11 federal prisons in operation at the time. Since  then, BOP’s mission has evolved into protecting society by controlling  offenders in the controlled environments of prisons and community-based  facilities that are safe, humane, cost-efficient, and appropriately secure  and that provide work and other self-improvement opportunities to assist  offenders in becoming law-abiding citizens.
At the end of fiscal year 2006, there were over 114 federal prison facilities  located throughout the country at four primary security levels—minimum,  low, medium, and high. BOP facilities are given a security designation  based on the level of security and staff supervision the facility is able to  provide. According to BOP, minimum security facilities, also known as  Federal Prison Camps, have dormitory housing and limited or no  perimeter fencing; low security Federal Correctional Institutions have  double-fenced perimeters and mostly dormitory or cubicle housing;  medium security Federal Correctional Institutions have strengthened  perimeters (often double fences with electronic detection systems) where  inmates are mostly confined to prison cells; and high security institutions,  also known as United States Penitentiaries, have highly secured  perimeters (featuring walls or reinforced fences) and multiple- and single- occupant cell housing. BOP also maintains administrative facilities, which  are institutions with special missions, such as the detention of pretrial  offenders; the treatment of inmates with serious or chronic medical  problems; or the containment of extremely dangerous, violent, or escape- prone inmates. Administrative facilities are capable of holding inmates at  all security levels.
According to BOP population data, at the end of fiscal year 2006, BOP’s  total inmate population was approximately 193,000 inmates, of which  about 43 percent, or 83,000, were long-term, adult male inmates confined  in BOP, private, or IGA low and minimum security facilities. About  52,000 (27 percent) of the total inmates were confined in medium security  facilities, and approximately 18,000 (about 9 percent) were in high security  facilities. Additionally, approximately 21 percent of the 193,000 total  inmates, or 40,000 inmates, were females, juveniles, inmates in halfway  houses, inmates in home confinement, or inmates confined in BOP’s  administrative facilities. See figure 1 for a breakout of these populations.
section_title: BOP Lacks Data Needed to Perform a Methodologically Sound Cost Comparison and Is Not Positioned to Evaluate Alternatives for Confining Inmates in Low and Minimum Security Facilities
paragraphs: A methodologically sound cost comparison analysis of BOP and private  low and minimum security facilities is not currently feasible because BOP  does not gather data from private facilities that are comparable to the data  collected on BOP facilities. BOP is not required under federal contracting  regulations to gather data that would enable a comparison, and although  BOP has not evaluated the cost of collecting additional information, BOP  officials maintain that it could increase the price contractors charge BOP  for contract services. However, without comparable data, BOP is not able  to analyze and justify whether confining inmates in private facilities would  be more cost-effective than other confinement alternatives such as  constructing new BOP facilities or renovating existing BOP facilities. Such  an analysis would be consistent with OMB requirements, which call for  agencies to identify and evaluate various alternatives when making  decisions about the acquisition of capital assets (e.g., office buildings,  hospitals, schools, and prisons).
subsections: section_title: A Cost Comparison Is Not Currently Feasible because BOP Lacks Data Needed to Perform a Methodologically Sound Comparison
paragraphs: We determined that it is not currently feasible to compare the cost of  confining male federal inmates in low and minimum security BOP and  private facilities because data needed for a methodologically sound  comparison are not currently available. Our review of BOP documentation  showed that BOP collects basic cost data on a per inmate basis across  BOP and private facilities. For BOP-owned and -operated facilities, BOP  maintains per inmate costs that include salaries, employee benefits,  equipment, and utilities. For private facilities, BOP maintains the  negotiated per inmate contract price, award fees, and deductions made as  a result of the performance-based contract terms. However, these cost  data are not sufficient for doing a methodologically sound cost  comparison. As we reported in 1996, any comparative study of private and  public prisons should not only be based on operational costs but also on  an analysis of similar facilities—including the design, capacity, security  level, and types of inmates and quality of service—and on sufficient  statistical controls to measure and account for any differences among  facilities. Otherwise, any comparative analysis of operational costs could  be skewed. For example, one study we reviewed as part of our 1996 report  did not assess quality of service as part of the cost comparison between  private and public facilities and, as a result, could not conclude whether  the levels of service affected the differences in costs.
According to BOP officials and private contractors, BOP and private  facilities have different characteristics and provide different levels of  service. Thus, statistical methods would need to be used to account for  these differences once cost data were collected to determine the impact  they have on the operating cost of the facilities. Using guidelines  established in our previous work, we sought to compare facilities with  similar characteristics to ensure results of a comparison would not be  skewed. However, we were unable to do so because the data needed to do  the comparison were not available. BOP and private contracting officials  reported that there are numerous differences among BOP and private  facilities, including inmate population, program requirements, and  economic differences within the different geographic locations of the  facilities. According to BOP officials, private contractor facilities have  fewer contractual requirements for programming, such as vocational  training and release preparation courses, than BOP facilities, in part,  because of the different types of inmates confined in the facilities. In  general, BOP facilities confine U.S. citizens and programs are designed to  teach inmates skills that they can use when they are released, such as job  training skills, so as to help avoid their return to prison. By contrast,  private facilities primarily confine criminal aliens—non-U.S. citizens or  foreign nationals, who are serving time for a U.S. federal conviction.  Programs that focus on preventing returns to prison are not required of  private facilities because criminal aliens are released for removal from the  country and are not expected to return to U.S. communities or BOP  custody.
Given the differences with regard to facility characteristics, statistical  techniques such as analyzing the extent to which characteristics— including program differences—vary among facilities, would have to be  applied to strengthen conclusions of a cost comparison analysis. For  example, if BOP facilities provide more programs for inmates than  contractors do, then comparable data on the number and types of  programs across all facilities would be needed to adjust for this difference  in order to conclude how the difference in programs affect operating  costs. BOP maintains data on its own low and minimum security facilities  and collects some similar facility data on private facilities, including the  age of the facility, the citizenship status of inmates, and inmate population.  However, BOP does not maintain comparable data on various aspects of  private facilities, such as inmate-to-staff ratios, size of the facility, specific  programs available to inmates, and whether inmates in private facilities  are completing those programs. Because BOP does not maintain  comparable data for private facilities on the differing facility  characteristics that could affect costs, we could not determine the extent  to which these facilities differed nor use statistical methods to determine  the impact of these differences on costs. Since we could not control or  adjust for such differences, the results of a cost comparison analysis  conducted at this time would be skewed.
With regard to quality of service, BOP also lacks sufficient data on  measurements of safety and security for inmates, staff, and the general  public for a methodologically sound cost comparison of BOP and private  facilities. As we reported in 1996, a cost comparison analysis should  include not just operational costs but also an assessment of quality to  ensure that if a contractor is operating at lower costs than BOP, it is  providing the same or a better level of service. We attempted to review  numerous quality of service data—such as data that measure safety and  security—so that differences could be accounted for by comparing data on  what is achieved by these services. However, according to officials in  BOP’s Office of Research and Evaluation, BOP does not maintain data on  private facilities that we could use to compare quality of service across the  different facilities. This includes the number of grievances submitted by  inmates, the number of inmates attended to by health care professionals  due to misconduct, staff turnover rates, and the experience level of the  staff. As a result, we could not assess the trade-offs between the levels of  services being offered and the costs of operating the facilities.
While the contract requirements for the private facilities direct contractors  to maintain some data on inmates in BOP’s central database system called  SENTRY, according to BOP officials, the data private contractors enter  are not necessarily consistent with those data collected on BOP facilities,  and BOP officials stated that they cannot attest to the reliability or validity  of the private contractor data. For example, BOP officials and private  contractors we spoke with stated that although private contractors are  required to report incidences of misconduct to BOP, neither could confirm  if the private contractor system for categorizing or tracking incidences of  misconduct is consistent with BOP’s misconduct categories. BOP further  reported that program data were not comparable. For example, according  to BOP officials, private contractors reported that inmates completed the  U.S. General Educational Development program, when the program  actually completed by the inmates was a Mexican equivalent of the  program. Additionally, private contractors we spoke with told us that they  maintain some facility characteristic and quality of service data, but the  data are not maintained in the same format as BOP facility data and are  not readily available because they are only maintained in hard copies at  some of the facilities contractors manage.
BOP officials provided two reasons why they do not collect or require  contractors to collect comparable data that would facilitate a comparison  of the cost of confining inmates in low and minimum security BOP and  private facilities: (1) federal regulations do not require such data as a  means for selecting among competing contractors, and (2) BOP believes  collecting comparable data from contractors could add costs. However,  BOP officials had not evaluated the probable amount of added costs.
When choosing among private contractors, federal regulations do not  require BOP to collect comparable facility characteristic or quality of  service information from private facilities. According to BOP officials, all  BOP private contracts in our review are firm-fixed price and, under federal  regulations for competing contracts, BOP does not need this information  for technical evaluations of the proposals. BOP officials added that  during the acquisition process, BOP maintains data needed to evaluate  proposed contract prices, such as the price to manage and operate each  facility and the government’s estimate of the price, in accordance with the  Federal Acquisition Regulation (FAR). The FAR requires the contracting  official to determine if proposed prices are fair and reasonable and further  states that the performance of a cost analysis is not needed if there is  adequate price competition. In general, adequate price competition is  established when two or more responsible parties independently submit  prices for the solicitation that meet the government’s requirements. The  award is made to the party whose proposal represents the best value and  there is no finding that the price of the other parties is unreasonable. In  addition to price, the FAR recommends agencies evaluate one or more  nonprice criteria, such as past performance and prior experience.  However, agencies have broad discretion in the selection criteria and in  determining the relative importance of each criterion. Consequently, the  regulation does not require BOP to collect comparable data on various  facility characteristics and quality of service measures needed to conduct  a methodologically sound cost comparison.
Additionally, while BOP is concerned that the cost of contracts could  increase if it were to require comparable data from private contractors  because it would be beyond the scope of existing contract requirements, it  has not evaluated the costs or benefits of acquiring the additional data.  BOP’s Senior Deputy Assistant Director and other BOP officials said they  suspect that it is likely that private contractors would charge BOP a higher  contract price if it required private contractors to meet additional  requirements, such as providing data similar to those collected by BOP for  its facilities. However, because BOP has not requested such data during  the contract process or estimated the incremental costs and benefits of  requiring comparable data from private facilities, BOP officials could not  speak to the extent of the potential cost increase.
Although in the Department of Justice Fiscal Year 2003-2008 Strategic Plan  BOP identified several alternatives for space acquisition, such as  expanding or renovating existing facilities, acquiring military properties  for prison use, contracting with private companies, and constructing new  facilities, BOP officials stated that they do not consider all of these  alternatives for confining inmates in low and minimum security facilities  because they are committed to contracting with nonfederal entities for low  and minimum security bed space.
Our past work has shown that over the long term, it is usually more cost- effective for an agency to own a facility than to lease one. For example,  we previously reported that for nine major operating lease acquisitions  proposed by the General Services Administration—the central leasing  agent for most federal agencies—construction would have been the least  expensive option in eight cases and would have saved an estimated  $126 million compared to two leasing options that spread payments out  over time. However, when funds for ownership are not available, leases  become a more attractive option from the agency’s budget perspective  because they add much less to a single year’s appropriation total than  other alternatives. According to BOP officials, they consider alternatives  for space acquisition only for medium and high security facilities, because  medium and high security facilities are BOP’s priority based on capacity  needs. In addition to capacity needs, from BOP’s perspective, inmates in  medium and high security facilities are at higher risk in terms of their  behavior (i.e., rates of misconduct, assaults, and history of violence) and  private contractors have yet to demonstrate the ability to handle these  higher security populations, so BOP has chosen to continue to confine the  higher security inmates in BOP-owned and -operated facilities. As a result,  BOP officials stated that they have not considered nor do they plan to  consider alternatives besides contracting for low and minimum security  facilities.
section_title: BOP Cannot Evaluate whether Privately Contracted Facilities Provide Better or Worse Value than Other Low and Minimum Security Confinement Alternatives
paragraphs: Because BOP is not able to compare the cost of BOP and private facilities  in a methodologically sound manner, it cannot determine if confining  inmates in private facilities is more or less cost-effective than other  confinement alternatives such as constructing and operating new BOP  facilities, acquiring and using excess properties (i.e., former military  bases), or expanding or renovating existing BOP facilities. OMB requires  agencies to follow capital planning principles set forth in its Capital  Programming Guide. OMB’s guide identifies the need for effective  planning and management of investments. Among other things, this guide  articulates key principles agencies should follow when making decisions  about the acquisition of capital assets such as prisons. The Capital  Programming Guide requires that agencies consider as many alternatives  as possible because, according to the guide, whenever the government  lacks viable alternatives, it may lack a realistic basis to manage contract  costs. Once a list of alternatives is established, the guide requires that  agencies then compare those alternatives based on a systematic analysis  of expected benefits and costs. The fundamental method for formal  economic analysis is a benefit-cost analysis. OMB guidance on benefit-cost  analyses can be found in OMB Circular A-94—a circular that helps  agencies conduct a study on the benefits and costs of whether to acquire a  new capital asset, undertake a major modification to an existing asset, or  use some other method such as contracting for services. More  specifically, the goal of the circular is to promote efficient resource  allocation through well-informed decision making by the federal  government. The circular provides general guidance for conducting  benefit-cost and cost-effectiveness analyses, and serves as a checklist of  whether an agency has considered and properly dealt with all elements of  a sound analysis.
OMB’s Capital Programming Guide reports that credible cost and benefit  analyses, such as those described in OMB Circular No. A-94, are the basis  of sound management decision making, enabling agencies to determine  the best investment option for meeting their goals and making them better  equipped to evaluate alternatives. OMB’s guide states that data are the  most important piece of such analyses, including various procurement or  contract data. Consequently, to do the analyses described in OMB Circular  No. A-94, BOP would have to first collect and maintain comparable BOP  and private facility data. BOP senior officials acknowledged that they have  not done any such analyses to assess alternatives for confining inmates in  low and minimum security facilities, and they were unable to explain why  such analyses have not been done. Nonetheless, according to the OMB  guide, selecting alternatives to meet space requirements without adequate  analysis by federal agencies has resulted in higher costs than anticipated.  Consequently, without such an analysis, it is difficult to know whether  BOP is deciding on the most cost-effective alternative for acquiring low  and minimum security facilities to confine inmates, including whether to  contract, build, or expand.
The results of any analysis conducted by BOP consistent with OMB  requirements would be important because BOP officials expect inmate  populations in low and minimum security facilities to rise. Inmates in low  and minimum security facilities made up approximately 43 percent of  BOP’s total population in fiscal year 2006, and according to BOP officials,  this population will continue to grow. As a result, there would be an  increase of inmates requiring confinement in low and minimum security  facilities. BOP also projects about a one-third increase in its long-term  criminal alien population, or approximately 5,700 more criminal alien  inmates between fiscal years 2005 and 2008, which could further strain  BOP resources as these inmates are confined primarily in low security  facilities. While the private sector has additional capacity to accommodate  at least some of this expected growth in inmate populations, BOP cannot  determine whether private contracting is or would be the most cost- effective alternative because of the data limitations discussed above.
While there are costs associated with gathering data needed to compare  costs across BOP and private facilities, without the data to conduct  benefit-cost or cost-effectiveness analyses, BOP is not able to compare  alternatives for confining inmates in a methodologically sound manner.  Additionally, the absence of data also has potential long-term costs  because BOP managers, OMB staff, and congressional decision makers do  not have the information needed to weigh alternatives and make the best  investment decisions. Although OMB staff told us that BOP provides  several documents in accordance with the Capital Programming Guide,  such as information about facilities in BOP’s inventory and weekly reports  about inmate population, OMB staff stated that it would be useful to have  more and better comparison information on the cost of confining inmates  in BOP and private low and minimum security facilities. They said that  without such data, it is difficult to understand how BOP is making  decisions on the most cost-effective way to manage and confine future  inmates sentenced to low and minimum security facilities. OMB staff  added that they consider contracting a viable option because it gives BOP  the flexibility to immediately deal with population changes. However,  according to OMB staff, they would not expect contracting to always be  cheaper because owning a facility may be more cost-effective in the long  run. As a result, comparative analyses would be beneficial to help them  better understand the long-term costs and benefits of owning versus the  short-term costs and benefits of privatization.
section_title: Conclusions
paragraphs: Because of projections of future growth of inmate populations, BOP will  need to continue to acquire additional capacity. However, deciding what  to do in response to this need will be difficult because BOP does not have  the data necessary to do a methodologically sound cost comparison of its  various alternatives for confining inmates in low and minimum security  facilities. Because contracting regulations do not require BOP to collect  private facility data comparable to BOP facility data, BOP has not gathered  or maintained data needed to conduct a methodologically sound cost  comparison. Additionally, BOP is concerned with increased contract costs.  However, BOP has not assessed the cost of collecting the data or whether  the estimated costs would outweigh the benefits of having it. As a result,  BOP is not in a position to meet OMB’s capital planning requirements and  evaluate whether contracting is more cost-effective than other  alternatives, such as building new low and minimum security facilities,  buying existing facilities that may be available, or expanding facilities  already operated by BOP. Without such data, BOP cannot determine  whether procuring prison confinement and services from private firms  costs the government more or less than other confinement alternatives, as  required by OMB.
section_title: Recommendation for Executive Action
paragraphs: To help BOP evaluate alternatives for confining inmates in low and  minimum security facilities, and recognizing that there is a cost associated  with gathering and analyzing data needed to compare costs across BOP  and private facilities, we recommend that the Attorney General direct the  Director of BOP to develop a cost-effective way to collect comparative  data on low and minimum security facilities confining inmates under  BOP’s custody and design and conduct methodologically sound analyses  that compare the costs of confining inmates in these facilities in order to  consider contracting among other alternatives for low and minimum  security confinement, consistent with OMB requirements.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from the Director of the  Office of Management and Budget and from the Attorney General. While  OMB did not provide comments, in a September 17, 2007, letter, BOP  provided written comments, which are summarized below and included in  their entirety in appendix II.
BOP disagreed with our recommendation and stated that it does not own  or operate facilities to house solely criminal aliens. BOP also said it does  not expect to receive funding to construct such low security facilities.  Therefore, BOP does not believe there is value in developing data  collection methods to compare costs of confining these inmates in private  facilities versus other alternatives for confining inmates. BOP stated that,  through open competition, it has been able to determine a fair and  reasonable price for its contracts. In a related comment, BOP stated that  our report does not reference that Congress has provided funds to  contract out for inmate bed space but has not provided funding for new  construction of low and minimum security facilities. BOP also noted that it  does not currently have the capacity to confine low security criminal  aliens and is dependent on private contractors to fill the gap, and, if  construction funds were available for low and minimum security facilities,  it would take several years before the bed space would become available.  In addition, BOP noted that it is committed to contracting, in part, because  OMB has directed BOP to take greater advantage of state and local  governments and the private sector to meet its space requirements to  confine inmates in low and minimum security facilities. With regard to the  recommendation, BOP also stated that gathering data from contractors to  aid in a cost comparison would have the potential to increase current  contract costs at a time when BOP is facing budget constraints. Finally,  BOP pointed out that an independent review conducted in 2005 which  compared the operational cost of a BOP-owned, contractor-operated  facility in Taft, California, with other low security BOP facilities meets the  intent of our recommendation.
We agree that full and open competition can establish fair and reasonable  costs for services provided by contractors. However, our recommendation  is about selecting the most cost-effective alternative for confining inmates,  not about selecting among contractors as the only alternative. We believe  that developing data collection methods to determine the costs of  confining inmates in low and minimum security facilities—regardless of  whether those facilities are owned and operated by BOP or a contractor  and regardless of whether the facility confines criminal aliens, U.S.  citizens, or both—is critical to BOP’s ability to evaluate the cost- effectiveness of contracting compared to other alternatives for confining  inmates, such as constructing a new facility, modifying an existing facility,  or acquiring military properties for prison use. OMB’s Capital  Programming Guide requires agencies to undertake the kind of  comparison we are recommending in order to consider alternatives when  making decisions about the acquisition of capital assets, such as prisons.  Adhering to OMB requirements better ensures that key decision makers,  including OMB and Congress, have the information needed to make the  most cost-effective investment decisions.
We recognize that BOP has not received funding to construct new low and  minimum security facilities, but this does not mean that funds will not be  appropriated in the future, especially if data demonstrate that this option  is more cost-effective. Without these data, BOP is not in a position to  justify funding for new construction or other alternatives because BOP  cannot do a methodologically sound comparison among low and minimum  security facilities. With regard to BOP’s comment that it currently does not  have the capacity to confine criminal aliens and must rely on contracting  to address capacity issues, our report noted that, according to OMB staff,  contracting may be a viable option because it provides BOP the flexibility  to immediately deal with population changes. Nonetheless, OMB staff also  said that they need more and better cost comparison information to help  them understand the long-term costs and benefits of owning versus the  short-term costs and benefits of privatization. OMB staff also stated that  they would not always expect contracting to be cheaper because owning a  facility may be more cost-effective over the long run, which is consistent  with our past work.
With regard to BOP’s concern that requiring comparable data from  contractors could raise the cost of current contracts, our report  recognized that there is a cost associated with gathering and analyzing  additional data needed to compare costs across BOP and private facilities.  However, BOP has not determined the cost of collecting the data or  whether the estimated costs would outweigh the benefits of knowing the  most cost-effective alternative for confining inmates. Without a cost- effective way to collect comparable data, BOP cannot conduct a  methodologically sound cost comparison analysis that takes into account  factors, such as facility characteristics and quality of service, which can  differ from facility to facility. Collecting and analyzing these data would  provide key decision makers the information needed to make the most  cost-effective investment decisions.
We disagree with BOP’s assertion that it has met the intent of our  recommendation via the 2005 study by the Center for Naval Analysis. In  citing this study, BOP failed to recognize that this study does not compare  the costs of various alternatives for confining inmates in low and minimum  security facilities. Rather, it compares BOP-owned and -operated facilities  with one BOP-owned and contractor-operated facility in Taft, California.
In addition, BOP stated it had provided detailed cost information and that  it believed we would obtain comparable data from the private sector in  order to conduct a methodologically sound cost comparison. As discussed  throughout our report, the cost data BOP provided were not sufficient to  conduct a methodologically sound cost comparison. As our report states,  any comparative study of private and public prisons should not only be  based on operational costs, but should also account for facility  characteristics and the quality of services provided. We requested this  information from the private sector. As our report notes, private  contractors do not maintain similar data, because BOP does not require  them to report or collect the data it requires of its own facilities.
BOP also provided technical comments, which we considered, and we  have amended our report to incorporate these clarifications, where  appropriate.
We are sending copies of this report to the Attorney General and the  Director of OMB. Copies will also be made available to others on request.  In addition, the report will be available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staff have any questions regarding this report, please  contact me at (202) 512-6510 or larencee@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. Key contributors are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our work focused on the comparative cost of confining federal inmates in  low and minimum security facilities owned by the Federal Bureau of  Prisons (BOP) and privately managed facilities under contract to BOP.  Specifically, our objective was to assess the feasibility of comparing the  costs for confining inmates in low and minimum security facilities owned  and operated by BOP with the cost to confine these inmates in private  facilities and the implications this has for making decisions on low and  minimum security confinement. Our work was initially designed to  address Conference Report 109-272, accompanying the Science, State,  Justice, Commerce, and Related Agencies Appropriations Act of 2006,  which directed GAO to compare the costs of confining federal inmates in  low and minimum security facilities owned by BOP, privately managed  facilities under contract to BOP, and local facilities or jails via  intergovernmental agreements (IGA) with BOP. However, during the  course of our review, BOP did not renew IGAs for four facilities in  Western Texas—in the cities of Big Spring and Eden, Texas, and Garza  County and Reeves County, Texas—that confined 83 percent of federal  inmates in IGA facilities. Although BOP has, over time, used hundreds of  IGAs across the country to confine inmates on a short term basis—45 days  or less—the four Texas facilities had evolved into facilities confining  inmates on a long-term basis, similar to BOP-owned and -operated low and  minimum security facilities. In January 2007, BOP awarded five contracts  to confine inmates in facilities with approximately 10,000 beds, which are  about 3,000 more beds than the capacity provided under the four IGAs.  According to BOP officials, BOP chose to compete the bed space  associated with these agreements partly because the four Texas facilities  outgrew their original purpose of confining small populations for short  periods of time. BOP officials also stated that acquiring bed space via  contracts rather than IGAs enhances their ability to oversee operations at  the facilities. Because BOP no longer plans to use IGAs to confine inmates  on a long-term basis, we shifted the focus of our review to BOP and  private facilities only.
We did our work at BOP headquarters and the Office of Management and  Budget (OMB) in Washington, D.C. We reviewed applicable laws,  regulations, and studies on BOP programs, prison management, and  contracting requirements. We also examined available BOP and private  contractor documents on the management of low and minimum security  facilities. In addition, we met with BOP officials and worked with them to  identify potential BOP and private facilities that could be compared  considering basic criteria including inmate gender (male or female  inmates, assuming that costs for programs and services might be different  depending on gender) and whether cost data might be available on the  individual facility level for a 5-year period covering fiscal years 2002  through 2006. In selecting low and minimum security facilities, we met  with BOP officials to identify potential BOP and private facilities that  could be compared over a 5-year period covering fiscal years 2002 through  2006. Our discussions with BOP officials resulted in the identification of  34 low and minimum security facilities operated by BOP and private  contractors that confined federally sentenced male inmates over the 5-year  period. Specifically, we focused on (1) 27 BOP-owned and -operated low  and minimum security facilities, and (2) 7 facilities operated by private  firms under contract to BOP. Table 1 lists the 34 facilities we selected.
Several facilities were excluded from our scope because of issues with the  availability of cost data for fiscal years 2002 through 2006. We excluded  from our analysis those BOP low and minimum security facilities that are  co-located with other facilities in a prison complex, since BOP does not  isolate the costs of operating individual low and minimum security  facilities located on the same campus with high and medium security  facilities. Additionally, the Federal Correctional Institutions Miami,  Oakdale, and Terminal Island are excluded from the list, as between  November 2004 and June 2005 they were converted from medium to low  security facilities so they do not have a comparable low security cost  history. We did not include the competitive, private contract Reeves  County Detention Center III in our study because the facility did not begin  receiving federal inmates until 2007 and consequently did not have cost  data associated with confining federal inmates. We also excluded the  privately operated facility in Eloy, Arizona, as BOP chose to not exercise  its option to continue contracting with the private operator at this facility  in February 2006 and it became an Immigration and Customs Enforcement  detention facility exclusively. In addition, because the private facilities do  not confine female inmates or juveniles, we excluded all female and  juvenile BOP facilities from our analysis, assuming that costs might be  different depending on these inmate characteristics.
Once we selected facilities, we interviewed BOP procurement officials;  budget officials; and officials from the Office of Research and Evaluation,  Office of Policy Development and Planning, and Office of Design and  Construction. We interviewed accounting, contracting, and operations  officials as well as general counsel representing the seven individual  prisons of the private firms. Over the course of our review, we used  numerous studies as well as data from the Bureau of Justice Statistics to  put together a list of variables that might affect a cost comparison  analysis. We coordinated with BOP officials from the Office of Research  and Evaluation to generate a list of comparable variables for BOP and  private facilities. Later, we were told by BOP officials that data for many  variables needed for a cost comparison analysis are not collected or  maintained for private facilities. Given the current status, we focused our  efforts on whether a methodologically sound cost comparison was  feasible. Where possible, we gathered and reviewed available data on the  facilities and examined whether the data would be suitable for a  comparison based, in part, on key factors—such as similar facility  characteristics and levels of service—needed to do a methodologically  sound comparison as outlined in our 1996 report and Office of  Management and Budget (OMB) Circular No. A-76: Performance of  Commercial Activities. Some studies in our 1996 report, for instance,  used a variety of quality measures or outcomes such as safety, incident  data, and the extent of programs available to inmates.
In order to determine if the selected BOP and private facilities were  sufficiently similar to allow a methodologically sound comparison, we  attempted to analyze facility characteristics data. In addition, we analyzed  the historical costs to the government including direct (i.e., salaries,  supplies, and cost of services) and indirect costs, such as support costs  and operating and maintenance costs for buildings, equipment, and  utilities and cost-related data between fiscal years 2002 and 2006  associated with operating low and minimum security BOP and private  facilities. Additionally, we met with prison experts from Florida State  University College of Criminology and Criminal Justice and from the JFA  Institute—a nonprofit agency conducting justice and corrections research  for effective policy making—to further our understanding about prisons  and the complexities of comparing the costs of operating private and  public prisons. We reviewed documentation on how BOP evaluates and  assesses contract proposals to determine what data are used to make  contracting decisions. In addition, we reviewed the Federal Acquisition  Regulation to determine what requirements were applicable to BOP with  respect to cost data and cost comparisons. Finally, we examined studies  done to compare the cost of operating one BOP facility in Taft, California,  that is owned by BOP but operated by a private contractor, as well as a  study conducted by the National Academy for Public Administration on  the feasibility of using low and minimum security BOP facilities to confine  federal medium and high security inmates.
To assess the implications a cost comparison has for making decisions on  low and minimum security facilities, we met with BOP officials and  reviewed BOP population data, population projection data, and data on  short-term and long-term facility planning. We also examined BOP  documents within the context of OMB requirements on capital planning  and space acquisition. In addition, we met with OMB staff responsible for  BOP budget review and preparation to discuss BOP efforts to acquire  space to confine inmates in low and minimum security facilities in order to  determine the information BOP provides OMB on capital investments and  how this information is used to inform decisions. We also met with  officials from the National Institute of Justice (NIJ) to discuss NIJ’s  current and past work on prison privatization and NIJ’s role within the  Department of Justice.
We conducted our work from May 2006 through August 2007 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Comments from the Federal Bureau of Prisons
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, John Mortin, Assistant Director;  David Alexander; Ben Bolitzer; Billy Commons; Katherine Davis;   Maria Edelstein; Erin Henderson; Carol Henn; Jeff Isaacs;   Charles Johnson; Dawn Locke; Michele Mackin; Jan Montgomery;   Don Neff; Bill Sabol; David Sausville; John Stambaugh; Stephanie Toby;  Lacy Vong; and Michelle Zeidman made key contributions to this report.
section_title: Related GAO Products
paragraphs: Federal Capital: Three Entities’ Implementation of Capital Planning  Principles Is Mixed, GAO-07-274. Washington, D.C.: February 23, 2007.
Federal Real Property: Reliance on Costly Leasing to Meet New Space  Needs Is an Ongoing Problem, GAO-06-136T. Washington, D.C.:   October 6, 2005.
Federal Real Property: Further Actions Needed to Address Long-standing  and Complex Problems, GAO-05-848T. Washington, D.C.: June 22, 2005.
Courthouse Construction: Overview of Previous and Ongoing Work,  GAO-05-838T. Washington, D.C.: June 21, 2005.
Budget Issues: Agency Implementation of Capital Planning Principles Is  Mixed, GAO-04-138. Washington, D.C.: January 16, 2004.
Federal Drug Offenses: Departures from Sentencing Guidelines and  Mandatory Minimum Sentences, Fiscal Years 1999-2001. GAO-04-105.  Washington, D.C.: October 24, 2003.
Justice Impact Evaluations: One Byrne Evaluation Was Rigorous;   All Reviewed Violence against Women Office Evaluations Were  Problematic. GAO-02-309. Washington, D.C.: March 7, 2002.
Standards for Internal Control in the Federal Government.   GAO/AIMD-00-21.3.1. Washington, D.C.: November 1999.
Executive Guide: Leading Practices in Capital Decision-Making.  GAO/AIMD-99-32. Washington, D.C.: December 1998.
Courthouse Construction: Improved 5 Year Plan Could Promote More  Informed Decisionmaking. GAO/GGD-97-27. Washington, D.C.:   December 31, 1996.
Private and Public Prisons: Studies Comparing Operational Costs  and/or Quality of Service. GAO/GGD-96-158. Washington, D.C.:   August 16, 1996.
Federal Courthouse Construction: More Disciplined Approach Would  Reduce Costs and Provide for Better Decisionmaking. GAO/T-GGD-96-19.  Washington, D.C.: November 8, 1995.
State and Federal Prisons: Factors That Affect Construction and  Operations Costs. GAO/GGD-92-73. Washington, D.C.: May 19, 1992.
Designing Evaluations. GAO/PEMD-10.1.4. Washington, D.C.: March 1991.
Private Prisons: Cost Savings and BOP’s Statutory Authority Need to Be  Resolved. GAO/GGD-91-21. Washington, D.C.: Feb. 7, 1991.