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. 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). 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. 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. 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. 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. 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. 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. 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. 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.

Summary: 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. 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.