Chapter 3

Prison Privatisation

The arguments about the propriety of private prisons are founded on philosophical objections to or justifications for the involvement of the private sector in provision of correctional services. The philosophical objection is that only the state has the legitimate authority to punish citizens. The rule of law is considered the core function of government and is the source of its legitimacy and authority, without which the state itself ceases to exist. The counter argument is that the state is mandated to ensure that the rule of law prevails but this does not meant the state must be the sole provider of such services. As then governor of New York, Mario Cuomo explained, "It is not government’s obligation to provide services but to see that they are provided."2

Logan points out, "It is one thing to believe that only the state has the right to imprison someone. It is another matter entirely to believe that only the state can run a prison in a fair, humane, effective, and economical fashion. The first belief is a matter of political philosophy. The second is an empirical proposition."3 The government decides to provide a service, and this is a policy decision. The actual production of that service is the implementation of that decision and is simply an administrative action.

Questions of the propriety of private prisons also become more specific when dealing with the issue of discipline and policy making within the prison setting. If a prisoner’s sentence can be shortened or lengthened as a result of his or her behaviour during incarceration, and a prison company is paid to incarcerate individuals, then is it proper to allow an employee of the prison company to mete out disciplinary infractions or rewards? In terms of policy making, should members of the parole board be permitted to invest in private prison companies? Would this cause troublesome prisoners to be released, because they are more expensive to deal with? Conversely, would well-behaving prisoners find their parole revoked because they are easier and cheaper for the company to manage?

The propriety of private prisons also extends to the marketing practices which could be expected from such businesses. If a private prison company has a vested interest in the building of new prisons, would that company then seek to distort public perceptions about crime? In South Africa, a company which makes bars and gates for the purposes of home security sponsored a daily radio segment on the instances of crime in specific areas. Is this a gross manipulation of public perception in order to fuel demand or an intelligent business practice?

One of the criticisms of private prisons is that companies will have a profit motive to fuel a fear of crime and will encourage reliance on prisons as a viable solution. This could then affect policy making and criminal justice legislation in such a way that the profits of the prison company are served rather than the safety and security of the general public. The danger arises when prisons manage only to produce more criminals, and the result is actually an increase in crime. If unchecked, the phenomenon could spiral as voters believe more prisons will decrease crime and the opposite effect continues. In this scenario, the only winner is the prison company which is provided with a constantly expanding market.

Cost

The proponents of prison privatisation, as with the supporters of privatisation in general, maintain that the private sector can provide the same services as the public sector at a lower cost. Privatisation in other sectors has not necessarily led to cost savings, and it remains debatable that it can actually raise costs in the long run. The charge is that contractors, anxious to break into the market, will submit extremely low estimates. Once a dependent relationship is established, the contractor will raise prices in order to make up for the initial loss.

On the other hand, the government does have the option to switch contractors. This option is only available when private contractors are involved; the state cannot opt to switch to a different agency or department. Also, when contractors are involved, some of the costs associated with paying these companies will return to the government in the form of taxes. Many of the contractor’s expenses–property taxes, payroll taxes, telephone and utility fees–are actually sources of revenue for the government.

Cost comparisons between public and private facilities are extremely difficult, and not one that has been completed to date has been accepted as being accurate. This is because prisons vary in terms of size, location, and classification of prisoners and these factors all impact on cost. Without the existence of two identical prisons, cost comparisons are all but impossible. Even assuming that two prisons could be considered comparable, assessing the actual costs is extremely difficult. Construction costs are difficult to quantify accurately, because of the changing value of land, and often costs for preparing the land or financing the purchase are excluded.

The usual mechanism for government agencies is the budget, which is an inherently inaccurate medium for assessing costs. The true cost of corrections is difficult to determine, as it is not simply the budgeted amount spent each year by the department. Most government budgets for prisons do not include construction costs, depreciation, debt service, rent, taxes (paid or foregone), overhead, or indirect costs. There are also hidden costs for services provided or paid for by other departments, such as the transportation of prisoners or the involvement of central government accounting or legal services. In South Africa, the Department of Public Works builds prisons and provides some of the maintenance, but these costs are not included in the Department of Correctional Services’ budget.

Government budgets are not as detailed or thorough as those of contractors who will carefully track each cost in order to obtain proper reimbursement. One of the advantages of contracting is that it forces the government to determine the costs of a service. When negotiating a contract for a government service, the true costs must be determined and quantified, and can then be analysed, compared and minimised. This process provides valuable information that government can use to compare and evaluate operations of other prison facilities. Whether a private prison is more or less expensive than one operated by the state, the process of contracting out a prison facility provides an economic benefit to the state that cannot be obtained without the involvement of the private sector.

Quality

The quality of prison services is extremely difficult to quantify, and nearly impossible to compare between privately and publicly managed facilities. Proponents of private prisons believe that contractors will bring better technology and innovation to the provision of correctional services. Joan Mullen of Abt Associates in the United States comments that "one of the major strengths claimed for private prisons is that their greater management flexibility and more rapid speed of response will promote both minor innovations and major program changes, whether through initiation, expansion, contraction, or termination."4

Opponents claim that private prisons will be of lesser quality because companies motivated solely by profit will be forced to cut corners and maximise returns by minimising investment. The greatest portion of any prison service’s budget is personnel costs, so it follows that this would also be the area for the most significant cost cutting. Critics argue that private prison employees are paid less, poorly trained, and overworked leading to substandard and even unsafe correctional facilities. This argument is difficult to support, because of the difficulty in comparing wages and training programmes for different prisons with different populations in different areas.

Nonetheless, there is a danger that companies will engage in cost cutting in the interest of profit and to the detriment of service delivery. Private prison companies, unlike the public sector, must respond to economic incentives in order to survive, let alone succeed. Competition in a market environment usually takes place in either cost or quality, but since the companies are not paid extra for providing better quality services it follows that they will compete by lowering costs. The question is whether this competition will lead to better value or less quality.

Quantity

The demand for prison is determined by the sentencing laws and practices of the state. In California, ‘Three Strikes and You’re Out’ legislation requires that any person convicted of a third serious offence is incarcerated for 25 years to life. California now has one of the largest prison systems in the world, with a larger prisoner population than that of France, Great Britain, Germany, Japan, Singapore, and the Netherlands combined.5 The new sentencing laws brought about by Three Strikes resulted in a booming prison industry, and the union which represents public prison workers is one of the state’s largest political contributors. The danger already exists that those who stand to gain from building more prisons will attempt to influence policy decisions to suit their own interests. When the private sector becomes more involved, this danger may be increased.

Opponents of prison privatisation argue that private prison companies will attempt to influence legislators to pass harsher sentencing laws in order to create business opportunities for themselves. This interference with the democratic process would distort criminal justice policy and place the interests of political power and profitability before the interests of the greater community.

The counter-argument is that this type of political manoeuvring will take place regardless of the extent of involvement of the private sector, as the unions and politicians are equally capable of disrupting democracy in order to further their own ends. The point remains, however, that private prison companies are more likely to contribute to these distortions of policy than they are to correct them.

Flexibility

In any field, the private sector is much more likely to experiment with new practices and introduce new advances. This is because private companies are rewarded financially for successfully taking risks and innovating, but public entities are motivated only to avoid risk and remain inert. The lack of competition reinforces the status quo and a climate of extreme caution. Also, public officials are concerned with political survival, which means steering clear of bad publicity.

In the field of correctional services, contracting with the private sector provides a degree of flexibility in the provision of public services. A contract allows an agency to experiment with new programs without the long-term commitment of funds or accumulating the vested interests of tenured civil servants. The flexibility allowed by having a choice of contractors and the services they provide is in sharp contrast to the bureaucracy and politics that makes public programs difficult to change, let alone discontinue. This flexibility becomes important for public policies where decision making is centrally concentrated, otherwise bad policy decisions become magnified and entrenched.

Security

To ensure the safety of the prisoners, the personnel, and the greater community, security is a top priority in any prison system. One concern regarding the security of private prisons is that cost cutting will lead to understaffing and poor training. This lack of appropriate supervision will then result in prisoners harming each other, attempting to escape, or a general loss of management control. There is also a concern that strikes or insolvency could result in a disruption of operations. Public sector employees in many prison systems are forbidden by law from going on strike due to the nature of their work, and governments are somewhat insulated from bankruptcy.

The issue of propriety also factors in concerns about security when considering the use of deadly force by a prison employee. Traditionally, only the government is permitted to use force against its citizens, and transferring this licence to a private company is not something which should be considered lightly. The use of deadly force by an entity which operates for profit, as opposed to an organisation which ostensibly draws from the will of the people, is a significant point of discussion in the debate over private prisons.

Liability

Governments can be held liable for their actions through lawsuits, and the same is true for private companies. Proponents of private prisons claim that the prison companies, by bearing the responsibility for the operation of the prison, also bear the liability and thus free the government from expensive lawsuits. Opponents point out that the private prison companies serve only to add another defendant in law suits, and that their substandard service and questionable ethics actually increase the government’s liability because of the greater risk that something will go wrong.

The role of private contractors in deflecting or attracting lawsuits cannot be easily determined, although in at least one case both the state and the private company were listed as co-defendants for misconduct at a private prison in the United States. Private prison contracts typically include a clause which indemnifies the state against reparations for harm caused during the operation of the prison. Also, many contracts will require that private prison companies carry a certain level of liability insurance, which ensures that at the very least the government will not bear the entire cost of a lawsuit. It is also argued that private companies are motivated to perform better because their insurance premiums will increase if too many incidents or disruptions occur.

Law suits are one mechanism for holding prison systems, public or private, accountable. The impact of lawsuits on private companies may be even more effective as a monitoring agent, because of the actual threat of being litigated into bankruptcy. No government agency has gone bankrupt from court costs and legal fees. Instead, the public sector passes these costs on to the taxpayer.

Of course, the private companies are just as capable of passing these costs on to the government, which will then cover them with taxpayer’s money anyway. If the creditors who loan money to private prison companies are given government guarantees on repayment, it is just as unlikely that a private contractor would find its loans called in and seek to file for bankruptcy.

Accountability

The administration of punishment is the responsibility of the state, but the implementation of this responsibility may be delegated to a private entity provided that accountability is maintained. The state does not outsource its responsibility to provide correctional services. Instead, the private company is contracted to provide correctional services, but in every case the private company is still held accountable to the state. Harding explains the theory of accountability as it pertains to private prisons:

"The key question [is] whether the contractor is effectively accountable to the state, and whether the state in turn is effectively accessible to its citizens. If accountability is structured effectively, then... the message continues to be conveyed through agents who are public in the sense of being ultimately answerable to the state."6

Some would argue that a private prison is one more step removed from the monitoring mechanisms of the state and therefore will be able to under perform without being detected. Others point out that the controversy surrounding private prisons necessarily leads to increased public scrutiny and thus better accountability. The prison systems in many countries operate in an environment of secrecy, and many governments have passed legislation which restricts media access to prisoners. The involvement of the private sector may reveal the well-disguised realities of prison life and lead to better accountability for both public and private prisons. The secrecy which surrounds prison services in general goes against the principle of accountability. No structure of accountability measurements or controls can achieve its purpose if the relevant activities are hidden from view.7

Effective accountability is always difficult in institutions such as prisons, because of the secrecy and the environment of absolute control. The actions inside the prison, as well as the interactions between the state and the contractor, must be open and transparent in order to achieve any degree of accountability. Harding explains 10 key tenets of accountability, which the state requires of private prison companies and which the public must require of the state:

There must be a distinction between allocation and administration of punishment. The private sector must be confined to administration.



Penal policy decisions must not be driven by those who will profit from them. (This requirement transcends the private prison debate, and should take into account the political ‘profits’ which have become part of the prison-industrial complex. This phenomenon will be covered in more detail in Chapter four.)



The activities of both the public and private sector must be open and publicly accessible. (The right to access such information is included in legislation such as the Freedom of Information Act in the United States, or the Promotion of Access to Information Act in South Africa.)



The expectations of the private sector must be clearly specified. These expectations are usually included as performance requirements in the contract.



The public sector should not be allowed to fall into complete disrepair, resulting in a dual system: a vibrant private sector and a run-down public prison system. This could lead to a level of dependence on the private sector that would compromise the amount of control which can be exercised by the government.



Independent research and evaluation with unrestricted publication rights should be included in the private contracts. Private companies should not be permitted to hide behind claims of ‘commercial confidentiality’ to refuse access to research.



Custodial regimes, programs, and staff must be ‘culturally appropriate’.



The state should maintain control over probity of private contracts.



Financial accountability must not be ignored. The whole contract, including financial details, must be made public.



The state must be able to reclaim prisons. Contracts should be terminable, both in fact and in writing. Accountability will not mean anything if the decision to contract out services becomes irrevocable in any respect.8

Corruption

Closely related to challenges of accountability is the relative propensity for corruption to be found in public versus private institutions. The involvement of additional financial transactions can expose the government to additional risks of fraud.

The awarding of government contracts in general carries with it the risk of kickbacks and political favours. On the one hand, the private prison companies have vested financial interest in covering up misconduct and would therefore be more prone to bribery and other dishonest practices. One could also argue, however, that because more is at stake for private prison companies–the loss of their contract, a decline in stock prices from bad publicity–that they will be less likely to engage in corrupt business practices.

In any institution, public or private, the likelihood for corruption has more to do with the management environment and the controls in place to prevent such activity than it does with the public or private nature of the enterprise. The greatest control risk is in the actual process of awarding the contract and the financial agreements contained therein. This is the case whenever the government contracts with a private company, and is yet another reason why the procurement process should be as transparent as possible, and the contracts themselves should be made available to the public.

The debate over prison privatisation has been fuelled by antagonism between public employee unions and private corporations. Each side has its own self-interest to protect when it comes to prison privatisation, and this bias is clearly evident in literature on the topic. In the state of Florida the Florida Police Benevolent Association (FPBA), which represents about half of Florida’s 18,000 correctional officers, have consistently campaigned against prison privatisation. In 1997, the FPBA filed an ethics complaint against Dr. Charles Thomas, a professor at the University of Florida and a leading expert on prison privatisation. In addition to being the director of the University of Florida’s Private Prisons Project, Thomas worked as a consultant for the state’s Correctional Privatisation Commission (CPC), the government body which contracts with private prison companies. Since 1990, private prison companies have donated hundreds of thousands of dollars to the University of Florida Research Foundation. Although an exact amount has not been agreed upon, some estimates are as much as $400,000 between 1990 and 1996. Thomas’ salary was paid by the university, but his expenses and summer salary were covered by corporate gifts and donations. He also owned stock in several of the private prison companies. However, Thomas has never kept his stock ownership a secret, and has explained that he did not participate in the evaluation of proposals submitted to government agencies. In 1997, the Corrections Corporation of America announced that Thomas would be paid to serve on the board on the company’s newly formed Prison Realty Trust. In 1998, he received $3 million in consulting fees from Prison Realty Trust for his work on the company’s merger with parent company CCA. The FPBA argued that Thomas’ financial interest in private prison companies compromised his independence and that his consulting with the CPC should be discontinued. Thomas initially dismissed these charges as politically motivated, but eventually admitted to three violations of the state’s ethics laws. He was forced to resign his university post and pay a $20,000 fine. The commission’s report concluded that Thomas’ relationship with Prison Realty Trust created a conflict of interest in which he could have altered the findings of his research in order to increase his financial benefits. The Attorney General specifically pointed out that "there is no evidence that [Dr. Thomas] has ever actually disregarded his public duties for a private benefit. However, violations are based upon the fact that a conflict exists, not whether or not [Dr. Thomas] succumbed to the temptation."9 Thomas is considered an authority in the prison privatisation debate, and has published numerous articles and books on the topic. Should his academic research be dismissed as biased and unreliable because of the interests served by his funding sources? Or was the FPBA only working to suppress information which is detrimental to their own anti-privatisation campaign? Both CCA and Wackenhut have spent thousands of dollars each year on ‘independent research’. Any company that wishes to survive must invest in research and development within their industry. Public sector employee unions in Canada and the US have also paid for research reports, predictably from avowed ‘anti-privatisation researchers’. The prison privatisation debate is shaped to a large extent by the available resources of the interests involved, and it remains critical to bear in mind the interests served by each argument.

Dependence

In countries which have turned to prison privatisation, the decision to contract out prison services was made at least in part because the public sector has been unable to meet or satisfy demand. This is usually because there is a greater demand for prisons than the government is able to supply. The danger with contracting out prisons to the private sector is that if the companies are extremely successful and do a much better job of meeting this demand, the public sector will become entirely dependent on the private sector.

Many prison systems around the world are struggling to provide the appropriate level of service to the prison population they currently serve. With these populations increasing each year, the public prison service is turning to the private sector for help. But if the public prison sector does not also elevate its standards to somehow compete with the private sector, then the private companies will gain a disproportionate amount of leverage in the negotiating process. Private prison companies, as a result of their superior service delivery, will then obtain de facto control of the entire prison system.

Additional issues in the privatisation debate

Logan explores ten issues around which the prison privatisation debate is centred. However there are two additional issues which overlap with several of those mentioned above but are important enough that they deserve separate emphasis. These are the issues of financing and monitoring, which in some ways are part of accountability but still merit additional discussion.

Financing

The manner in which private prisons are financed has a great deal of impact on the public interest. If the state wishes to build a prison, it must first find the capital. One option is to take out a loan, but there are usually legislative restrictions on the amount of debt the government is permitted to carry and constructing a prison is expensive and would require a sizeable loan. Often, the state must receive legislative approval before taking out a large loan even if the state’s finances are sufficiently balanced to support the additional debt. Legislators answer to their constituents, and the public is usually not in favour of the government spending more money or getting into debt in order to build a prison. The state could alternatively issue bonds to raise money, but a bond issue is even more reliant on public approval. Usually, the decision to issue bonds is decided upon in a special referendum election. More often than not, the public will vote against issuing bonds to pay for a new prison.

Contracting out to the private sector is one way to get around the legislative requirements which restrict the government’s ability to raise capital. The private company can secure financing from the banks and then charge the government an annual fee for the provision of correctional services. The government does not need referendums or legislative approval to pay operational expenses. The private company also wins, in that it usually receives a contract for anywhere from 5-15 years of guaranteed income. Also, the private company can usually get reduced rates from the bank when the government issues a ‘certificate of participation’ on the company’s behalf. With the government guaranteeing the cash flow of the company, the bank will usually provide the loan at a reduced interest rate.

The certificate of participation is part of what makes prison contracts so attractive to the private sector. The company gets reduced rate financing, thus decreasing their cost of capital and increasing their rate of return. These are the ratios that stockholders like, and successful managers are those that keep their stockholders happy. The government is content because it has avoided additional debt and cut back on long, drawn-out approval processes. The negative side to the use of a certificate of participation is that the government becomes financially linked to the management of the prison. If the prison company should fail or the contract be terminated, what would become of the loan? It would more than likely become due, and if the company could not pay, then there is the possibility that the bank could require the funds from the government. Paying off the loan from a bankrupt private prison company is not likely to be approved by voters.

The question of the public interest also comes into play when examining the finance arrangements for private prison companies. If voters have turned down the bond issue or their representatives have passed legislation restricting debt, then turning to private financing is in effect spending taxpayer money without their approval. In fact, if the voters have explicitly voted against spending on a new prison and a private prison contract is substituted instead, then the government is directly contravening the will of the people. Private sector financing of prison construction could save money and time but it can also be used to circumvent the checks and balances which are intended to ensure that the government remains accountable to the will of the people. In this way, the use of private finance mechanisms becomes un- or even anti-democratic.

The most common means of financing private prisons is through the establishment of a consortium. The consortium is a group of companies which each own a percentage of a trustee company formed expressly for the purpose of a private prison contract. The companies that usually form a consortium are those which represent the design, construction, finance and management of the prison: architecture firms, construction/contractor groups, banks, and private prison companies. The trustee company will own the facility and lease it back to the state, usually over a term of 20 or 25 years. The title for the facility will not transfer to the state until all of the capital and lease payments are made to the trustee company, which then disburses earnings to the various members of the consortium.

The trustee company obtains the certificate of participation and is able to access the benefits afforded to governments in securing finance. This includes not only a lower borrowing rate, but it also means that the interest income to the bank which provides the financing is exempt from taxation. In many constituencies, interest received on a loan offered to the state is not taxed by the state. In this way, the banks win because they receive tax-free income. The construction companies and architecture firms gain a multimillion rand government contract. And the private prison companies get reduced rate capital and guaranteed cash flow.

Everyone involved in private prison contracts seem to win, except the public interest. These transactions are kept notoriously secret, and it is almost impossible to legally find out exactly how much is being paid to whom for what purpose and whether, in the long run, there is any cost savings to the taxpayer at all. That is not to say that such consortium arrangements will necessarily act against the public interest, but the avoidance of any restraints and a lack of transparency in the entire process certainly does not provide any guarantees that the parties involved will prioritise the protection of the public interest.

The intertwining of management issues with the financing deal affects accountability and flexibility between the state and the consortium. The long term lease for the actual prison facility is a separate transaction from the management contract for that prison, and is usually for a much longer period of time. In spite of any monitoring or evaluation standard which may be included in the management contract, the existence of a long-term lease as part of the financing arrangements will compromise the ability of the state to terminate the contract. The accountability mechanism which requires the private prison company to re-bid and compete for the management contract is relegated to an automatic option to renew. As Harding points out, "Deferred ownership of real estate and physical plant and long term financial commitments by way of certificates of participation together constitute real if not insuperable barriers to state policy reversal in this area."10

Monitoring

Accountability and the protection of the public interest are both contained in the challenge of appropriate monitoring mechanisms. If prison systems can be effectively monitored then many of the more contentious issues surrounding prison privatisation will fall away.

The key question for monitoring is to define the successful operation of a prison and to devise standards for measuring that success. One might expect a successful prison to be one which achieves the rehabilitation of offenders and the reduction of recidivism. However these are goals which are difficult to quantify and benchmark. Instead of successful rehabilitation, private prison contracts tend to list performance objectives which minimise harm or wrongdoing in the prison. As one author observed:

"The era of the development of private prisons has coincided with the decline of the ‘rehabilitation ideal’ within prisons. In such a penal climate, private firms can hardly be expected to achieve overall rehabilitation objectives that have been largely discarded by the public sector."11

It is much easier to quantify and measure the number of incidents of assault and the amount of contraband which has been confiscated. It is much more difficult to measure the likelihood that a prisoner will become a productive member of society upon his or her release. Because the performance standards applied to private prison companies are included in the contract, they are also subject to the same negotiating process as other aspects such as fee structures and termination clauses. This leads the performance standards to represent more of a deal or compromise between the two parties than a representation of the public interest.

The private prison companies are usually financially penalised for failing to meet the performance objectives in their contracts. Thus, there is an added incentive to make sure the prison is run as smoothly as possible with minimal interruption or risk. Programs such as job training and education, in some respects, could make the management task more complicated and difficult as prisoners must be supervised and transported to different locations.

Sometimes the private prison contract will attempt to encourage rehabilitation by requiring that a certain number of hours of job training or other programs are available. However, the companies are neither measured nor rewarded for the success of the rehabilitation programs. In this way, the private prison companies are motivated to concentrate on security and detention and simply go through the motions with regards to the actual rehabilitation of the inmates. As a result, the evaluation criteria used in private prison contracts are serving to accelerate the trend towards the warehousing of criminals.

While valid and reliable standards for measuring prison performance have not been developed for either public or private facilities, the advent of prison privatisation has resulted in increasing discussion about the need for such standards. Perhaps one contribution of private prison contractors will be that they have served as a catalyst for further research in the area of public sector performance measurement.

Assuming that appropriate standards could be developed to measure prison performance, the enforcement of those standards also poses unique challenges. Most private prison contracts include the implementation of a monitoring mechanism, usually in the form of a representative of the state who is responsible for ensuring compliance with performance standards. A common problem in any regulatory situation is the incidence of ‘capture’, in which the regulator becomes more concerned with serving the interests of the industry than the more abstract public interest.

Capture occurs when the person responsible for monitoring the actions of an organisation becomes co-opted into sympathising with the organisation and thus relinquishes his or her authority as a overseer. An example is an inspector of gas pipelines who notices a small repair which must be done according to the guidelines of the regulating authority which he or she represents. However, performing this repair would require the pipeline to be shut down and the inspector, having worked with the company on routine inspections in the past, knows that shutting down the pipeline for even a half day results in significant loss of revenue to the company. The inspector most likely has a background in oil pipeline management and sympathises with the business. This understanding combined with the constant contact he or she has with the employees of the company results in a greater degree of sympathy for the interests of the company than the safety requirements of a distant and faceless regulatory agency.

There are several factors which can predispose a regulator to capture. Often the person appointed to regulate an industry will have a professional background in that industry. The regulatory agency may be dealing with personnel shortages and a lack of resources, as is characteristic of the operations of many government departments. For the already overworked regulator, citing a company for a violation will result in additional work as the necessary paperwork and follow-up must be completed. On the other hand, if a regulator has only a few locations or companies which he or she monitors on frequent visits, it is more likely that a less formal and more familiar relationship will develop. Rather than write up a report and citation for a violation, the regulator may simply verbally inform the management of the problem and ask that it be fixed at some point. This leads to sloppiness and weakened authority, which erodes the state’s power and ability to protect the public.

In the case of private prisons, the additional challenge for monitors is that they represent the prison system, which is not a regulatory body but an agency which is performing the same function as the private company. A failure by the contractor becomes a reflection of the entire department, and so it is in the interest of both regulator and contractor to ensure that mistakes and incidents are not reported. Also, the work of a regulating agency is very different from one which operates in that industry and so the prison service often finds that its personnel are neither trained nor experienced in the importance of independence for those appointed as monitors. In many cases, both the monitor and the prison company ultimately report to the same management hierarchy within the government agency responsible for prison administration. This arrangement is much more likely to lead to collusion and informal or inconsistent application of standards than if the prison were monitored by an external agent.

External regulation and accountability which is not contract based but is rather the result of a separate statute and enforced by an independent regulatory body is more likely to be effective at monitoring prison performance. Such an entity should be charged with regulating both public and private prisons and hold to the same standards for both.

For prison privatisation

The proponents of prison privatisation make several strong arguments. Logan, a prominent supporter of prison privatisation, points out that contracting does not deny the government’s responsibility to provide prison services. Rather, contracting out prison services simply rejects the government’s monopoly over the provision of those services. Logan explains that, "Imprisonment has all of the characteristics of a monopoly; quality is low, prices are high, and supply has not kept up with demand."12 If the state builds a prison and there are not enough prisoners to fill it, then that mistake and all its costs will be passed on to taxpayers. If competition is introduced, then both government and contractor will be forced to predict and meet demand better in order to stay in operation.

Logan summarises his argument for prison privatisation by making ten points:

As a result of contracting out prison services, the true costs become highly visible, and can be analysed, compared, and minimised. This provides competitive price and product information.



Private companies can construct prisons more quickly and cheaply. Whereas the government takes two to five years, a private company can do it in six months to one year. Also, the private company is more apt to design for efficient operation.



Private contractors have greater speed and freedom in matters from personnel to purchasing. This flexibility promotes innovation and experimentation, because it allows for risk-taking. It becomes easier to undo mistakes, and creates an environment which is ideal for change.



Involving the private sector adds expertise, skills, and experience of a multinational company’s ‘head office’, which will exceed that of smaller jurisdictions.



Contracting out reduces a tendency towards bureaucratic self perpetuation and helps limit the size of government. It’s easier to control business interests in encouraging greater spending than government’s ‘insatiable craving for internal expansion’.



Private prison contracts increase accountability because market mechanisms of control are added to the political process.



Private prisons are highly visible, while state prisons are ignored by the public. Greater public suspicion towards ‘Big Business’ translates into increased vigilance over those who run prisons.



Private prison contracts promote the development and use of objective performance measures. The government spends taxpayer money without incentive to measure quality of performance, but contracts usually specify performance indicators and to the same extent broader goals as well.



By creating an alternative, private prison contracts encourage competitive evaluation, thus raising standards for government as well as for private contractors.



Private prison contracts provide a surgical solution. If reform is needed, public management is entrenched and inert, whereas a contractor is easier to replace than a government agency.13

Against prison privatisation

One of the arguments against prison privatisation is that privatisation in general is "a concept already partially discredited in the western world because of its association with inflated profiteering and the abandonment of the public interest."14 Even the proponents of prison privatisation acknowledge that "...private operation of prisons and jails can be seen as an extreme test of limits of privatisation, because the administration of criminal justice, and especially of punishment, is widely regarded as a core function of government and the exclusive prerogative of the state. The lament of the opponents of prison privatisation thus becomes, "If the penal function can be privately performed, what function cannot be?"15

The claims for cost savings are difficult to support and all but impossible to prove. Other arguments that the private sector brings increased flexibility, innovation, and technology are weakened by the reality that companies are not rewarded for performing beyond the specifications of their contracts. The performance standards in the private prison contracts serve more to limit the efforts of the private prison companies than to ensure minimum performance. The company is penalised for failing to meet them, but is not rewarded for exceeding them.

In addition, these contracts often stretch for up to 25 years. Even though the management portion may expire in less time, the lease-purchase arrangements tie the government and contractor together in such a way that it becomes both difficult and expensive to terminate. It does not seem plausible that flexibility and innovation will be found in the management style of a company with 25 years of specifically determined and guaranteed income.

Some of the arguments against private prisons are not specific to private prisons but are actually criticisms of prisons in general. The problems encountered by private prisons are similar to those faced by public prisons. Overcrowding, prisoner suicide, smuggling of contraband, drug use, violence, and poor health are in no way unique to private prisons. Providing correctional services is a difficult, and sometimes dangerous, business regardless of whether those services are provided by public or private entities.

Particularly in the United States, the criminal justice system is increasingly relying on incarceration and building more prisons. People who are opposed to the policy of mass incarceration fear that cheaper and more efficient prisons will only increase the use of prisons in criminal justice, when other community based correctional programs are more effective. These people are not opposed to private involvement in community based programs, however, and so their opposition to private prisons is actually misguided. The criticisms they raise have more to do with prisons in general than with private prisons.

Private sector involvement in the prison industry may lead to increasing use of imprisonment, but excluding the private sector is not likely to reverse this trend. Vested interests can be found in any kind of organisation, public or private. The public interest is not necessarily allied with the interests of government agencies, just as it is not necessarily served by profit-seeking corporations. Just as corporations seek market opportunities, politicians look for union support, and bureaucrats work to increase their budgets. These activities are not intrinsically evil but simple facts of incentives which motivate behaviour. As Logan explains: