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Essential Public Interest Protections for Prison Privatization Contracts

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The privatization of prison facilities is fraught with risks. When a state contracts with a private prison company to operate a correctional facility, it is handing over control of an important and sensitive public function to a company that may have different goals and priorities than the government and public. Many weaknesses with privatized prisons that have been documented are due to the profit-driven nature of the private entities that take over the facilities. For example, private companies seek to minimize operating expenses, including employee salaries, leading to high employee turnover rates and insufficient training. At the same time, companies ensure maximum revenues by demanding contract provisions that require prisons be to filled to capacity. These conditions directly contribute to the decreased security and higher incidence of violence found at privatized prisons.

However, while private prisons cut costs at the staff level, they pay multi-million dollar compensation to their executives and they pay profits to shareholders. That is why, all things considered, and despite industry claims, there is little evidence that private prisons actually save governments money. For example, a recent state audit in Arizona found that privately-run prisons resulted in higher costs to the state compared to publicly-run facilities.

Privatization contracts represent a long term investment (typically 20 years) in a business relationship with a corporation. Once the state enters into a prison privatization contract, it can be extremely difficult to nullify or amend the contract, even when the contractor is shown to be grossly negligent or abusive. Many states turn to privatization due to overcrowding. Unfortunately, states do not always have the option of cancelling a contract because they have nowhere else to house inmates. Facilities are often sited in small, economically depressed towns, where there are few jobs. These towns can become dependent on the income generated by the prison, which makes local officials reluctant to “rock the boat” by reporting problems in the facility. Indeed, local officials may put political pressure on departments of correction or state officials to keep facilities open, even when serious violations occur for which the state may be liable. These are important items to consider before going down the long and often treacherous road of prison privatization. Given these risks, it is important to understand what public protections should be included in contracts when a state considers prison privatization. While these provisions will not completely mitigate the risks of prison privatization, if explicitly included in prison privatization contracts and swiftly and thoroughly enforced, they can potentially prevent problems and protect the state from costly contract mistakes. Drawing from the experiences of states that have attempted prison privatization, In The Public Interest has developed a list of protections that should be considered when negotiating and designing contracts with private prison companies. We also include best practices that states can implement to better monitor and enforce these contract provisions.