Private sector involvement in prisons is not new — federal and state governments have had a long history of contracting out specific services to private firms, including medical services, food preparation, vocational training, and inmate transportation. The 1980s, though, ushered in a new era of prison privatization. With a burgeoning prison population resulting from the “war on drugs” and increased use of incarceration, prison overcrowding and rising costs became increasingly problematic for local, state, and federal governments. In response to this expanding criminal justice system, private business interests saw an opportunity for expansion, and consequently, private-sector involvement in prisons moved from the simple contracting of services to contracting for the complete management and operation of entire prisons.
Today, the privatization of prisons refers both to the takeover of existing public facilities by private operators and to the building and operation of new and additional prisons by for-profit prison companies. (Many of the new prisons, additionally, are built to house out-of-state inmates.) Depending on the jurisdiction, the local, state, or federal government is then charged a per diem or monthly rate for each prisoner.
The modern private prison business first emerged and established itself publicly in 1984 when the Corrections Corporation of America (CCA) was awarded a contract to take over a facility in Hamilton County, Tennessee. This marked the first time that any government in the country had contracted out the complete operation of a jail to a private operator. The following year, CCA gained further public attention when it offered to take over the entire state prison system of Tennessee for $200 million. The bid was ultimately defeated due to strong opposition from public employees and the skepticism of the state legislature. Despite that initial defeat, CCA since then has successfully expanded, as have other for-profit prison companies. As of December 2000, there were 153 private correctional facilities (prisons, jails and detention centers) operating in the United States with a capacity of over 119,000.