CORRECTIONAL PUBLIC-PRIVATE PARTNERSHIP:
A SENSIBLE SOLUTION FOR CORRECTIONS SYSTEMS

Today, federal, state and local governments face intense
fiscal challenges. A proven strategy for long-term cost
control is the use of public-private partnerships to
deliver a few key government services. Corrections is
a prime example – the construction and operation of
prisons, jails and detention centers.

for the public corrections system by 4.45% annually.
This could result in a cost avoidance of approximately
$20 million annually for states with a typical annual
corrections budget of $445 million (this is in addition
to the direct operational cost savings by the private
sector of an average 10-20%).

More than 12 percent of all federally sentenced
offenders and more than 6 percent of state offenders
are currently managed by privately-operated
corrections management companies – and those
figures are growing. More than 30 states, the District of
Columbia, all three federal corrections agencies, along
with dozens of county agencies now partner with
private management companies.

A research report by the Washington Policy Center
cited findings that states that have at least 20% of their
prisons privately operated had a lower net increase in
their overall state budget during the study period of
June 1997 and June 2001. (Washington Policy Center,
February 2003)

Numerous states – including New Mexico, Colorado,
Oklahoma, Tennessee, Alaska, Hawaii, Idaho, Montana
and Wisconsin – house between 20 to nearly 50% of
their inmates in private facilities. And Texas has the
largest overall privatization program, with more than
40 facilities capable of handling nearly 30,000 inmates.
Research comparing public and private corrections
demonstrates that private operators deliver reduced
costs, high quality and enhanced accountability.
Privately-managed prisons generate savings during
design, construction, and start-up as well as program
management for years in the future. Structured and
fiscally responsible operations enable government
leaders to allocate scarce financial resources to other
important programs.

PRIVATE PRISONS PROVIDE COST
SAVINGS. THIS IS CONFIRMED BY MANY
STUDIES.
• Privatization has a major impact on overall state
corrections budgets.
A very important fact is that the presence of
competition from private prisons benefits governmentrun facilities as well. Researchers from Vanderbilt
University, in a report released in 2003, found that the
use of privatization by state corrections departments
resulted in the reduction of daily incarceration costs

• Construction time falls 40% and cost savings
appear to be more than 20%.
A recent report published by the Confederation of
British Industry (CBI) in the United Kingdom stated that
“Competition is currently saving the taxpayer £40m to
£60m a year and between £200m and £260m over the
period 1991 to 2002 – equivalent to 20 new secondary
schools or three new general hospitals.” Savings are
derived through appropriate contracting, competition,
innovation, staffing and lessons learned. (CBI, July
2003)
• Corrections management companies offer
important capital savings.
With capital funds available today, some private
corrections management companies are able to
aid corrections agencies by financing, building and
managing a new facility, with favorable terms for the
government agency, who, due to strapped budgets,
may not be in a position to finance a typical $50 million
for a new government-owned correctional facility.
• Private prisons save taxpayers 5 – 15% on prison
operational costs.
A comprehensive review of the privatization literature
by the Reason Public Policy Institute (RPPI) examined
28 research reports that compared cost data for private
prisons to government-operated facilities. Of those
studies, 22 (79%) found significant budget savings,
conservatively estimated to be between 5 and 15%,
due to privatization. (RPPI, January 2002).

Cost savings are achieved because private firms are
free from time-consuming and costly government
procurement rules. Additionally, private prisons apply
innovative techniques and modern correctional
technology that ensure not only a safe environment, but
also reduce costs. Private prisons are also not subject to
government civil service requirements that often hinder
efficient personnel management.

QUALITY AT PRIVATE PRISONS IS
AS GOOD OR BETTER THAN PUBLIC
COUNTERPARTS.
Qualitative standards are imposed on the private
prisons through government mandated contractual
arrangements and regularly monitored, in most cases,
by government staff to ensure compliance. Research
has proven that, although private prisons result in
significant cost savings, quality is not diminished or
compromised.
• 11 of 18 (61%) qualitative studies found services
at private prisons equal or better.
Of the 18 qualitative studies reviewed, RPPI determined
that 11 found quality of services at the private prisons
were as good as or better than the services provided at
public prisons. (RPPI, January 2002)
• 44% of private prisons meet national standards
in contrast to 10% of public prisons.
Agencies and facilities throughout the U.S. strive to meet
nationally recognized standards from the American
Correctional Association (ACA). At the end of 2001, the
RPPI review of facilities established that “Only 532 are
accredited by the ACA—465 of 4,800 governmentmanaged facilities (10 percent ACA accredited) and
67 of 150 privately managed facilities (44 percent ACA
accredited).” (RPPI, January 2002)
• Comparative analysis reveals private prisons
perform better.
Private prisons “…perform better in terms of escapes,
time out of cell and hours of purposeful activity”
according to the report published by CBI in the United
Kingdom. The report stated that “Privately managed
prisons have also brought about a revolution in the
decency of staff-prisoner relationships.”
• Two-year study reveals private prison quality
equal to public prisons.

The Arizona Department of Corrections conducted a
comprehensive study which demonstrated that three
private Arizona prisons exceeded the 15 public state
prisons in quality. The study stated, “Combined results
for both fiscal years indicate that the private prisons
performed at or above the aggregate performance of
Level 2 [minimum security] public prisons 62.3 percent
of the time.” (Arizona Department of Corrections,
October 2000)

PRIVATE PRISONS HAVE GREATER
SCRUTINY AND ACCOUNTABILITY.
Contractors who fail to meet contract terms face
contract termination, fines, business reduction and
other negative impacts. Private prisons are scrutinized
by their government customers, stockholders, inmates
and their legal representatives, and, in many cases,
other external entities including the media.
• Legal accountability is high.
The Harvard Law Review points out that there are
many legal factors which increase private prison
accountability beyond that of the public prisons. The
article holds that “…private prisons are, if anything,
more accountable for their constitutional violations
than are public prisons.” (Harvard Law Review, May
2002)
• Contracts spell out desired results.
State-of-the-art contracting calls for performance
based contracts, which are now common in the
industry as a means to enhance accountability. These
contracts spell out what outcomes the contractor must
produce and in many cases provide financial incentives
for meeting the desired results. (RPPI, January 2002)