Public Policy: Using Market-Based Approaches - Department for ...

Section 9 – Competitive Tendering of Prisons
1920s (Austin and Coventry, 2001). 76 Private sector management of prisons was
re-introduced to the US in the 1980s in response to problems of overcrowding.
Privatisation of existing prisons was achieved by contracting out management
and, more radically, transferring ownership of the prison and its management
responsibilities to a private operator. Some private prisons have been built
speculatively, in that the contractor constructs the prison without having a
contract from the prison service. The operator then seeks to obtain a contract
once the prison is already constructed. There are 158 private correctional
facilities in the States, making up less than 5 per cent of the current market
(Austin and Coventry, 2001). 77
A nationwide survey conducted by the Bureau of Justice Assistance in 2001 found
that, rather than the projected 20 per cent savings, the average saving from
privatisation was only about 1 per cent, and most of this was achieved through
lower labour costs. The study concluded that in general privately operated
prisons function as well as publicly managed prisons, with the exception of the
rate of inmate-on-inmate assaults, which was 35.1 per cent in private prisons
compared to 25.4 per cent in public prisons. This was attributed to a number of
factors, including the 15 per cent fewer staff employed by private prisons.
These labour cost savings, achieved through reductions in number of staff,
fringe benefits and working patterns, have been the source of great controversy
because they have been linked with some highly publicised management
failures. These failures are often cited as examples of why the private sector
should not be involved in prisons. One such example is the Northeast Ohio
Correctional Center, constructed by CCA in 1996 as a speculative build prison.
Within the first 15 months of operation, 17 inmates had been stabbed, 6 had
escaped and 2 had been murdered. Furthermore, in 1999 the US District Court
granted preliminary approval of a $1.6m settlement on behalf of inmates who
claimed they were abused, denied adequate medical care and not properly
separated from other inmates (Clarke, 1998). 78 Northeast’s problems were found
to result from a lack of basic security practices, inexperienced staff, inadequate
training and a willingness to accept inmates who should not have been
transferred to the facility.
Another example of private prison failure is that of the Elizabeth detention centre
in New Jersey, operated by Esmore Correctional Services Corporation, where
attempts to cut costs led to the hiring of inadequately qualified prison guards.
This was in breach of its contract, but inadequate monitoring resources meant
the breach went undetected until a riot broke out in 1995. Following an
investigation that found under-qualified staff to be a contributing factor to the
76 Austin, J. and G. Coventry (2001) Emerging issues on privatised prisons, Bureau of Justice Assistance, National
Council on Crime and Delinquency.
77 Op.Cit.
78 Clarke, J.L. (1998) Report to the Attorney General: Inspection and Review of Northeast Ohio Correctional Center,
Washington, DC: Office of the Corrections Trustee for the District of Columbia.
81