Private Prison Success

Study says CA private prison is delivering results

This month, the Justice Department’s National Institute of Justice released a study, Contracting for Imprisonment in the Federal Prison System: Cost and Performance of the Privately Operated Taft Correctional Institution (available here)

The researchers set out to determine whether the low-security private prison facility located in Taft, California performs as well as publicly operated facilities do within the Federal prison system. They compared the cost of contracting the operation of Taft Correctional Institution (TCI) to what the federal government would have spent if it had run the facility. This is a hypothetical comparison. It’s worth noting that the model used to determine what the cost of public operation would be represents a ‘best-case’ or ‘low-cost’ scenario compared to actual data for other facilities.

The researchers also compared the cost of operating TCI to that of other existing low-security federal prisons.

In addition, TCI was evaluated on the basis of the quality of its performance during its first six and one-half years of operation as compared to publicly operated federal prisons over the same period.

The findings:

  • The private facility SAVED taxpayer money

The contract at TCI cost the government $142.1 million, while the estimated cost of government operation cost was between $151.6 and $158.6 million. Thus, the private facility saved between 6 and 10 percent or $9.6 and $16.5 million. During all five years of the analysis, the net cost of contracting was less than the lowest estimate of direct public operation.

In the hypothetical model for public operation of the Taft facility, the researchers assumed that staffing levels would be the same as the privately operated facility and that pay is at the ‘mid-grade’ level. In actuality, the private provider employed more employees, but offered a less-expensive package of employee benefits. In addition, labor costs (wage and salary) for the private facility were higher than many other public facilities it was compared against. Had the private facility been located in another part of the country with lower prevailing wages, the difference between public and private labor costs would have been much greater. For example, if the facility had been located in Yazoo City, Mississippi (the site of one of the similar federal facilities), the contractor’s labor costs would have been 24 percent lower, and savings would have increased as well.

A simple review of per diem rates provides even stronger evidence of cost savings from the private facility. Indeed, TCI housed prisoners at a significantly lower daily per prisoner cost than the Bureau of Prisons experienced at fourteen low-security federally operated prisons.

The private facility had the lowest per diem rate in every year except its start up year (1998), when costs were higher, as expected. After 1998, TCI had nearly a double digit advantage in every year over the next lowest per diem in the federal system. The cost savings is even more dramatic when compared against the average and the high cost per diem facility.

1998 1999 2000 2001 2002
Taft (Private) 52.43 33.82 33.25 36.88 38.37
FCI Elkton 46.59 39.72 39.77 44.75 46.38
FCI Forrest City 44.2 39.46 39.84 41.65 43.61
FCI Yazoo City 44.15 41.46 40.05 43.65 42.15
FCI Ashland 69.96 62.75 63.47 64.12 63.38
FCI Bastrop 56.75 53.75 52.67 57.15 52.97
FCI Big Spring 58.8 54.71 51.03 67.99 70.88
FCI Butner 51.78 45.76 47.04 50.93 54.27
FCI Latuna 58.47 56.47 57.36 71.39 60.02
FCI Loretto 62.59 61.42 63.22 49.32 50.86
FCI Milan 73.93 66.77 62.97 62.56 63.23
FCI Petersburg 65.79 61.79 61.79 56.97 60.59
FCI Safford 58.65 56.51 58.57 58.51 58.69
FCI Seagoville 61.48 59.41 61.03 77.4 75.83
FCI Texarkana 49.29 47.52 49.68 53.34 55.55
Low Savings -15.79% 16.68% 19.82% 12.93% 9.85%
High Savings 41.01% 97.43% 90.89% 109.87% 97.63%
Average Savings 9.32% 57.87% 60.79% 54.89% 48.63%

Note: Highest costs per year are shaded red. Lowest costs per year are shaded green.

  • The private facility did NOT jeopardize quality

While cost is important, the quality or performance of a prison facility is critical. The review concluded the following about the private facility: “very efficient performance, fully responsive to contract requirements, more than adequate results, reportable deficiencies but with little identifiable effect on overall performance.” It was determined that the contractor delivered what it promised in the contract, and what the contracting agency expected. Indeed, the federal Bureau of Prisons exercised its option to renew the contract after the three-year base period, and has done so in every subsequent year since.

In addition, the rates of assault are lower at TCI than at the average low-security publicly operated facility. There have not been any homicides at the private facility. While there was one escape, it was followed by immediate remediation and policy changes.

The type and amount of health care was found to be the same, although the private facility used a different staffing model that relied on more doctors and registered nurses. Thus, inmates were more likely to see a doctor at the private facility than in public facilities.

However, not all findings favored TCI. It was found to have higher rates of drug use and a greater number of inmate grievances.

  • The private facility performed ABOVE minimum compliance and contractual requirements.

On the most comprehensive and in-depth measure of performance-the extent to which the private operator met its performance obligations established in the contract-the firm performed at levels above and beyond mere compliance with these contractual requirements.

With results like these, it is understandable why the Federal Bureau of Prisons continues to seek public-private partnerships to manage a growing federal prisoner population. This is even more evidence that private prisons not only work, but that they work well-saving taxpayers money, protecting the public, and securing the rights of inmates.

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Geoffrey F. Segal is the director of government reform at Reason Foundation.

Geoffrey Segal is the director of privatization and government reform at Reason Foundation, a nonprofit think tank advancing free minds and free markets. He is also editor of Reason's Privatization Watch.