Jails Inc.

harles Neff, a Bureau of Prisons manager, shakes his head as he walks through the Taft Correctional Institution in Taft, Calif., one of the first privatized federal prisons. Neff, a former prison guard, notices that inmates have easy access to scissors in an area where they work on craft projects. He picks up a pair of the scissors, looks them over and puts them back down on the table, shrugging his shoulders.

"I am not allowed to run this institution. I see things, but I am not allowed to do anything," Neff says. "[The contractor] is running Taft, but certainly not as well as the bureau could run it."

Managers like Neff may not like it, but contractors are running more and more federal prisons. The Bureau of Prisons has had little choice but to turn to outsourcing; while the federal prison population is growing, the agency's annual $3.6 billion budget is tight. As a result, over the past decade, privatization efforts have expanded rapidly and the bureau is now paying contractors hundreds of millions of dollars a year to house federal inmates. And the Taft operation marks the first time the bureau has hired a contractor, Wackenhut Corrections Corp. of Palm Beach Gardens, Fla., to operate a prison owned by the government. Like state and county governments that embraced prison privatization in the 1980s and 1990s, the Bureau of Prisons has found that tougher laws and a scarcity of funds have made it all but impossible to adequately house federal inmates without outside help.

"The bureau's philosophy about using the private sector is, it's well-suited to controlling growth, because we have been struggling to keep up with the growth of the federal inmate population," says Michael Janus, who oversees the bureau's privatization programs. It was not always this way. Throughout much of its existence, the Bureau of Prisons easily kept pace with inmate growth and viewed itself as the Cadillac of correctional systems for emphasizing rehabilitation, not simply punishment. During its first 50 years, the federal prison system grew moderately, from 13,000 inmates in 14 institutions in 1930 to 24,252 prisoners in 44 facilities by 1980. Privatization was limited to juvenile detention centers, halfway houses and facilities to house immigration offenders.

Demands on the Bureau of Prisons, however, increased dramatically in the 1980s and 1990s. New federal laws abolishing parole, creating mandatory minimum sentences for many federal crimes and beefing up law enforcement in the areas of drug trafficking and illegal immigration sent the federal inmate population skyrocketing. The need to house thousands of felons from Washington, D.C., in federal prisons didn't help, either.

Now there are more than 158,000 federal prisoners in 101 facilities. By 2006, the bureau expects the prison population to grow to 196,000 inmates. To manage the growth, the bureau has increasingly turned to contractors to build new federal facilities. The agency now houses 8,155 inmates at five prisons run by contractors at an annual cost of more than $100 million. Both the number of privatized prisons and the amount of money spent to operate them are almost certain to increase.

Going Private

Privatization emerged as a popular option for containing prison costs in the 1990s. The Clinton administration went as far as proposing the privatization of all federal minimum-security facilities as part of its plan to downsize government. The Bureau of Prisons successfully opposed the initiative, but the agency decided that outsourcing would be the best way to house many illegal immigrant felons awaiting deportation after having served criminal sentences in the United States.

Today, the bureau houses about 4,800 foreign inmates at contractor-owned and -operated facilities in California City, Calif.; Eloy, Ariz.; and Milan, N.M. Those contracts range from $302 million to $529 million over 10 years. Additionally, the Bureau of Prisons will soon award two new contracts for private companies to house an additional 6,000 immigrant inmates at contractor-owned prison facilities in southeastern and southwestern states. Those contracts, the Wall Street Journal reported in November, could ultimately be worth more than $1 billion.

Immigrant felon operations are attractive candidates for privatization because the population of inmates could rise or fall quickly if Congress changes immigration laws, Janus says. If the population increased, it would be easier for the bureau to hire contractors to build new jails than to come up with all of the money up front to build facilities. On the other hand, the bureau could easily walk away from private prisons once contracts are up if the immigrant felon population drops.

Additionally, Janus says, by segregating criminal immigrants, contractors can tailor programs specifically for them. For example, at the California City prison, the contractor, Corrections Corp. of America of Nashville, Tenn. has worked to offer Mexican prisoners a chance to take courses while in prison that will allow them to earn the equivalent of a Mexican high school diploma. If the foreign felons were not segregated at one site, it might be too costly for the bureau to establish a program to meet their educational needs, Janus says. Congress has encouraged prison privatization efforts. In 1997, lawmakers gave the Bureau of Prisons responsibility for incarcerating Washington, D.C.'s 10,000 felons and ordered that at least half of those inmates be housed at private facilities. In 2000, the bureau hired Cornell Corrections Inc. of Houston and Wackenhut to build and operate prisons exclusively for District of Columbia felons in Winton, N.C., and Philipsburg, Pa., under deals valued at nearly $700 million over 10 years.

The bureau balked at fully implementing the law, because it would have included medium- and maximum-security inmates, which the bureau is opposed to housing at private jails. Instead, Congress and the bureau have agreed that 2,000 low- and minimum-security inmates would be housed at the North Carolina and Pennsylvania sites and the rest absorbed into federal prisons. Since March 2001, about 1,000 D.C. inmates have been housed at the correctional center in Winton. The Philipsburg facility is still being built.

Pilot Problems

The boldest experiment in federal prison privatization is under way at the Taft Correctional Institution, located about 100 miles north of Los Angeles. Just months before Taft was set to open as a low-security facility in 1997, Congress ordered it privatized for at least five years as a pilot test of outsourcing. So while the Bureau of Prisons owns the facility, Wackenhut Corrections Corp. has a contract worth as much as $302.4 million over 10 years to house 2,346 low- and minimum-security inmates. The deal marks the first time the federal government has hired a contractor to run a government-owned prison. "Clearly, the intent of Congress is to evaluate the effectiveness of privatization," says Janus. The bureau must report to Congress on privatization at Taft this summer.

Some early returns on the Taft pilot program are already in. Interviews with government contract administrators at Taft and reviews of reports on the privatization effort suggest that hiring a private company to run a federal prison may cost more and, in many cases, contractors do not follow the same standards required for federal prisons.

Studies by two Bureau of Prisons research organizations-the National Institute of Corrections and the Office of Research and Evaluation-have raised questions about the idea of widespread outsourcing of federal prison operations. An internal bureau summary of its own studies and those conducted by outside organizations says that privatized prisons require larger staffs, have higher turnover among correctional officers and have a higher rate of drug use among inmates than federally operated prisons do.

A 1999 analysis commissioned by the National Institute of Corrections found that the Bureau of Prisons paid $1.9 million more in fiscal 1998 ($28.3 million) to operate Taft, including $618,000 for monitoring contracts, than it would have spent if it had operated the facility itself. And the costs of running the facility privately will continue to rise, researchers found. The higher costs were blamed mainly on the private sector having a larger staff at Taft than what the bureau would require, the study states.

A November report in the Wall Street Journal suggested that another reason for the cost differential is that the Bureau of Prisons typically pays its contractors based on performance rather than the number of inmates housed, as state governments do. The bureau has argued that cost should not be the only factor considered in evaluating private prisons.

A June 2001 study by the Office of Research and Evaluation found that incidents such as escapes and inmate disturbances were more common at Taft than at comparable government-run prisons. In one November 1999 incident, about 1,000 inmates refused to enter their housing units at Taft for evening bed counts and milled around the prison yard until tear gas was fired at them. Overall, the study found "mixed" results as to whether Taft was better operated, staffed and managed than similar federal facilities were.

'Constant Tension'

Asked to assess Wackenhut's performance, Neff, who oversees the team of on-site contract administrators, says, "They're meeting the minimum contract requirements." More than one contract administrator at Taft said Wackenhut is good at temporarily fixing problems, but often does not follow through on concerns raised by the bureau. "Often we'll order a correction, they'll get on it, but then slack off," says Gary Gilmore, also a contract administrator at Taft.

Zach Currier, another contracting officer at Taft who was a case manager for inmates before taking his current post, says there is "constant tension" over whether Bureau of Prisons requirements should be followed by the contractor or whether the contractor can meet performance goals using less stringent national correctional standards. All federal prison contractors follow standards set by the American Correctional Association, which accredits more than 1,500 local, county, state and federal correctional facilities. But the bureau often adds its own stricter requirements at facilities it runs. "Contractors will meet only the minimal requirements because they are for-profit," Currier says.

But Taft Warden Raymond Andrews says Wackenhut "exceeds the minimum requirements." For example, he says, it created a canine unit and installed an additional fence to provide extra security, which was not called for in the contract.

Currier says he is concerned about inmates who have spent years in the federal system having to adjust to contractors' new policies. In some cases, he says, contractors have adopted bureau standards to avoid inmate unrest. In one case, a contractor wanted prisoners to walk along marked lines when they moved about the facility, as inmates in some contractor-run state prisons are required to do. But that practice has never been followed at federal facilities. After grumbling from inmates and a closer look at federal practices, the contractor dropped the requirement.

Gilmore says Wackenhut officials have still not learned to "walk and talk," a term for the common bureau practice of encouraging correctional officers to regularly chat with inmates as they make their daily rounds to monitor conditions and keep on top of possible unrest. In several instances, he says, bureau contract administrators have tipped Wackenhut off to inmate concerns picked up by "walking and talking" that contractor employees failed to notice.

New Man At The Top

Neff says Wackenhut's performance at Taft has slowly improved over the past two years largely because the company hired Andrews, a 22-year Bureau of Prisons veteran who served as a warden at two other facilities. Initially, Neff says, Wackenhut had appointed a former Texas state prison warden with no federal experience to run Taft, which led to a series of conflicts with bureau contract administrators. "Four years ago, I would have stopped this pilot if I could have," Neff says.

Andrews concedes that "when this project started up, we had growing pains and a difficult time meeting the needs of our customer." Andrews now heads a three-member management team that includes two other former federal wardens.

Still, Andrews says, the pilot privatization is in the "growth process." He says his biggest challenge is his inexperienced staff. Of Taft's 388 contract workers-183 of whom are corrections officers-more than half have less than four years' experience and only about 10 percent have worked in a prison. (At new federal prisons, typically about half of the employees are brought in from other bureau facilities.) Once the staff gains more experience, he says, Taft will be as well run as any other federal prison.

Andrews believes the contractor, not the government, should own any prisons that are privatized. Since the government still owns Taft, he says, Wackenhut must ask the bureau for permission to do any work at the facility ranging from changing electrical outlet covers to adding cell houses. "When you don't own your own home, there's a lot you can't do," he says. Also, he says, a contractor could find new uses for the $50 million prison if it were no longer needed to house inmates, whereas the bureau would have few options. The Taft contract is Wackenhut's largest to date and, Andrews says, he's well aware that the outcome could mean more work for his company. "We look forward to getting future contracts, but we can't get them if we don't handle this one," he says.

The Debate

Some lawmakers however, are eager to make sure private companies do not win any additional work. Rep. Ted Strickland, D-Ohio, calls prison privatization "a bad idea for more than one reason." Strickland, a former prison psychologist, has introduced legislation in the past-and may do so again this spring-that would put an end to the privatization of federal jails. Strickland says prison companies do not provide the same level of service as federal prisons, are motivated by profit rather than rehabilitation of prisoners, and often use workers who are poorly paid and under-trained.

Geoffrey Segal, director of privatization for the Reason Public Policy Institute in Los Angeles, disputes the notion that private prisons do not save money. Aside from cutting prison operating costs by 5 percent to 15 percent, he says, contractor-run jails offer new and expanded services, perform existing services more efficiently, provide the government greater flexibility in how and where it houses inmates, and can generate upfront funding for building new prisons. "When you couple cost savings with performance improvements, quality guarantees and not having to build [prisons] yourself, [the argument] weighs more heavily in favor of privatization," Segal says.

For now, that's clearly not the way the Bureau of Prisons views the situation. In a July 1999 letter, the agency's director, Kathleen Hawk Sawyer, urged employees to work more efficiently to stave off widespread outsourcing. "We must be cost-competitive with the private prison companies," she wrote, "to argue against further congressional mandates for privatization."