A private prison or for-profit prison is a place in which individuals are physically confined or incarcerated by a third party that is contracted by a government agency. Private prison companies typically enter into contractual agreements with governments that commit prisoners and then pay a per diem or monthly rate, either for each prisoner in the facility, or for each place available, whether occupied or not. Such contracts may be for the operation only of a facility, or for design, construction and operation.
In the modern era, the United Kingdom was the first European country to use for-profit prisons. Wolds Prison opened as the first privately managed prison in the UK in 1992. In the UK, all prisons are legally required to turn a profit.
In addition, a number of the UK's Immigration Removal Centres are privately operated, including the Harmondsworth Immigration Removal Centre, Yarl's Wood Immigration Removal Centre, and Colnbrook Immigration Removal Centre.
In the UK there are 2 ways in which a private company may take on management of a prison:
Prisons may be re-competed at the end of the contract. The public sector Prison Service is only allowed to be used as a trading brand for all British prisons Increasingly, a range of services within all prisons, whether public or privately run, are contracted out on a regional basis: this includes works and FM services, and rehabilitation programmes.
Following release of an extremely critical report regarding a G4S-operated jail, the Labour party's shadow justice secretary said they would be inclined to take control of for-profit prisons if the industry competitors had not met deadlines imposed upon them. Sadiq Khan's response stressed the need for better contracting, to include liquidated damages provisions. The chief inspector of prisons Nick Hardwick, recommended the crafting of a takeover contingency plan. "It's not delivering what the public should expect of the millions being paid to G4S to run it." Khan said, " I see no difference whether the underperformance is in the public, private or voluntary sector... We shouldn't tolerate mediocrity in the running of our prisons." Khan continued: "We can't go on with scandal after scandal, where the public's money is being squandered and the quality of what's delivered isn't up to scratch. The government is too reliant on a cosy group of big companies. The public are rightly getting fed up to the back teeth of big companies making huge profits out of the taxpayer, which smacks to them of rewards for failure." 
In 2007 the new Scottish National Party Government in Scotland announced that it was opposed to privately run prisons and would not let any more contracts. Since then new prisons in Scotland have been built and run by the public sector. The last contract let in England and Wales was for Northumberland Prison, which transferred from the public sector to Sodexo in 2013. The most recent new prison to be built in England and Wales, at Wrexham (opening in 2017), was given to the public sector to operate without any competition. It is not yet clear whether, or how, the 9 new prisons announced by Michael Gove, Justice Secretary, on 9 November 2015, to replace old Victorian jails in city centres, will be competed.
Privately run prisons are run under contracts which set out the standards that must be met, which in many respects mirror the Service Level Agreements which apply to publicly run prisons. Payments may be deducted for poor performance against the contract. Government monitors ("controllers") work permanently within each privately managed prison to check on conditions and treatment of prisoners. The framework for regulation and accountability is much the same for privately run prisons as for publicly run ones. In Great Britain they are subject to unannounced inspection by HM Chief Inspector of Prisons, to monitoring by local Independent Monitoring Boards and prisoner complaints are dealt with by the Prison and Probation Ombudsman. Similar arrangements exist in Scotland and Northern Ireland.
In the United Kingdom contractual provisions for liquidated damages and other responses to breaches are rarely enforced. Payments are rarely deducted for poor performance against the contract. Government monitors have tended to be co-opted or ineffectual.
In early 2012, Frances Crook, chief executive of the Howard League for Penal Reform said Her Majesty's Inspectorate of Prisons encountered an almost nine-fold rise in restraint used in the previous year at Ashfield Young Offenders Institution, which holds 15- to 18-year-olds. She cited "many incidents of strip searching children unnecessarily". Force had been used almost 150 times a month compared to 17 times monthly the prior year, recalling it had "chilling echoes" of circumstances in the choking death of a 15-year-old at Rainsbrook Secure Training Centre after restraints had been applied. Frequent use of force followed failure of wards to obey staff instructions. Three years earlier the institution recorded more than 600 attacks on inmates in one year - the highest number of every jail, including adults, in the country. Crook claimed "This jail has a history of failing children and the public." Managers blamed the increase was due to better reporting of the use of restraints. The institution had been half full during the previous unannounced inspection in 2010. The chief inspector of prisons noted "some staff lacked confidence in challenging poor behaviour." The director of the prison and the YOI admitted there is "room for improvement."
Six members of staff were dismissed from G4S-operated Rainsbrook Secure Training Centre for children in Rugby in May 2015 following a series of incidents of gross misconduct. G4S took the action in response to an Ofsted inspection that reported some staff being on drugs while on duty, colluding with detainees and behaving "extremely inappropriately". The behaviour allegedly included causing distress and humiliation to children by subjecting them to degrading treatment and racist comments.
Four G4S team leaders of Medway Secure Training Centre in Rochester were arrested in January 2016 and four other staff members were placed on restricted duties, following a BBC Panorama investigation into the centre. Allegations in the television programme included foul language and use of unnecessary force – such physical violence, overuse of restraint techniques (causing one teenager to have difficulties breathing) – on 10 boys aged 14 to 17, as well as a cover-up involving members of staff by avoiding surveillance cameras in order not to be recorded, and purposefully misreporting incidents in order to avoid potential fines and punishment; for example, in one exchange, it was claimed some staff don't report "two or more trainees fighting" because it indicates they've "lost control of the centre", resulting in a potential fine.
G4S-run Medway managers received performance-related pay awards in April 2016, despite the chief inspector of prisons weeks saying weeks earlier that "managerial oversight failed to protect young people from harm at the jail." In January, the BBC's Panorama programme showed an undercover reporter working as a guard at the Medway secure training centre (STC) in Kent. The film showed children allegedly being mistreated and claimed that staff falsified records of violent incidents. No senior managers were disciplined or dismissed. Prior to the Panorama programme's broadcast, the Youth Justice Board (YJB), which oversees youth custody in England, stopped placing children in Medway. In February, a Guardian investigation revealed that, in 2003, whistleblowers had warned G4S, the Ministry of Justice (MoJ) and the YJB that staff were mistreating detained children. Their letter, forwarded by Prof John Pitts, a youth justice expert, was ignored. When the prisons inspectorate carried out a snap inspection at Medway it found detainees reported staff had used insulting, aggressive or racist language toward them and felt unsafe in facility portions not covered by closed circuit TV. Reviewers agreed to the legitimacy of evidence presented by Panorama showing, "...targeted bullying of vulnerable boys," by employees, and that, "A larger group of staff must have been aware of unacceptable practice but did not challenge or report this behaviour."
In an earlier Ofsted report on Medway, inspectors said staff and middle managers reported feeling a lack of leadership and having "low, or no confidence in senior managers." Nick Hardwick, at the time the chief inspector of prisons said, "Managerial oversight failed to protect young people from harm. Effective oversight is key to creating a positive culture that prevents poor practice happening and ensuring it is reported when it does." The Guardian newspaper learned that senior managers at Medway received performance-related pay awards in April amounting to between 10-25% of their annual salaries, according to seniority. One 15-year-old girl placed at Medway in 2009 said she was frequently unlawfully restrained over 18 months, citing an occasion in which her face was repeatedly slammed into icy ground. "I assumed the senior management team would be sacked... But now it looks like they have been rewarded for allowing children to be abused in prison," she said. Former Labour MP Sally Keeble has complained about G4S maltreatment in STC's for over ten years, stating: "This is people making personal profit out of tragedy. I hope that justice minister Liz Truss would intervene and make sure these bonuses are not being paid by a Ministry of Justice contractor." Notwithstanding the results of the investigations no senior managers at Medway were disciplined or dismissed. In May, the MoJ said the National Offender Management Service (NOMS) would take over the running of Medway. In July, it formally assumed control of the STC. In February 2016, G4S had announced that it was to sell its children's services business, including the contract to manage two secure training centres. The company hoped to complete the process by the end of 2016.
Australia was one of the first countries to use private prisons, starting with NSW June in 1993.
The privatization of prisons can be traced to the contracting out of confinement and care of prisoners after the American Revolution. Deprived of the ability to ship criminals and undesirables to the Colonies, Great Britain began placing them on hulks (used as prison ships) moored in English ports.
In 1852, on the northwest San Francisco Bay in California, inmates of the prison ship Waban, began building a contract facility to house themselves at Point Quentin. The prison became known as San Quentin, which exists today. Its partial transfer of prison administration from private to public did not mark the end of privatization.
The next phase began with the Reconstruction Period (1865–1876) in the south, after the end of the Civil War. Plantations and businessmen needed to find replacements for the labour force once their slaves had been freed. Beginning in 1868, convict leases were issued to private parties to supplement their workforce. This system remained in place until the early 20th century.
Federal and state governments have 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.
The modern private prison business first emerged and established itself publicly in 1984 when the Corrections Corporation of America (CCA), now known as CoreCivic, 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.
The US Department of Justice statistics show that, as of 2013, there were 133,000 state and federal prisoners housed in privately owned prisons in the US, constituting 8.4% of the overall U.S. prison population. Broken down to prison type, 19.1% of the federal prison population in the United States is housed in private prisons and 6.8% of the U.S. state prison population is housed in private prisons. While 2013 represents a slight decline in private prison population over 2012, the overall trend over the past decade has been a slow increase  Companies operating such facilities include the Corrections Corporation of America (CCA), the GEO Group, Inc. (formerly known as Wackenhut Securities), Management and Training Corporation (MTC), and Community Education Centers. In the past two decades CCA has seen its profits increase by more than 500 percent. The prison industry as a whole took in over $5 billion in revenue in 2011.
According to journalist Matt Taibbi, Wall Street banks took notice of this influx of cash, and are now some of the prison industry's biggest investors. Wells Fargo has around 100 million invested in GEO Group and 6 million in CCA. Other major investors include Bank of America, Fidelity Investments, General Electric and The Vanguard Group. CCA's share price went from a dollar in 2000 to $34.34 in 2013. Sociologist John L. Campbell and activist and journalist Chris Hedges respectively assert that prisons in the United States have become a "lucrative" and "hugely profitable" business.
In June 2013, students at Columbia University discovered that the institution owned $8 million worth of CCA stock. Less than a year later the student group Columbia Prison Divest was formed and delivered a letter to the president of the University demanding total divestment from CCA and full disclosure of future investments. By June 2015, the board of trustees at Columbia University voted to divest from the private prison industry.
Corrections Corporation of America (CCA) has a capacity of more than 80,000 beds in 65 correctional facilities. The GEO Group operates 57 facilities with a capacity of 49,000 offender beds. The company owns or runs more than 100 properties that operate more than 73,000 beds in sites across the world.
Most privately run facilities are located in the southern and western portions of the United States and include both state and federal offenders. For example, Pecos, Texas is the site of the largest private prison in the world, the Reeves County Detention Complex, operated by the GEO Group. It has a capacity of 3,763 prisoners in its three sub-complexes,
Private prison firms, reacting to reductions in prison populations, are increasingly looking away from mere incarceration and are seeking to maintain profitability by expanding into new markets previously served by non-profit behavioral health and treatment-oriented agencies, including prison medical care, forensic mental hospitals, civil commitment centers, halfway houses and home arrest.
A 2016 report by the U.S. Department of Justice asserts that privately operated federal facilities are less safe, less secure and more punitive than other federal prisons. Shortly thereafter, the DoJ announced it will stop using private prisons. Nevertheless, a month later the Department of Homeland Security renewed a controversial contract with the CCA to continue operating the South Texas Family Residential Center, an immigrant detention facility in Dilley, Texas.
In the wake of the escape of three murderers from the minimum/medium security Kingman Prison, Arizona operated by Management and Training Corporation (MTC), and its gruesome aftermath, Arizona Attorney General and gubernatorial candidate Terry Goddard said "I believe a big part of our problem is that the very violent inmates, like the three that escaped, ended up getting reclassified [as a lower risk] quickly and sent to private prisons that were just not up to the job". The private prison had inadequate patrols and prisoner movement, excessive false alarms, a lax culture, and inconsistencies in visitor screening procedures.
One escaping murderer, Daniel Renwick, immediately absconded with the intended getaway vehicle, abandoning his companions outside the prison. He was involved in a shootout in Rifle, Colorado, about 30 hours after the prison break, and was captured by a Garfield County deputy and Rifle police. Though he still "owed" Arizona 32 years on his sentence, he was sentenced to sixty years to be served first in Colorado.
In the course of evading pursuers, the remaining two escapees and their accomplice, Casslyn Welch, kidnapped and hijacked vacationing Oklahomans Gary and Linda Haas in New Mexico. The couple was soon murdered by the ringleader, John McCluskey. The extended family of the murdered couple sued the state of Arizona, as well as Dominion, a corporation based in Edmond, Oklahoma, that spec-built the prison, and MTC, the corporation that managed it, for $40 million. The last escapees and their accomplice were soon captured. Tracy Province, a lifer, was apprehended in Wyoming on August 9. The final pair were arrested on August 19, 20 days after the jailbreak, upon their return to Arizona. All three were first convicted of the escapes, initial hijacking, kidnappings and robberies in Kingman, Arizona. Then they were charged with the same crimes plus murder in New Mexico. John McCluskey, the ringleader, and his accomplice, Casslyn Welch, were also alleged to have committed an armed robbery in Arkansas. The three were eventually held on federal murder charges in New Mexico. McCluskey was tried on death penalty charges but after five months of court proceedings, his jury gave him life imprisonment on December 11, 2013. Estimates of the costs of the nationwide searches as well as the apprehensions, prosecutions and subsequent imprisonment in the three states greatly exceed a million dollars.
Studies, some partially industry-funded, often conclude that states can save money by using for-profit prisons. However, academic or state-funded studies have found that private prisons tend to keep more low-cost inmates and send others back to state-run prisons.
Proponents of privately run prisons contend that cost-savings and efficiency of operation place private prisons at an advantage over public prisons and support the argument for privatization, but some research casts doubt on the validity of these arguments, as evidence has shown that private prisons are neither demonstrably more cost-effective, nor more efficient than public prisons. An evaluation of 24 different studies on cost-effectiveness revealed that, at best, results of the question are inconclusive and, at worst, there is no difference in cost-effectiveness.
A study by the U.S. Bureau of Justice Statistics found that the cost-savings promised by private prisons "have simply not materialized". Some research has concluded that for-profit prisons cost more than public prisons. Furthermore, cost estimates from privatization advocates may be misleading, because private facilities often refuse to accept inmates that cost the most to house. A 2001 study concluded that a pattern of sending less expensive inmates to privately run facilities artificially inflated cost savings. A 2005 study found that Arizona's public facilities were seven times more likely to house violent offenders and three times more likely to house those convicted of more serious offenses. A 2011 report by the American Civil Liberties Union point out that private prisons are more costly, more violent and less accountable than public prisons, and are actually a major contributor to increased mass incarceration. This is most apparent in Louisiana, which has the highest incarceration rate in the world and houses the majority of its inmates in for-profit facilities. Marie Gottschalk, professor of political science at the University of Pennsylvania, argues that the prison industry "engages in a lot of cherry-picking and cost-shifting to maintain the illusion that the private sector does it better for less." In fact, she notes that studies generally show that private facilities are more dangerous for both correctional officers and inmates than their public counterparts as a result of cost-cutting measures, such as spending less on training for correctional officers (and paying them lower wages) and providing only the most basic medical care for inmates.
A 2014 study by a doctoral candidate at UC Berkeley shows that minorities make up a greater percentage of inmates at private prisons than in their public counterparts, largely because minorities are cheaper to incarcerate. According to the study, for-profit prison operators, in particular CCA and GEO Group, accumulate these low-cost inmates "through explicit and implicit exemptions written into contracts between these private prison management companies and state departments of correction".
Evidence suggests that lower staffing levels and training at private facilities may lead to increases in the incidence of violence and escapes. A nationwide study found that assaults on guards by inmates were 49 percent more frequent in private prisons than in government-run prisons. The same study revealed that assaults on fellow inmates were 65 percent more frequent in private prisons.
An example of private prisons' inadequate staff training leading to jail violence was reported by two Bloomberg News journalists, Margaret Newkirk and William Selway in Mississippi regarding the now-closed Walnut Grove Correctional Facility. According to the journalists, the ratio of staff to prisoners in this prison was only 1 to 120. In a bloody riot in this prison, six inmates were rushed to the hospital, including one with permanent brain damage. During the riot, the staff of the prison did not respond but waited until the melee ended, because prisoners outnumbered staff by a ration of 60-1. The lack of well-trained staff does not only lead to violence but also corruption. According to a former prisoner in this prison, the correction officers are also in charge of the smuggling in the prison. To make more money, they can provide prisoners everything, including weapons. Law enforcement investigations led to the exposure of a far wider web of corruption.
At the Walnut Grove C.F., intense corruption was involved in the construction and operation of, and subcontracting for medical, commissary and other services. After exposure of the rape of a female transitional center prisoner by the mayor, who also served as a warden, a bribery scheme was uncovered. It had paid millions to the corrupt Mississippi Department of Corrections Commissioner Chris Epps and his conduits. Ten additional officials and consultants, including three former state legislators (two Republicans and one Democrat), were indicted in the Department of Justice's Operation Mississippi Hustle prosecution.
Prior to the Mississippi investigations and prosecutions, a similar investigation begun in 2003, dubbed Operation Polar Pen, exposed a wide-ranging bribery scheme of what legislative members themselves called the "Corrupt Bastards Club" (CBC). It initially involved for-profit corrections, then extended to include fisheries management and oil industry taxation. At least fifteen targets of the investigation, including ten sitting or former elected officials, the governor's chief of staff, and four lobbyists were considered for possible prosecution, and a dozen were indicted. Investigation of a Democratic state senator found nothing amiss, but ten indictments were issued that included six Republican state legislators, two halfway house lobbyists, two very wealthy contractors and the U.S. Senator, Ted Stevens. The seven felony convictions against Stevens were overturned, as were verdicts involving three other legislators and the governor's Chief of Staff, one directly due to the Supreme Court's overturning part of the existing "Honest services" statute, in the case of Representative Bruce Weyhrauch. Weyhrauch pleaded guilty to a state misdemeanor. Others also had their verdicts overturned, in part because the prosecution failed to completely disclose exculpatory evidence to their defense, but three of those also pleaded guilty to lesser charges. Though they were implicated, the Department of Justice also declined to prosecute a former state senator and the U.S. Congressman, Don Young, who spent over a million dollars on his defense, though he was never indicted.
In the kids for cash scandal, Mid-Atlantic Youth Services Corp, a private prison company which runs juvenile facilities, was found guilty of paying two judges, Mark Ciavarella and Michael Conahan, $2.8 million to send 2,000 children to their prisons for such crimes as trespassing in vacant buildings and stealing DVDs from Wal-Mart.
CCA, MTC and The GEO Group have been members of the American Legislative Exchange Council (ALEC), a Washington, D.C.-based public policy organization that develops model legislation that advances free-market principles such as privatization. Under their Criminal Justice Task Force, ALEC has developed model bills which State legislators can then consult when proposing "tough on crime" initiatives including "Truth in Sentencing" and "Three Strikes" laws. By funding and participating in ALEC's Criminal Justice Task Forces, critics argue, private prison companies influence legislation for tougher, longer sentences. Writing in Governing magazine in 2003, Alan Greenblatt states:
ALEC has been a major force behind both privatizing state prison space and keeping prisons filled. It put forward bills providing for mandatory minimum sentences and three-strikes sentencing requirements. About 40 states passed versions of ALEC's Truth in Sentencing model bill, which requires prisoners convicted of violent crimes to serve most of their sentences without chance of parole.
According to a 2010 report by NPR, ALEC arranged meetings between the Corrections Corporation of America and Arizona's state legislators such as Russell Pearce at the Grand Hyatt in Washington, D.C. to write Arizona SB 1070, which would keep CCA's immigrant detention centers stuffed with detainees.
CCA and GEO have both engaged in state initiatives to increase sentences for offenders and to create new crimes, including, CCA helping to finance Proposition 6 in California in 2008 and GEO lobbying for Jessica's Law in Kansas in 2006. In 2012, The CCA sent a letter to 48 states offering to buy public prisons in exchange for a promise to keep the prisons at 90% occupancy for 20 years. States that sign such contracts with prison companies must reimburse them for beds that go unused; in 2011, Arizona agreed to pay Management & Training Corporation $3 million for empty beds when a 97 percent quota wasn't met.
Many organizations have called for a moratorium on construction of private prisons, or for their outright abolition. The religious denominations Presbyterian Church (U.S.A.) and United Methodist Church have also joined the call, as well as the Catholic Bishops of the South organization.
As of 2013, there has been a modest pushback against the private prison industry, with protests forcing GEO Group to withdraw its $6 million offer for naming rights of FAU Stadium, and Kentucky allowing its contract with the CCA to expire, ending three decades of allowing for-profit companies to operate prisons in that state. In 2014, Idaho will be taking over the operation of the Idaho Correctional Center from the CCA, which has been the subject of a plethora of lawsuits alleging rampant violence, understaffing, gang activity and contract fraud. Idaho governor Butch Otter said "In recognition of what's happened, what's happening, it's necessary. It's the right thing to do. It's disappointing because I am a champion of privatization."
In the final quarter of 2013, Scopia Capital Management, DSM North America, and Amica Mutual Insurance divested around $60 million from CCA and GEO Group. In a Color of Change press release, DSM North America President Hugh Welsh said:
In accordance with the principles of the UN Global Compact, with respect to the protection of internationally proclaimed human rights, the pension fund has divested from the for-profit prison industry. Investment in private prisons and support for the industry is financially unsound, and divestment was the right thing to do for our clients, shareholders, and the country as a whole.
Some U.S. states have imposed bans, population limits, and strict operational guidelines on private prisons:
The Federal Bureau of Prisons announced its intent to end for-profit prison contracts.
There have only been two private detention facilities in Canada to date, and both reverted to government control.
The only private prison in Canada was the maximum-security Central North Correctional Centre, Penetanguishene, Ontario, operated by the U.S.-based Management and Training Corporation from its opening in 2001 through the end of its first contract period in 2006. The contract was held by the Ontario provincial Ministry of Community Safety and Correctional Services. A government comparison between the Central North "super-jail" and a nearly identical facility found that the publicly run prison had measurably better outcomes.
Additionally the GEO Group built the New Brunswick Miramichi Youth Detention Center under contract with the provincial Department of Public Safety, then had its contract ended in the 1990s after public protests.
In 2004, the Israeli Knesset passed a law permitting the establishment of private prisons in Israel. The Israeli government's motivation was to save money by transferring prisoners to facilities managed by a private firm. The state would pay the franchisee $50 per day for each inmate, sparing itself the cost of building new prisons and expanding the staff of the Israel Prison Service. In 2005, the human rights department of the Academic College of Law in Ramat Gan filed a petition to the Israeli Supreme Court challenging the law. The petition relied on two arguments. First, it said, transferring prison powers to private hands would violate the prisoners' fundamental human rights to liberty and dignity. Secondly, a private organization always aims to maximize profit, and would therefore seek to cut costs by, for instance, skimping on prison facilities and paying its guards poorly, thus further undermining the prisoners' rights. As the case awaited decision, the first prison was built by the concessionaire, Lev Leviev's Africa Israel Investments, a facility near Beersheba designed to accommodate 2,000 inmates.
In November 2009, an expanded panel of 9 judges of the Israeli Supreme Court ruled that privately run prisons are unconstitutional, finding that for the State to transfer authority for managing the prison to a private contractor whose aim is monetary profit would severely violate the prisoners' basic human rights to dignity and freedom. Supreme Court President Dorit Beinisch, wrote that "Israel's basic legal principles hold that the right to use force in general, and the right to enforce criminal law by putting people behind bars in particular, is one of the most fundamental and one of the most invasive powers in the state's jurisdiction. Thus when the power to incarcerate is transferred to a private corporation whose purpose is making money, the act of depriving a person of [their] liberty loses much of its legitimacy. Because of this loss of legitimacy, the violation of the prisoner's right to liberty goes beyond the violation entailed in the incarceration itself."