The Situation in the United States

In the 1980s, growing incarceration rates and increasing debt caused governments in the United States to look for new strategies to deal with offenders. The administration’s fiscal year 1996 budget proposal reflected a commitment to increase the use of privatized correctional facilities in the Federal Bureau of Prisons (BOP). Under the BOP privatization initiative presented in the budget request, the bureau proposed to contract with private firms, where most appropriate, to operate the majority of all future federal pretrial detention facilities as well as the majority of all future federal minimum and low security correctional facilities (United States General Accounting Office, 1996). Because the United States has corrections branches and contracts at the federal, state and local level, it is difficult to obtain exact numbers on the extent of private prison management.

Wall Street and the government are extremely positive about privatized corrections (Sharpiro, 1997). The nine top performing private prison stocks soared in value an average of 36.89 percent from January to October, 1997. Capital Corrections Resources Incorporated saw its stock value jump almost tenfold in the last three years (Bai, 1997). Thomas (as cited by Hart, Shleifer, & Vishny, 1997) stated that private prisons have grown rapidly in the United States in the last decade from a capacity of about 1200 prisoners in 1985 to almost 50,000 prisoners at the end of 1994. Sharpiro suggested that private American companies are confident that in the next five years they will be guarding upward of 250,000 inmates.

Corrections Corporation of America (CCA) now holds contracts with 18 states, plus Puerto Rico and the federal government (Bai, 1997). Only Wackenhut, the Florida based corporation, comes close as a comparison. CCA operates 22 correctional facilities in the U.S., Australia and Britain (Danylchuk, 1994). CCA’s chairman, Doctor Crants, took over the business in 1987. The company has since doubled its profits in each of the last two years and now runs 59 prisons (Bai, 1997). Frank Roberts, president of Durrant Industries, which builds public and private jails, stated that the market is growing so quickly, prisons are being run by corporate managers rather than experienced wardens (Sharpiro, 1997).

Despite the great interest in this topic, the fact remains that less than 1 percent of the nation’s one million prison and jail inmates were housed in facilities owned or managed by private companies in the United States in the early nineties (Lilly & Knepper, 1993).

“As of March 1996, a total of 47 private correctional facilities (secure facilities for adults) were being operated or being planned for operations by private companies in various states. These 47 private correctional facilities are located in 12 states. However, the most use (actual or planned) of privatized correctional facilities is in 3 states - Texas, with 21 facilities, Florida, with 7 facilities; and California, with 5 facilities“(United States General Accounting office, 1996, p. 1).

In 1997, private prisons housed only about 3 percent of the total prison population (Hart, et al., 1997) Danylchuk (1994) suggested that private operators have about 2 percent of the market and would unlikely ever have more than 10 percent.