Private Sector Prison Industries: A Study of Their Impact on Incarceration Costs

• NCJ Number: 161215
• Author(s): R H Lawson; F C Farrow; G E Sexton; B J Auerbach
• Date Published: 1994
• Length: 126 pages
• Grant Number(s): 90-MU-CX-0004
• Sponsoring Agency: National Institute of Justice (NIJ); US Dept of Justice NIJ Pub
• Sale Source: Criminal Justice Associates
• Publication Type: Program/Project Evaluation
• Language: English
• Country: United States of America

Annotation

This project was designed to increase knowledge in the corrections community of financial costs and benefits of private sector prison industries (PSPI's) to help correctional administrators make more informed judgments about whether and how to undertake such ventures.

Abstract

Toward that end, cost impact data were collected at three sites with strong PSPI activities: Nevada, Oregon, and South Carolina. Data were then aggregated, compared, and subjected to a first order cost-benefit analysis. Nonfinancial information, such as the impact of PSPI on prison tranquility and inmate participants, was also examined. An effort was made to address the following about PSPI costs and benefits: (1) costs incurred by correctional agencies in creating and operating PSPI's; (2) financial contributions to correctional agencies from private sector participation in prison-based joint ventures; (3) extent to which costs incurred by correctional agencies offset financial contributions returned by private industry; and (4) whether the cost impact of private sector participation in prison-based joint ventures differed according to the type of joint venture model. The project found that, under certain conditions, PSPI's produced financial benefits for the public sector that offset some or all of the costs associated with them. PSPI model choice was important; manpower model projects in which the private sector played a significant role, essentially leasing inmate labor, were more likely to return a net profit to prison industries and more quickly than customer model projects in which inmates worked for prison industries which then sold the product to the private sector. Employer model projects where the private sector company employed inmates directly were typically revenue-neutral to prison industries. A major cost factor in establishing PSPI's involved space. Suggestions are offered to further analyze costs and benefits of PSPI's, such as using a multidisciplinary team on site visits, examining costs and benefits over a longer time period, and conducting impact evaluations. Supporting data on costs and benefits of PSPI's at the three sites are appended. References and tables