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On Government Prison Contracts To Buy And Sell Human Beings: 2013 Edition

Matt Stroud

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There’s been a lot of coverage in the last few days about an old story: When private prison companies negotiate contracts with government agencies, they typically arrange population quotas. These quotas guarantee a base number of prisoners the agency will fund, whether or not the prison population falls below that level.

For companies such as Corrections Corporation of America (CCA) and the GEO Group, this makes perfect sense. It’s like setting up a reserve” price on an eBay sale; it ensures that the companies will not be forced to incarcerate people for free (or at a lower rate than they think is fair).

That said, for everyone else involved, it’s reprehensible. (And I don’t use that word lightly.) Indeed, it’s like setting up a reserve” price on an eBay sale – but it’s for the sale of human beings.

These quotas are at the core of why many people – including the person writing this post – are against prison privatization. These quotas punish governing bodies for doing exactly what they should be working very diligently to do all the time: namely, lowering the number of people behind bars.

And so on. The spike in recent media coverage about this issue is built upon a very good report from In The Public Interest released this month. Read it here in PDF form. Here’s an excerpt: 

As ITPI’s analysis shows, there are a number of private prison contracts without bed guarantee clauses. In our review of many Texas private prison contracts, we found that no contract contained a bed guarantee clause. The state’s contracts with private prisons specifically state that the payment schedule is based on occupancy levels determined by the official count of the number of inmates who are present at the facility at the end of each day calculated at midnight (what Texas refers to as the The Midnight Strength Report”). State and local governments should not agree to bed guarantee provisions during the initial contract signing or any subsequent amendment. Instead payments to the contractor should be based on the actual daily count of the number of inmates housed in a facility. Enacting state legislation that prohibits occupancy guarantee clauses allows the government contracting agency to take the discussion of these provisions out of the negotiating process, and reject them based on state law.

Prison occupancy quotas require the government to spend public dollars on housing and supervision of a certain number of inmates, whether a prison is empty or full. With governmental priorities pulling public funds in so many different directions, it makes no financial sense for taxpayers to fund empty prison beds. From a financial standpoint, bed guarantee clauses are insupportable for government entities.

Private prison companies often attempt to lure governments into agreements with bed guarantee clauses by promising a lower per diem cost. However, bed guarantees do not secure jurisdictions lower per diem rates, as evidenced by Arizona’s experience of per diem rates rising 13.9 percent even after the bed guarantee was added to the contracts.35 With better understanding of the per diem rates in private prison contracts in similar facilities in other jurisdictions, governments can negotiate reasonable per diem rates without resorting to bed guarantees.

Bed guarantee clauses can also tie the hands of lawmakers. If lawmakers determine that there are more effective ways of dealing with specific criminal offenses than prison time, bed guarantee clauses may restrict their options. If lawmakers pass rules that have the effect of decreasing the prison population, if law enforcement officials take action that results in a reduced prison population, or if the crime rate simply drops, the government might be responsible for funding empty prison beds. In the words of Roger Werholtz, former Kansas secretary of corrections, My concern would be that our state would be obligated to maintain these (occupancy) rates and subtle pressure would be applied to make sentencing law more severe with a clear intent to drive up the population.” 

Furthermore, private corporations interested in running public prisons should be forced to run a competitive business in the open market. When entering a contract to operate a prison, a private company should be required to take on some risk. If the company fails to perform well, a bed guarantee clause should not serve as the company’s financial safety net. In many cases, private prison beds were intended to be a safety valve to address demand that exceeded public capacity. It was never intended that taxpayers would be the safety valve to ensure private prison companies’ profits.

Elimination of bed guarantee clauses will allow lawmakers to enact policies that are in the public interest, not in a private prison corporation’s financial interest. Corrections agencies should not be forced to direct prisoners to certain private facilities because of bed guarantee clauses. Criminal justice policy and programs should be guided by our public goals, such as reducing the number of people in prison. Rejecting bed guarantee clauses allows public officials to make the best decisions in the public’s interest.

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Follow me on Twitter where I post frequent links to fascinating and infuriating criminal justice stories like this one. Find me @ssttrroouudd.

Win a trip for two to Cascais, Portugal!

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Matt Stroud is a former Innocence Network investigator who now covers the U.S. legal system, in all its glory and ugliness, as a freelance journalist. Follow him on Twitter @ssttrroouudd. Email him at stroudjournalism<at>
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