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UK: Firms lose two, but ‘market’ is safe

Britain's private companies have failed to beat off competition from the public sector for contracts to manage Blackenhurst and Manchester prisons.

Prisons and probation minister Paul Boateng announced on 12 January 2001 that, following tendering exercises, the prison service had been awarded preferred bidder status for both contracts.  The gap between the bids in terms of cost and quality once again undermines the arguments that private companies are always cheaper, more efficient and innovative than the public sector. The in-house bid for Blakenhurst prison in the West Midlands was 13 per cent higher on quality but 12 per cent cheaper than the second best bid from UK Detention Services Ltd (UKDS), the company that has run the prison since 1993. These differences in quality and cost appear staggering until compared with the result of the  competition for Manchester prison in North West England. The prison is already run by the prison service under what is known as a Service Level Agreement (SLA, the public sector equivalent of a contract). The difference between the in-house bid and the nearest competitor - UKDS again - was 18 per cent on quality and 20 per cent on cost.  Both in-house bids offered to provide more purposeful activity, education, offending behaviour programmes and increased time out of cell for prisoners. The ten year SLA for Blakenhurst will take effect from 19 August 2001 and Manchester’s SLA will start on 16 October 2001.

Asked if the failure of UKDS to retain its contract had anything to do with poor performance, the director general of the prison service, Martin Narey, replied that the decision was made solely on the bid for the future provision of services and not on past or current performance at Blakenhurst or Forest Bank, the company’s other contracted prison in Salford, North West England.

Also remarkable is that bids for both contracts from another of the short listed companies, Premier Prison Services Ltd (PPS, owned by Wackenhut Corrections Corporation and Serco), failed to meet the independent evaluation panel’s qualification criteria.

PPS has six prison contracts in the UK  - more than any other company. Last year, Elaine Bailey, the prison service’s head of security became managing director of Premier Custodial Group Ltd.

Other unsuccessful firms were Securicor, which  bid for both Blakenhurst and Manchester and Group 4 which only bid for Manchester.

Still a safe-haven for companies

Despite this setback, the prison companies do not need to worry about how they might recoup the heavy costs of their involvement in such bidding processes.

        Minister Paul Boateng attributed the results of the tendering processes more to the private sector than the prison service, saying that “the result shows what the prison service can do when under the pressure of competition.”

He also pledged that, if the management at Manchester and Blakenhurst fail to deliver  “all that is promised ... they will be contracted out again without an in-house bid being allowed.” Continuing his unveiled threat to the prison service he added that “there can be no more excuses for failing prisons. The private sector has played, and will continue to play, a significant role in the delivery of high quality correctional services. There is no reason for the private sector to doubt ministerial commitment to the public private mix. We are using competition as a means of constantly ratcheting up performance and improving value for money.”

The minister, who denied that he had any “ideological predisposition one way or another” also took the opportunity to outline his plans for further market testing of existing publicly run prisons in England and Wales.

Admitting that “the private sector would show interest [in market testing] if there was no in-house bid” he also said: “market testing has proved its worth and I now wish to make the process more rigorous ... and I have agreed with the director general that ... he will provide me with a list of prisons which in terms of quality of regime and costs are failing. The worst of those prisons, at least two this year, will be given six months to plan and agree necessary and significant improvements. If this does not happen I shall direct the director general to move immediately to contract out those prisons without an in-house bid.”

Asked which prisons were immediately under threat he replied that he had “none in mind.”

But, according to prison service sources, these could include prisons at Birmingham, Exeter and Chelmsford.

Under fire

The Government’s market testing strategy was criticised by both the private sector and the trade unions that represent public employees. The Financial Times, 13 January 2001, reported that, according to Group 4, the Government’s policy lacked clarity and there was no guarantee that the private sector would be interested in taking on failing prisons. Meanwhile, the Prison Officers’ Association (POA) and Prison Governors’ Association (PGA) argue that market testing leads to anxiety and lower morale amongst staff and diverts resources away from providing regimes for prisoners. The major cause of failing prisons, they say, is under funding.

Sale time: private or semi-private?

While it remains to be seen how market testing for existing publicly run prisons develops, private prison operators received a Christmas bonus when, in December 2000, the director general of the prison service announced plans to close and sell off a number of the 37 English prisons which are no longer fit for modern use.

Their closure is likely to be matched with a building programme of larger capacity facilities. These will either be privately financed, designed, built and run or semi-private,  where all but the custodial services are privatised.

The plan was a response to a recent report by the chief inspector of prisons for England and Wales which condemned conditions for prisoners in older facilities.

n Since 1992, the management of four newly built prisons and one refurbished prison have been put out to tender. Of the four that have been run privately, when the current contract for Blakenhurst ends only two will remain under private management. These are: Doncaster, now run by Premier Prison Services Ltd on a 10 year contract (see PPRI #31); and HMP Wolds, which is run by Group 4. The contract for Wolds is due to be re-tendered.

n The family of Alton Manning, a black remand prisoner who, according to a coroner’s jury, was unlawfully killed by prisoner custody officers at Blakenhurst in 1995, have renewed their call for the officers to be charged in connection with his death. Mr Manning died of asphyxia after being restrained by UKDS staff. Seven officers were suspended from duty but the Director of Public Prosecutions  said there was insufficient evidence to bring any criminal charges against them. But in May 2000, after a challenge in the High Court by Mr Manning’s family, the Lord Chief Justice said that the decision was flawed and should be reconsidered.

 

New method for comparisons

After years of standing by its figures for the comparative costs of public and privately managed prisons, the prison service has commissioned consultants to devise a new methodology. The original method used by Coopers & Lybrand (as was) for 1994/95 has also been used since by the prison service. The last comparison, for 1998/99 found that, on average, privately run prisons were 13 per cent cheaper. Critics have always argued that the methodology was flawed.

 

Scotland: two to replace five

    Five prisons currently run by the Scottish Prison Service could be closed and replaced with two large privately financed, designed, built and run prisons. If the proposal comes to fruition, some 1,200 public sector prison staff could lose their jobs.          The Shadow Justice Minister, Rosanna Cunningham, criticised the proposal, saying: “the falsehood peddled by New Labour that private prisons were cheaper has been blown out of the water by a recent report which highlighted the true cost of the private prison in Kilmarnock was £290m over 25 years rather than the £130m reported by Labour.”

 

Private money go round

A round up of some of the most recently filed accounts of British companies operating prisons, prisoner escort services,  electronic monitoring and immigration detention centres (see PPRI #25).  NB:Not all companies are listed here.

n Prison and Court Services Ltd is Group 4's holding company for three subsidiaries, Group 4 Prison Services Ltd, Group 4 Court Services Ltd and Rebound ECD Ltd. The company paid a dividend of £2m to shareholders during the year ended 31 December 1999. Its combined revenues were £81m (£71m in 1998) and pre-tax profit was £8.2m (£9.2m in 1998). Including administrative staff, the group employed 2,788 employees compared with 2,482 the previous year. The highest paid director earned £119,000. The group also participated in joint ventures such as:

Group 4 Carillion (Fazakerley) Ltd (see below), with Carillion Private Finance Ltd for the finance, design, construction and management of Altcourse prison in Liverpool. Its trading subsidiary is Fazakerley Prison Services Ltd.

Education Care and Discipline Ltd, with Carillion Private Finance Ltd, for the finance, design, construction and management of Medway Secure Training Centre in Kent. Its trading company is ECD (Cookham Wood) Ltd.

ECD 3 Ltd with Carillion Private Finance Ltd for the design, construction, management and finance of Rainsbrook Secure Training Centre. The trading subsidiary  is ECD (Onley) Ltd.

Group 4 Carillion (Onley) Ltd with Carillion Private Finance Ltd for the finance, design, construction and management of Rye Hill prison. The trading subsidiary is Onley Prison Services Ltd.

 

n Group 4 Prison Services Ltd designs constructs and manages prisons, remand centres and “similar institutions” and provides associated security services. Its dividend contribution to shareholders was £700,000 during the financial year ended 31 December 1999. Revenues for the year were £28.05m (£27.25m in 1998) and pre-tax profit was £1.9m (£3.2m in 1998).

 

n Rebound ECD Ltd is the management contractor for the two secure training centres run by ECD (Cookham Wood) Ltd - Medway - and ECD (Onley) Ltd - Rainsbrook. Revenues for the year ended 31 December 1999 were £6.89m (£4.29m in 1998) and the pre-tax loss was £1.69m compared with a loss of £207,000 in 1998.

 

n Group 4 Court Services Ltd provides escort and associated security services. Its dividend contribution in the financial year ended 31 December 1999 was £1.3m. Revenues were £46.1m  (£39.9m in 1998) and pre-tax profit was £5.4m compared with £5.1m in 1998.

 

n Group 4 Carillion (Fazakerley) Ltd had revenues of £19.4m for the year ended 31 December 1999 (£15.9m in 1998) and pre-tax profit of £4.2m compared with £1.6m in 1998. The company paid a dividend of £2.4m during the year. The company is the holding company for Fazakerley Prison Services Ltd (FPSL) which has a 28 year contract for the finance, design, construction and management of HMP Altcourse.

 

n Premier Prison Services Ltd (PPS) is jointly owned by Wackenhut Corrections Corporation and Serco and is part of Premier Custodial Group Ltd.  For the year ended 31 December 1999, PPS made a pre-tax profit of £3.43m (£4.12m in 1998) on revenues of £53.68m (£43.4m in 1998). The company’s main activities are the provision of custodial services, the manufacture and leasing of electronic tagging equipment and the provision of electronic monitoring services. During the year, one director received remuneration of £140,260 plus £9,505 towards a pension scheme. On average, PPS had 2,209 employees compared with 1,688 in 1998.

 

n Lowdham Grange Prison Services Ltd, also part of Premier Custodial Group, is the company set up to finance, design, construct and manage Lowdham Grange prison. Pre-tax profit for the year ended 31 December 1999 was £1.15m on revenues of £11.98m (not comparable with 1998). Bankers to the company included: Barclays Bank, Credit Lyonnaise, Dai-Ichi Kangyp Bank Ltd, Westdeutsche Landesbank and Bank of Scotland.

n Other companies in the Premier group include Premier Custodial Finance Ltd, Premier Custodial Investments Ltd, Premier Monitoring Services Ltd, Premier Geografix Ltd, Medomsley Training Services Ltd, Medomsley Holdings Ltd, Kilmarnock Prison Services Ltd, Kilmarnock Prison Holdings Ltd, Pucklechurch Custodial Services Ltd, Pucklechurch Custodial Holdings Ltd and Marchington Prison Services Ltd.

 

n Wackenhut UK Ltd, which runs immigration detention centres and “a diverse range of security services” made a pre-tax profit of £160,000 in the year ended 31 December 1999 compared with a loss of £604,000 in 1998. Revenues were £13.05m compared with £12.99m in 1998. The company is owned by the Wackenhut Corporation.

 

n UK Detention Services Ltd (UKDS) runs Blakenhurst prison and also “tenders for contracts for the design, construction, management and financing of new prisons and other similar projects.” For the year ended 31 December 1999, pre-tax profit was £751,251 (£330,168 in 1998). Revenues were £11.9m compared with £11.6m in 1998. The average monthly number of employees was ten management, 271 prison officers, 25 administration staff and 12 maintenance staff. In 1999, UKDS passed on £2.54m of costs to Agecroft Prison Management Ltd relating to the start up of Forest Bank prison, Salford, England.

 

n Securicor Custodial Services Ltd, a subsidiary of Securicor plc, had reduced revenues of £36.38m for the year ended 30 September 1999 compared with £39.71m in 1998. Its pre-tax profit was also cut to £1.21m compared with £2.31m in 1998. Notes on the accounts stated that “following a prolonged period of  trial operation of electronic monitoring, a five year contract was awarded to the company and commenced on 28 January 1999. Parc Prison continued its improvement in both service provision and improving profitability.” But the company also noted that “there are concerns over the increasing application of performance penalties outside of the contract terms and conditions. However the directors consider that the accounts for the year reflect the likely levels of penalties for the year under review.”

 

n Bridgend Custodial Services Ltd is another Securicor subsidiary whose principal activity is “the design, construction and management of a prison for the provision of a custodial service” at Parc Prison in Bridgend, Wales. For the year ended 30 September 1999 the company had a pre-tax profit of £1.7m (£1.4m in 1998) on revenues of £22.6m (compared with £16.4m in 1998). The revenue figure included finance income of £8m compared with £6.4m in 1998.

 

n Reliance Custodial Services Ltd made a pre-tax profit of £449,079 on revenues of £10.26m for the year ended 30 April 1999 (£137,000 and £9.69m in 1998). During the year the company operated prisoner escort and electronic monitoring contracts.

 

n GSSC of Europe Ltd made a pre-tax loss of £55,709 for the period 6 July 1998 to 30 September 1999. Revenues were £2.98m. The company was involved in supplying electronic montioring services in the UK. Its ultimate parent company is General Security Services Corporation based in Minneapolis.

 

NETHERLANDS

 

Commission studies privatisation

    A commission comprising officials from the  ministries of justice, finance and home affairs has been studying the international prison privatisation experience with a view to introducing private and/or semi-private prisons.  Although a final report is due in the spring, an unpublished report by the department of finance has already concluded that international public-private prison co-operation has been successful. The government is being assisted in its deliberations by a ministry of justice official from the Netherlands Antilles, which recently contracted with Wackenhut Corrections Corporation (see PPRI #37 and 30).

 

 

AUSTRALIA

Victoria buys women’s prison

      The Government of Victoria has paid A$20.2m to Sodexho SA and taken the ownership and operation of the troubled Metropolitan Women’s’ Correctional Centre back into the public sector (see PPRI # 37 and 35). This is the first time that a company has given up its contracts for a failing privately financed, designed, built and operated prison. The move follows the issuing of default notices by the Government and its subsequent takeover of the prison’s management in September 2000.

Victoria’s minister for corrections, Andre Haermeyer, told Parliament in November 2000 that no compensation had been paid to the company and that the cost was less than the value of the ongoing payments for use of the prison had the contracts continued. “The settlement is on the basis of a fair price for the prison buildings, infrastructure and chattels and below the valuer general’s valuation of almost A$22M,” he said.

n The Law Institute of Australia is the latest organisation to call for Victoria’s two remaining private prison s to be brought back into the public sector.

 

What’s in a name?

     Corrections Corporation of Australia has changed its name to Australian Integrated Management Services Corporation Pty Ltd (AIMS). According to a recruitment advertisement in the Australian, 20 January 2001, the company is “an international icon in the area of correctional rehabilitation  and integrated facilities management ... currently aligning their senior management team towards contemporary business practices that will set the foundations for significant business transformation and repositioning as they enter the 21st century.”

In Victoria, the company is still has prisoner escort and court security contracts and is also part of the Liberty consortium which has a contract to finance, design, build and operate a new court complex (see PPRI #34). It also has court escort and security contracts in Western Australia where, since July 2000, it has been fined $A80,000 for allowing unlawful releases from custody.

 

Competition benefits not realised

In the first instance, the contractor may submit an offer to the minister for the provision of correctional services for a further term. If this is done, the minister must negotiate with the contractor and, within a certain time, advise the contractor whether the offer is above or below what the minister determines is the benchmark cost for running the prison for a further term. Only if the minister and the contractor cannot agree on a basis for the provision of correctional services by the contractor may the minister then initiate the competitive review process and request tenders. If any new operator is chosen as a result of the tender process, that operator must purchase the existing contractor’s equity in the prison.  - Clause 61, Prison Services Agreement for Fulham prison, run by Australasian Correctional Management (ACM, owned by Wackenhut Corrections Corporation).

An independent investigation into the management and operation of Victoria’s privately financed, designed, built and operated  prisons has found that, although the state had benefited from having new facilities built, the anticipated benefits of competition had not been realised.The investigation was commissioned by the Government following the coroner’s findings into the deaths of five prisoners at Group 4-run Port Phillip Prison (see PPRI #35).

Although an underlying assumption of the investigation was that  private prisons “may be expected to be a part of Victoria’s corrections system for at least the 20 years of the contracts” the report was completed before the Government took over the failing Metropolitan Women’s Correctional Centre (see above). For all three prisons, issues such as the legal framework, the contracts, contract compliance and monitoring, the management of prisons and prisoners, staffing, health care and the integration of public/private prisons were examined.

The Panel’s findings included:

n the contractors (as might be expected - Panel’s emphasis)  have taken care to ensure they will not be commercially disadvantaged if the state wishes to change the arrangements;

 n the contractual arrangements with the private prison operators provide much less flexibility for government to change arrangements and adopt new initiatives;

n the limitations placed on operational flexibility by the contractual arrangements are not eased by the current legislative framework;

n where a material default in the operation of a prison is not remedied, the Government can require the contractor to remove the operator but the contractor - not the Government - is responsible for appointing a new operator;

n fresh tenders for the operation of the prisons should be called for whenever there is an opportunity to do so;

n  the performance measures specified in the current contracts are inadequate;

n although recommended changes should improve the contractual framework, the Panel concluded that even the best of contracts will neither provide sufficient safeguards against poor operational performance, nor incentives for innovation.

In response to the Panel’s 54 recommendations, the minister for corrections announced that he would “work closely with the private prison operators to achieve the best possible system for Victoria.”

Report of the Independent Investigation into the Management and Operations of Victoria’s Private Prisons, October 2000 (The Kirby Report, published 28 November 2000) is at: www.justice.vic.gov.au

n Victoria’s contracts with private prison operators can be found on the internet at: contracts.vic.gov.au

 

Abuses alleged at ACM centres

    Australia’s federal government has launched an independent inquiry into allegations that child abuse was allowed and not reported to the proper authorities by  staff at the Woomera immigration detention centre in South Australia. Refugee, legal and church groups are concerned that the inquiry is being conducted out of public view and has limited powers to call or protect witnesses. One allegation being investigated is that ACM was under pressure not to report incidents for fear of incurring financial penalties.

Amnesty International and Centacentre, a catholic church welfare agency, also claim to have details of cases at Woomera where children have been handcuffed while in detention and placed in solitary confinement. Former prime minister Malcolm Fraser has described Woomera as a “hell hole” that should be shut down.

n Allegations of physical and verbal abuse and improper medical care of detainees at ACM’s Curtin refugee detention centre in Western Australia have also surfaced. Barrister Laurie Levy told the 7.30 Report on 8 December 2000 that: “I have acted for 27 or 28 detainees  at various times and the one thing I have heard consistently is the allegation of brutality perpetrated against the detainees.” A detainee has also alleged that, between November 1999 and February 2000, there was no doctor and just one nurse for 1,200 people at Curtin.

n ACM guards at the Maribyrnong detention centre in Melbourne are alleged to have goaded detainee Villami Tanginoa before his death in December 2000. Mr Tanginoa fell from the top of a basketball ring after an eight hour stand off with ACM staff. Since the incident, a number of other detainees have come forward with allegations of mistreatment.All immigration detention centres in Australia are run by Australasian Correctional Management (ACM, see PPRI #37, 36, 32,30, 29 and 14).

n The Australian and The Age have internet archives of articles and reports dealing with  the situation at Woomera:

www.theaustralian.com/au/extras/woomera/index.html

www.theage.com/au/issues/immigration/index.html

 

 

ACM’s performance at Junee

    Seven years after Australasian Correctional Management (ACM) started to run the Junee Correctional Centre in New South Wales, the NSW contract monitor found that the company still had problems ensuring that prisoners were usefully employed and programmes and welfare services adequately provided (see PPRI #35).

According to the monitor, the high levels of prisoner unemployment had been reported on consistently in previous years and “the 1999/2000 performance review found that, while the overall level of inmate employment still falls below the national performance indicator of 65 per cent ... ACM has taken recent initiatives to address this concern.”

The 1998/99 review concluded that ACM’s screening process for prisoners participating in Men’s Issues and Survivors of Sexual Abuse groups was ineffective. This deficiency had resulted in child sex offenders participating in these groups. This issue “continued to be of concern to the Department during the current review period.”

Regarding core welfare services, the 1998/99 review concluded that ACM needed to identify programme intervention outcomes and to record the level of service delivery to allow for evaluation and review. The monitor noted that for 1999/2000 “there continues to be a difference of opinion with ACM on the delivery of these services.”

In 19998/99, alcohol and other drug programmes lacked the continuity of services delivered in state facilities and “ ... again the AOD programme conducted by ACM staff was identified as deficient...”

There were also concerns about the maintenance of case files. “It was identified that the number of officers being placed on detached duty with ACM’s [immigration] detention centres had an impact on the delivery of case management within the centre.”

Prisoners who, after urinalysis, had tested positive for drugs were still not being charged. Urinalysis had “traditionally posed problems and resulted in negative comments in several annual performance reviews.”

The contract monitor’s overall assessment for 1999/2000 was that “ACM continues to satisfactorily meet its contractual obligations under the management agreement.”

NSW Department of Corrective Services, Annual Report 1999-2000, Appendix 26 - Junee Correctional Centre 1999/2000 Performance Review.

 

Canberra: public prison called for

      A Prison Community Panel would prefer the Australian Capital Territory (ACT) Government to operate the proposed new prison in Canberra (see PPRI # 35, 30 and 25).

The panel believes that the government would best ensure that the vision of the prison would be successfully implemented. But if the government proceeds with a private owner/operator model, the panel also recommended that the owner and operator should not be the same entity. Consultants are advising the government on options for cost,  design, construction and operation. Currently, sentenced ACT prisoners are held in prisons in New South Wales. n A Legislative Assembly committee has called on the government to note “the consistent message from all recognised experts” that it should build a publicly run prison. The Standing Committee on Justice and Community Safety says the government should not privatise.

 

MTC’s international aspirations

      Management and Training Corporation (MTC) took over the management of Borallon Correctional Centre at Ipswich,  Queensland on 1 January 2001 after a three month transition period (see PPRI # 37 and 36). The five year, A$83m contract is the Utah based company’s first outside of the US. Scott Marquardt, MTC’s president and chief executive, told the Courier Mail  9 January 2001 that MTC hopes to run other private jails in Australia, Britain, Canada and eventually South America. Mr Marquardt also expressed the view that society was  over reliant on jail to deal with drug problems and that at-risk young Australians, like their US counterparts, would benefit from boot camps.

MTC runs 24 of these facilities - known as Job Corps Centres - as well as 13 prisons in the US.

 

NEW ZEALAND

 

ACM’s first escape

    Australasian Correctional Management (ACM) has allowed its first escape from the Auckland Remand Centre which it has run since June 2000 (see PPRI # 34 and 32). A prisoner placed a dummy in his bed, changed his clothes and left through the main entrance of the prison during visiting hours on 3 December 2000. Under the terms of its contract, ACM can be penalised NZ$50,000 for each escape.

Staff have already left ACM’s employ over working conditions. One former prison  officer has written to the minister for corrections claiming that both training and staffing levels are inadequate. The officer alleged that, during visiting hours, one staff member is left responsible for 40 prisoners and up to 100 visitors.

UNITED STATES 

 

Feds boost domestic industry

    With George W. Bush as president and John Ashcroft as attorney general, the private prison industry in the US has secured a dream team to oversee federal prison affairs at a crucial time.

    New contracts from state authorities are few and far between and potential new domestic markets such as local jails are yet to come on stream (see PPRI #37). In the meantime, federal agencies already appear to be throwing a lifeline to a troubled industry which, over the last few years, has been wracked by scandals, contract failures, lawsuits, plummeting stock prices and financial problems, not to mention studies undermining the claims for the benefits of privatisation (see PPRI #37 and back issues). Although WCC has suffered domestically, its fortunes have been sustained by international expansion. But federal contracts are more crucial for CCA, which has given up its international operations and, with a billion dollar debt,  is in a more precarious position than its main domestic rivals.

Support for Bush & Co

    Although the full extent of the industry’s support for the Republican election cause is yet to be revealed, according to the [Florida] St Petersburg Times, 17 January 2001, Wackenhut Corrections Corporation (WCC)  contributed $20,000 towards the cost of Bush’s inauguration.

The website of the Center for Responsive Politics (www.opensecrets.org) also shows that corrections companies such as WCC, CCA and Cornell Companies Inc. and/or their directors and family members had been donating money to the election fund and/or Republican causes generally.

President Bush’s recent appointments of ‘compassionate conservatives’ - prominent figures of the religious right - as White House staff will also have a bearing on criminal justice policy.

Not least because Chuck Colson, well known internationally as a key adviser to Richard Nixon during the Watergate affair, subsequently for his jail term and most recently for running faith based prison wings in the US, is an advocate of faith based private prisons.  Perhaps less well known abroad is Mr Ashcroft’s record. Just a few of his activities have  included: supporting some of the most extreme ‘drug war’ legislation; trying to amend the constitution to give police draconian search powers; supporting mandatory minimum sentencing; and failing to deal seriously with racial disparity within the criminal justice system.

Once in office, Mr Ashcroft will doubtless ensure that the so-called wars already being waged on drug users and immigrants are stepped up.

This is important for the corrections industry as these policies will impact directly on federal agencies which, in turn, will ratchet up both their already fast growing prison populations and their reliance on the private sector.

Federal agencies have been good to the industry. Back in the early 1980s the Immigration and Naturalisation Service (INS) helped to kick start the industry by awarding (CCA) and Wackenhut Corrections Corporation (as was) their first contracts.

     Most recently, WCC opened a new facility for federal prisoners in Texas on 15 January 2001, just days before George W. Bush’s inauguration. On 22 January, the Federal Bureau of Prisons (FBOP) revealed that WCC, CCA and Cornell Companies Inc. had been short listed for  new prison contracts, going some way  towards meeting the Bureau’s stated need for 6,000 beds to hold ‘criminal aliens’- non-US citizens convicted of federal offences and who, ultimately, could face deportation.

Prior to the presidential election, however, it was estimated that the agency could require a further 20,000 such beds. All would be in private facilities. In between times,  the industry has kept an open door to former FBOP prison wardens seeking second careers in the private sector.

Meanwhile, former FBOP directors such as Michael J. Quinlan and Norman Carlson have done even better, becoming highly paid executives with CCA and WCC respectively.

The INS already has around 14 per cent of its prison population in private facilities and is due to award three contracts for a total of  2,000 beds.

As well as contracts for the INS Wackenhut,  CCA and Cornell Companies Inc. have benefited from FBOP largesse to the tune of over $2bn for just six contracts. Up until recently, CCA was the major beneficiary.

But as the recent campaign against WCC’s prison for federal prisoners in Winton, North Carolina (see PPRI # 32) and the current campaigns (see below) show, there is growing resistance to the federal project of boosting the private sector.

The indications are that this opposition will escalate to match whatever the new administration devises.

 

Federal bailout sparks protests

       Hundreds of protesters from neighbourhood, law enforcement, labour, justice, religious, student and immigrant rights groups, are campaigning  to oppose plans by the Federal Bureau of Prisons (FBOP) to use for‑profit private prisons in the Southeastern US to house thousands of low security, male, non US citizen ‘criminal aliens’. 

At the end of January 2001 actions took place  in Kendall, Florida; McRae, Georgia; Jackson, Mississippi; and Hertford, North Carolina. 

The protests were organized by the Public Safety and Justice Campaign (PSJC, see PPRI # 34) which sees the FBOP plans as a bailout for a failed industry.

“For‑profit private prisons are an experiment that failed.  We demand to know why the federal government is rewarding this failure,” said Si Kahn, PSJC campaign director. 

“The incarceration of human beings is a fundamental responsibility of government.  The profit motive leads to public endangerment and corruption,” he continued.

“We find it reprehensible that, at the same time the federal government has catalogued abuse and corruption by the for‑profit private prison industry, it is going to give out billions of dollars in contracts to that same industry. This has got to stop,” said Kahn.

PSJC’s website is at:www.stopprivateprisons.org

 

Black legislators take a stand

In December 2000, the 24th annual legislative conference of the national black caucus of state legislators passed the following resolution sponsored by  Senator Gwen Moore, WS:

 

WHEREAS, State and local governments, confronted with prison overcrowding and fiscal constraints, and the promise of jobs and tax revenues in impoverished rural communities, have been experimenting with prison privatisation; and

WHEREAS, The existence of private prisons provides perverse incentives to grow the inmate population by focusing criminal justice policy on passing punitive laws, warehousing inmates, and building prisons for economic gain; and

 

WHEREAS, Many states do not have any laws governing the operation of private prisons, and many contracting jurisdictions do not have a system of oversight to ensure proper accountability, appropriate treatment of inmates and protection of public safety; and

 

WHEREAS, Private firms generate profits by cutting back on inmate services, programmes that lessen recidivism and inmate health care.  The impact of privatisation has been especially devastating on inmates requiring health care services and specialized treatment because inmates tend to have greater health care needs than the general public; and

 

WHEREAS, Private firms encourage the exportation of inmates to private facilities in other states to optimize their profit potential.  This business practice moves inmates far away from their families and support networks. For instance, inmates from Washington, D.C. are currently

housed at private prisons in Ohio and New Mexico; and

 

WHEREAS, Private firms generate profits by  under staffing facilities, paying employees inferior wages and benefits, providing inadequate staff training, and not paying corporate or property taxes. This endangers inmates, workers and the community.  In addition, it erodes local

economies and increases the liability for the contracting jurisdictions; and

 

WHEREAS, Despite all of the ways that private management firms cut corners, there is no conclusive evidence that prison privatisation saves tax dollars. However, there are numerous ‘horror’ stories at private

prisons in places like Youngstown, Ohio; Travis County, Texas; Jena, Louisiana; and Santa Rosa and Hobbs, New Mexico; and

 

WHEREAS, The stock prices for the three biggest companies, which manage over 80 per cent of all adult private prison beds, have plummeted, and each of the companies has experienced severe financial difficulties. This has put added pressure on the private firms to cut corners and jeopardize inmate treatment and public safety.  Furthermore, the financial viability of these firms is uncertain and presents significant risks to jurisdictions that contract with them; and

 

WHEREAS, There is widespread opposition to private prisons.  A recent poll, conducted by the renowned research firm of Lake Snell Perry & Associates, found that 51 per cent of people likely to vote in the 2000 election oppose private prisons while only 28 per cent support them. Groups across the political spectrum ‑ from churches to inmates' rights advocates, unions and law enforcement organizations ‑ are on record opposing private prisons.

 

THEREFORE BE IT RESOLVED, THAT THE 24TH ANNUAL LEGISLATIVE CONFERENCE OF THE NATIONAL BLACK CAUCUS OF STATE LEGISLATORS, ASSEMBLED IN CHARLOTTE, NORTH CAROLINA, NOVEMBER 27 – DECEMBER 2, 2000, strongly opposes the privatisation of prisons. The case against prison privatisation is clear.  The profit motive leads to increased recidivism, and it does not improve prison operation or save taxpayer money.  Prison privatization only benefits corporations and their shareholders. The promises to communities of jobs and tax revenues never materialize. Cost‑cutting and high employee turnover lead to dangerous conditions inside and

outside the prison walls.  The operation of prisons is a fundamental government responsibility; and

 

BE IT FURTHER RESOLVED, THAT NBCSL and its members fight to pass legislation that will prohibit private prisons and/or limit the expansion of the industry.

 

BE IT FINALLY RESOLVED, THAT NBCSL will also work with other organisations and interested parties to stop prison privatisation.

 

Resistance in Georgia

      More than 30 civil rights, criminal justice, faith and labour organisations, including the Georgia Association of Black Elected Officials and the Southern Christian Leadership Conference, have signed a resolution opposing the importation of prisoners into Georgia and the use of private prisons.

The initiative was in response to a plan by Corrections Corporation of America to fill two prisons being built speculatively (ie, without contracts to fill the beds) in the state with prisoners from out of state.

Contact: Ann Colloton. Tel: ++ 1 404 688 1202

 

CCA’s policy of excessive force

        In a landmark ruling a federal grand jury has found that Corrections Corporation of America (CCA) had a corporate policy of using excessive force to control teenagers at a  juvenile detention facility that it ran in Columbia, South Carolina.

On 15 December 2000, former inmate William Pacetti, now 18, was awarded more than $3 million in punitive damages and $125,000 in actual damages for his pain and suffering after CCA guards hog‑tied (two hands tied to an ankle behind the back), maced and threw him against  a wall three years ago (see PPRI # 8). The jurors had been asked to award punitive damages of $140m, or 10 per cent of the company’s net worth in order to send a message to all companies that run prisons for profit.

The incidents occurred when Pacetti, then 14, was in the facility between July 1996 and January 1997.

“It’s a case where a corporation had a policy of using abuse, not a case involving the actions of individual officers,” said Gaston Fairey, the Columbia lawyer representing William Pacetti and several other former inmates of the facility.

In 1996, the South Carolina Department of Juvenile Justice signed a three year, $14m per year contract with CCA to run the prison and other programmes for young offenders.

When the contract was awarded, CCA announced that it was “an opportunity ... to showcase its knowledge, ability and responsiveness in this specialised arena while helping the state meet its court-ordered requirements.”

But after one year, the state decided not to renew the contract following a series of escapes and other operational problems including inadequate training of staff and the excessive use of force.

Although CCA might yet appeal the decision, the verdict could lead to similar findings for 21 other former inmates who have filed lawsuits alleging assault and improper punishment by the company. Gaston Fairey will see if the Pacetti case is appealed and how an appeal court rules on it before he presents the other cases.

Gaston Fairey is with the law firm Fairey, Parise & Mills, 1722 Main Street, Suite 300, PO Box 8443, Columbia, South Carolina 29202, USA.

 

Where the money goes

“We literally spent millions of dollars educating our legislators on the advantages of private prison operators.” - Doctor C. Crants, former Chief Executive, Corrections Corporation of America.

“We are not in the public policy making business.”  - Susan Hart, former Vice President for Communications, Corrections Corporation of America.

Private prison corporations with vested financial interests in increasing US imprisonment rates have deeply insinuated themselves into the political process, according to a new report documenting the industry’s political campaign contributions and involvement in the influential American Legislative Exchange Council (ALEC).

The report’s authors note that, over the last 20 years, the backdrop to this increasing influence includes:

n the ascendancy of conservative politics, which favours privatisation;

n the increasingly common practice of exploiting public fears about crime in order to gain or maintain political power;

n the concerted effort of corporate-backed think tanks to develop and disseminate pro-privatisation legislative models;

n the dependency of elected officials on big-money contributors for their ongoing political careers; and

n the opportunity for profits to be made from criminal justice systems.

The report quotes from Abt Associates’ Private Prisons in the United States study (see PPRI # 25): “[Most] contracting for imprisonment services was not taken at the initiative of the correctional agency, but was instead mandated by either the legislature or the chief executive of the jurisdiction, typically the governor.”

This, say the authors, explains why influencing elected officials at the state level has become a key business strategy for private prison corporations.

American Legislative Exchange Council

Recent federal and state legislation has criminalised more and more behaviour, incarcerated offenders for longer sentences and dismantled most rehabilitative and transition services for prisoners.

Much of the legislation implemented at the state level was crafted by just one organisation in partnership with private prison interests.

The American Legislative Exchange Council (ALEC) is a Washington DC-based public policy organisation whose main function is to develop model legislation that advances conservative principles.

In 1995-96, ALEC’s model legislation resulted in 1,647 bills, including 365 that became law (a 22 per cent success rate). By 1999, the introduction of ALEC-based bills had increased by 34 per cent with 322 of 2,208 ALEC bills enacted.

In 1995, ALEC’s Model Legislation Scorecard claimed that: “The busiest Task Force was Criminal Justice, which had 199 bills introduced.”

Its recent success includes:

n  enactments of Truth in Sentencing legislation (where offenders serve at least 85 per cent of their sentence) in  24 states;

n habitual offender three strikes legislation (life imprisonment for a third violent felony) in 11 states;

n four enactments of legislation for private correctional facilities in four states; and

n one piece of legislation requiring prisoners to work for private companies in one state.

A key component of ALEC policy is that governments should “use prison privatisation, electronic home detention, boot camps and similar methods...”

There are over 6,000 state legislators in the US. Approximately 2,500 of them are ALEC members. According to the report, “scores” of them hold key state leadership positions.

Also, prominent among ALEC’s financial backers are Corrections Corporation of America (CCA), Wackenhut Corrections Corporation (WCC) and Sodexho Marriott Services (see PPRI # 37 and 34) .

CCA’s contribution to ALEC’s 1999 States and Nation Policy Summit gave it President’s List status. Wackenhut Corrections Corporation and Sodexho Marriott Services also sponsored the conference.

Two cases from Pennsylvania and Arizona show how ALEC was able to peddle influence.

n In February 1995, Pennsylvania Governor Tom Ridge,  an ALEC member, called a special session of the legislature to address crime in the state. Twenty pieces of legislation - all based on ALEC’s programme - were introduced. Overall, in the nine month session, 30 crime bills were approved and the governor released more than $87m in state funding for new prison construction. Governor Ridge was a featured speaker at ALEC’s 26th Annual meeting in Nashville in August 1999.

n In Arizona’s 1999 legislative session, Senate president Brenda Burns - ALEC’s 1999 national chairwoman - sponsored two bills aimed at privatising the state’s prison system. Although both bills passed the House, they failed  to make it through the Senate before adjournment.

Money talks

As well as providing a partial list of lobbyists working for CCA and WCC in Alabama, Washington DC, Florida, New Mexico, Tennessee, Idaho and Texas, the report also found that private prison corporations make direct financial contributions to many legislators.

“Several prominent ALEC members who have received campaign  contributions ... have supported private prisons or tough on crime legislation.”

n In 1998, private prison corporations made 645 contributions  totalling over $540,000 to 361 candidates in 25 states (out of a total of 43 states surveyed for the report).

“While this figure appears small relative to federal elections, the total represents a significant and growing effort by a handful of corporations to ensure access to policy makers at the state level at crucial moments. In states where campaign budgets still average $5,000 for state representatives and $20,000 for state senators, contributions of $250, $500 and $1,000 are meaningful,” say the authors.

n CCA gave $335,106 to 195 candidates in 16 states, particularly California, Tennessee, Iowa, Idaho, Colorado and Texas.

n Cornell gave $110,575 to 84 candidates in California, Alaska, Florida and Iowa. Republicans received 56.8 per cent of the contributions.

n Correctional Services Corporation (CSC) gave $34,378.

n WCC gave $33,325.

n US Corrections gave $4,300.

Of the total contributions, 47 per cent went to Republican candidates and 53 per cent went to Democrats. Fifty three per cent ($297,000) went to incumbents; 34 per cent ($182,199) went to candidates who won; 11 per cent  ($59,825) went to candidates who lost in the general election; and six per cent went to candidates who lost in the primary stage.

The report also noted “the overlap between politics and business goes well beyond local and state level contracts to the heart of Wall Street.”

Richard Gilder is a founding partner in New York investment house Gilder, Gagnon, Howe and Co which has a 6.4 per cent stake in CCA. Mr Gilder is described as “a major funder of conservative candidates; he donated more than $360,000 during Newt Gingrich’s Republican Revolution.  J Patrick Rooney of Golden Rule Financial is a major underwriter of ALEC and gave Gingrich $231,000. Gilder is also a founder and director of the Club for Growth, which raises funds for conservative GOP candidates, and promotes a conservative policy agenda including privatisation. Club for Growth board colleagues include Stephen Moore, a Heritage Foundation [right wing think tank] Fellow who was the research director of President Reagan’s Commission on Privatisation.”

Going west

The report found “a particular push by private prison corporations into the western region, with over 70 per cent of the total contributions going to candidates in western states (excluding Texas). California, the most populous state and a hotbed of tough-on-crime activity, received the highest level of investment.”

The report describes how the leading corporations are southern based and built their early markets in the south.

But they have since targeted California, Arizona and New Mexico for expansion and “have succeeded in moving into Idaho and Montana ... and major forays into Utah and Alaska.”

A profile of California also notes that the California Correctional Peace Officers’ Association, while anti-prison privatisation, has become “one of the most powerful forces in California politics,” donating $2.174m to campaigns.

There is a section on resisting prison privatisation, with a case study of a successful campaign in Utah. 

It concludes that, “private prison corporations are seeking to increase their access to policy makers” and, although the private prison industry has recently suffered substantial losses in the stock market “it would be a mistake to discount their growing political power.”

The Prison Payoff: the role of politics and private prisons in the incarceration boom, by Brigitte Sarabi and Edwin Bender, Western States Center and Western Prison Project. Copies price $15 + shipping per copy, discounts for larger orders. From WPP, Publications Dept, PO Box 40085, Portland, Oregon 97240, USA. Tel: ++503 335 8449. Fax: ++ 503 287 5561. Email:wpp@teleport.com

 

CANADA
 

US firms close in on Ontario

    The Government of Ontario has passed legislation enabling the contracting out of adult correctional services.

Bill 144, is euphemistically described as “an Act to establish accountability in correctional services ...” and amends the existing Ministry of Correctional Services Act.

Prison companies from the US have visited Ontario’s public prisons in preparation for the competition to run the new 1,200 bed facility at Penetanguishene (see PPRI # 37, 35, 34 and 32). Ministry of Corrections officials who supervised the visits refused to name the companies.

The government’s shroud of commercial secrecy was also used to deny the Penetanguishene Town Council access to the Request for Qualifications (RFQ).

The Ontario Public Service Employees Union (OPSEU) and the council have since established that the RFQ omitted 29 of the council’s suggested 52 clauses that were included in the original Request for Proposals.

n Around 150 municipal councils in Ontario have passed resolutions opposing the government’s plans for privatised adult correctional facilities.

n Citizens Against Private Prisons (CAPP) has a website: www.capp.50megs.com

n The Ontario Public Service Employees’ Union corrections bulletin Locktalk is on the internet at: www.opseu.org/ops/ministry/locktalk

 

 

What the auditor revealed

    The Government of Ontario’s auditor general has found that the ministry of corrections expanded the use of privately run ‘strict discipline’ programmes for young offenders before a three year pilot project had been completed and evaluated.

Project Turnaround (see PPRI #13) won a three year C$8.3m contract which, prior to its expiry in July 2000, should have been evaluated for its impact on young offender recidivism, academic achievement, employment success  and other factors.

But the evaluation did not take place.

The audit also found that an extra C$400,000 was paid to Project Turnaround for additional staffing not anticipated in the original contract even though the contract had no provision for such payments.

Nor had the ministry verified invoiced amounts against the contract and had been overpaying the contractor by C$24,000 for aftercare services.

n In 1996, the Ministry of Corrections was supposed to have explored the possibility of private finance and ownership of two new prisons which were being planned as part of an infrastructure renewal project.

Although no Requests for Qualifications (RFQ) were ever issued, ministry officials did have meetings with the private companies. The auditor reported that:

n in the meetings, the private sector consortia indicated they would be willing to provide the financing to win the contract. However, they were more interested in obtaining the operating component of the package;

n with provincial financing and ownership, the cost of financing would be at the province’s interest rate which was 15 to 40 base points lower than that of the private sector;

n if a facility were to be owned and operated by the private sector, the province’s ability to regain possession and/or ownership in the case of inadequate performance could be problematic;

n the release of a RFQ or a RFP to privately finance, design, build and/or operate the facility could have resulted in significant delays caused by union grievances.

 

CHILE 

    The tendering timetable for Chile’s ten new semi-private prisons has been revised with bids being split into two phases (see PPRI #36).

January 2001 was the deadline for prequalification for the first five bids. Calls for tender will be in March and the adjudication will take place in October and November 2001. The government wants the first five prisons to be open by 2003.

Calls for tenders for a further five prisons will be in September 2001 and the adjudication will take place in April/May 2002.

Contracts will be for 20 to 25 years and all prisons will be privately financed, designed and built. All non custodial services will also be contracted out but custodial services will be provided by the Gendarmeria.

n In December 2000, Chile’s director general of public works told the private finance conference in Cape Town  (see below) that prisons have been targeted for public private partnership involvement as they are schemes -along with highways, airports, ports and hospitals - which have a strong social impact while showing adequate private returns.

The government will share with private partners non  diversifiable risks such as lower than expected demand and will cover currency risks with a payment to the contractor for exchange rate fluctuations when depreciation is more than 10 per cent.

 

SOUTH AFRICA 

Private finance global summit

  The Public-PrivatePartnerships/Private Finance Initiative Global Summit took place in Cape Town in December 2000.

The aim was to market the concept of providing new infrastructure through privately financed and operated projects and expand the already growing international business of British contractors, law firms, banks and consultants.

According to The PFI Report January 2001, “senior government ministers from across the developing world appealed for the private sector to invest in their countries through Public Private Partnerships ...”

One of the case study presentations was on South Africa’s two private prisons currently under construction (see PPRI # 36, 34, 30, 23, 20, 18, 16, 15 and 13.  It was revealed that the government had an advisory team comprising Justice Solutions International as lead consultant; South Africa’s Loots International and Malelake Msimang & Associates and UK law firm Masons as legal advisers; Kagiso Financial Services (South Africa)and the UK’s Berliner Bank as financial advisers; Aaon as insurance advisers; and LMA/Ove Arup as engineers.

The cost of the fees associated with all this advice and consultancy was not reported.

The event’s sponsors included: consultants KPMG and PricewaterhouseCoopers; construction firm Carillion; construction risk advisers Currie and Brown; bankers Investec; and international law firms Masons and Simmons and Simmons.

Speakers from the world of banking included representatives from Bank of America, Commonwealth Bank of Australia, European Investment Bank, First Rand Bank, Investec and Development Bank of South Africa.

 

 

RECENT PUBLICATIONS 

 

Privatization in Criminal Justice, Past Present and Future, edited by David Shichor and Michael J.Gilbert. Anderson Publishing Co, PO Box 1576, Cincinnati, Ohio 45201-1576. www.andersonpublishing.com

An important collection dealing with issues relating to prison privatisation in the US. But it raises fundamental questions - particularly about the concept of the state, its functions, responsibilities and authority - that need to be debated everywhere.

It includes a history of privatised criminal justice and asks how much is too much privatisation in criminal justice. There are also chapters on: jail privatisation, the next frontier and the grassroots battle against CCA in Tennessee. The chapter profiling CCA notes: “If government operated correctional facilities had an even halfway decent record they would not be as vulnerable to encroachment by groups such as CCA...”

 

GATS: How The World Trade Organization’s new “services” negotiations threaten democracy by Scott Sinclair, Canadian Center for Policy Alternatives, Suite 410, 75 Albert Street, Ottawa, Ontario KIP 5E7, Canada. www.policyalternatives.ca

Explains the General Agreement on Trade in Services (GATS) and sets out the threat to public services. “Most citizens and even elected officials still do not comprehend  the full extent or implications of the existing GATS... the ultimate goal is to commercialise every service sector in every WTO country - including essential services...”

 

Public Services or Corporate Welfare, Rethinking the Nation State in the Global Economy by Dexter Whitfield, Pluto Press,London.www.plutobooks.com

Available from: Centre for Public Services, 1 Sidney Street, Sheffield S1 4RG, England. Tel: +44 114 272 6683.  Fax +44 114 272 7066. www.centre.public.org.uk

Email:ctr.public.serv@mcr1.poptel.org.uk 

The book provides an analysis of modernisation including partnerships, private finance and Best Value. It analyses how the state facilitates globalisation by promoting private finance and the marketisation of public services;  demonstrates how the World Trade Organization is committed to privatising public services and welfare states; charts the emergence of a Corporate Welfare Complex; promotes a revitalised role for the state in a new system of global governance, stressing the importance of sustaining and improving the welfare state; and advocates a dynamic new model of public service management.

 

Prison Privatisation Update: what the private prison industry doesn’t want you to know. Fifth edition, July- December 2000. Corrections USA, www.cusa.org

A compilation of reports from a variety of news outlets across the country and around the world. “These reports document the incredible failure this industry has become...”

 

Private Prisons: Public Safety Threatened. A survey of recent escapes. Ryan Sherman, California Correctional Peace Officers’ Association Legislative Department. Email: rsccpoa@aol.com

Since 1995, there have been at least 200 escapes from private prisons throughout the US. In the same period, there have only been 11 escapes from secure California Department of Corrections(CDC) facilities.

 

Business Behind Bars, a two part film documentary directed and co-produced by Catherine Scott and Pat Fisk.  Further details are available on the internet at:  www.businessbehindbars.com

The films deal with prison privatisation in the US and Australia. “They’re [Australia] really starting to punish people, as they should have all along.” - George C. Wackenhut, president of Wackenhut Corporation.