Opinion: Daily Journal

Some Corrections on Privatizaton

RALEIGH — Here’s what some state politicians think they know about the privatization of prisons. North Carolina gave it a good try, with two medium-security prisons contracted out in the mid-1990s, and the results were disappointing. Both the private contractor and the state agreed that the latter should take back control of Mountain View Correctional Facility in Spruce Pine and Pamlico Correctional Facility in Bayboro three years ahead of schedule.

Case closed. Nothing to see here.

This version of events deserves to be, well, corrected. No serious advocate of privatization — whether the service be corrections, data processing, maintenance, or instruction — would argue that any and all potential contracts with private vendors are inherently worth pursuing. Experts in the field emphasize the importance of details, of spelling out ahead of time the responsibilities of both the contract administrator and the vendor and of providing specific, qualitative and quantitative measures of success.

As associate editor Paul Chesser revealed in a Carolina Journal cover story last summer, the story of the Mountain View and Pamlico facilities is more complex than the concept’s ideological opponents would admit and its political detractors would recognize. The company that ended up running the two prisons, Corrections Corporation of America, was not the original bidder. CCA acquired that firm, U.S. Corrections Corporation, in 1998. CCA officials say they would not have negotiated the contract they inherited, while state officials say in retrospect that they would have structured the agreement differently.

Mistakes were made on both sides. CCA shouldn’t have acquired another company without knowing what it was getting into. And the state should have included clauses in the original contract to trigger a renegotiation should the original vendor be acquired. Private companies learn such lessons all the time in their own “make or buy?” decisions about contracting out for services vs. doing them in-house. Indeed, my own organization still struggles with some of these issues today in areas such as printing and mailing costs.

North Carolina lawmakers need to understand that their experience with the failed CCA contract is not the beginning and end of the prison-privatization story. Many states have invested significant time and effort developing contracting systems that manage a large number of facilities and inmates. As the Reason Public Policy Institute has observed, these experiences are yielding a wealth of new information about the concept and its most effective application. New Mexico, for example, has nearly half of its prison population in privately managed facilities. Both cost savings and best-quality service are evident. More generally, researchers at Vanderbilt University have recently studied the experiences of states with significant privatization programs in corrections and those without them. The private-prison states were better able to control growth in government corrections spending.

North Carolina is going to have to be creative if it expects to handle another emerging crisis in prison overcrowding without raising taxes or shortening the sentences of some dangerous criminals (though shorter sentences for nonviolent offenders is probably merited). State leaders need to set aside what they think they know about the privatization option, do some additional research, issue a new round of requests for proposal, and see what possibilities present themselves.

After all, no one is suggesting that North Carolina has to agree to any proposed contract. But policymakers committed to expending taxpayers’ money in the most efficient way possible should always be willing to accept private bids and consider them thoughtfully.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.