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Audit on Private Prison Contractors, FBOP,2001

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THE DEPARTMENT OF JUSTICE’S RELIANCE
ON PRIVATE CONTRACTORS FOR PRISON SERVICES
INTRODUCTION
The housing of federal prisoners is the responsibility of three
Department of Justice (DOJ) components: the U.S. Marshals Service
(USMS), the Immigration and Naturalization Service (INS), and the Federal
Bureau of Prisons (BOP). The USMS detains individuals awaiting trial for
federal crimes. The INS detains persons charged with violating immigration
laws, entering the country illegally, or awaiting deportation. The BOP
maintains custody of persons convicted of crimes and sentenced to federal
prison.
All three components obtain space for prisoners through contracts with
private contractors and through intergovernmental agreements (IGAs) with
state and local governments. In some cases, the space and services
obtained through an IGA are actually provided by a private contractor of the
state or local government entity. Private prison contractors provide DOJ
with about 18,000 beds each day.
Most private prison space is provided to the DOJ by three
corporations: Corrections Corporation of America (CCA), Wackenhut
Corrections Corporation (WCC), and Cornell Corrections. The DOJ’s reliance
on a few large contractors for jail and prison space raises concerns about the
impact on the DOJ if one of these contractors is unable to continue to
operate its facilities across the country for an extended period.
Our review objectives were to determine: (1) the extent to which the
DOJ relies on private contractors for prison services, and (2) the status of
contingency planning in the event a contractor is unable to carry out its
contractual obligations. See Appendix I for our scope and methodology.

RESULTS OF REVIEW
CONTINGENCY PLANS ARE NEEDED TO ADDRESS THE
POTENTIAL LOSS OF PRIVATE CONTRACTOR SERVICES
About 18,000 federal offenders are housed each day in facilities owned
or operated by private contractors, and the use of contractors for
housing prisoners is expected to increase in the future. The DOJ’s
reliance on a few large private prison contractors raises concerns
about how the DOJ would respond to a long-term loss of multiple
private contractor facilities across the country, such as if one of the
large contractors ceased operating. However, the USMS, the INS, and
the BOP have not developed contingency plans to address the
potential inability of a contractor to continue operations on a large
scale. Without coordinated contingency planning, the disruption of
contract services could lead to a host of legal, health, financial,
logistical, safety, and security issues.
Reliance on Private Contractors
The DOJ relies on private prison contractors to help manage its
growing prison population and reduce overcrowding. The following table
shows the significant extent to which the USMS, the INS, and the BOP
currently rely on private facilities to house prisoners.
FEDERAL PRISONERS HOUSED IN PRIVATE FACILITIES
DOJ
COMPONENT1
BOP

TOTAL
PRISON
POPULATION
145,851

PRIVATE PRISON POPULATION
CONTRACT
3,9293

IGA2
4,481

TOTAL
CONTRACT/IGA
8,410

PERCENT
OF
TOTAL
5.8

4

INS

19,043

3,593

541

4,134

USMS

35,954

4,013

1,663

5,676

21.7
15.8

Total

200,848

11,535

6,685

18,220

9.1

The USMS relies on state and local facilities to provide jail space near
cities with federal courts. However, according to the DOJ’s February 2000
1

We were unable to obtain the data from each component for the same time period. The BOP
prison population is as of December 31, 2000, and the INS data is as of December 29 and 31,
2000, and January 3, 2001. For the USMS, the private prison population is as of November 15,
2000, while the total prison population is the average daily population for November 2000.
2

This only includes IGAs with facilities owned or managed by private contractors.

3

This excludes approximately 6,000 individuals in halfway houses.

4

Complete data on the number of INS detainees in IGAs operated by private contractors were
not readily available. Thus, this number may be understated.

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Detention Plan, acquiring detention space is becoming increasingly difficult
for the USMS because state and local detention facilities are filling up with
their own prisoners. The plan revealed that many USMS districts were
reporting that the only option available to them was private contractors. In
1994, private facilities housed about 1 percent of USMS detainees. By the
end of 2000, private facilities housed almost 16 percent.
The INS relies on private contractors because it lacks the funding to
build and operate additional facilities and because, like the USMS, it
sometimes has difficulty obtaining space from state and local governments.
According to an INS official, the INS is seeking to increase the number of
beds by more than 1,500 in its private contract facilities in Houston, TX;
Laredo, TX; and Seattle, WA.
While the BOP housed the smallest percentage of its total prison
population in private facilities (5.8 percent), it has the most prisoners in
private facilities of the DOJ components (8,410), and it appears that these
numbers will continue to grow. For example, the National Capital
Revitalization and Self-Government Improvement Act of 1997 requires the
BOP to house District of Columbia sentenced felons in private facilities. In
response, the BOP has contracted with WCC to operate a 1,380-bed facility
in Winton, N.C. In addition, at the time of our review, the BOP had at least
three other private prison projects under development or planned. In its
FY 2001 congressional budget submission, the BOP requested funding to
contract for an additional 6,000 beds in privately owned or operated
facilities. The BOP FY 2001 budget estimates that its contract population will
increase from 16,394 beds in FY 1999 to 30,063 by FY 2002 (an increase of
13,669 contract beds), the majority of which will be housed in private
facilities.
Primary Prison Contractors
CCA, WCC, and Cornell Corrections are the DOJ’s three largest private
prison contractors. 5 At the time of our review, DOJ components housed
prisoners in at least 41 privately owned or operated facilities (excluding
halfway houses).6 Of the facilities used by the DOJ, 24 are operated by CCA.
As shown below, these contractors account for approximately 91 percent of
the federal prisoners currently housed in privately owned or operated
facilities.

5

The chart in Appendix II shows a breakout of the private contractors for each DOJ component.

6

A listing of these facilities appears in Appendix III.

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PERCENT OF FEDERAL PRISONERS
IN PRIVATE FACILITIES
(BY CONTRACTOR)

Other
9%
Cornell
14%

CCA
53%

WCC
24%

CCA is the nation’s largest private provider of detention and
corrections services to government agencies. At the time of our review, CCA
had approximately 61,000 beds in 68 facilities under contract with
government agencies in 21 states, the District of Columbia, and Puerto Rico.
WCC has 38 facilities and about 28,000 beds in 14 states and Puerto Rico.
Cornell Corrections has contracts to operate 71 adult and juvenile facilities
with a total capacity of more than 14,000 prisoners. Cornell’s facilities are
located in 13 states and the District of Columbia.
Coordination of Contingency Planning Is Needed
To prepare for unforeseen events and emergencies, it is common
business practice to develop contingency plans that describe procedures for
ensuring the continuation of mission critical functions in the event of
disruptions. While the USMS, the INS, and the BOP have plans in place for
dealing with short term emergency situations at individual contract facilities,
they lack overall contingency plans to address potential large scale
disruption of private contractor facilities nationwide. For example, financial
problems of the DOJ’s largest private prison contractor, CCA, underline the
need for DOJ components to have contingency plans that address a potential
disruption in service on a national basis for an extended period.7
7

In fiscal year 1999, CCA, formerly Prison Realty Trust, Inc. (PRT), suffered a net loss of $72.7
million. Due to the company’s financial condition and default on certain provisions of its
indebtedness, in March 2000 CCA’s independent auditor expressed substantial doubt as to its
ability to continue as a going concern. For fiscal year 2000, CCA incurred a net loss of almost

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According to BOP and INS officials, contracts with private prison
companies typically require the contractor to have an emergency plan for
each facility to address such things as strikes, fire, adverse weather, or
other disturbances. In addition, BOP and INS officials told us their contracts
with individual facilities allow them to take over and operate the facility in
case of an emergency, but INS officials added that they lack the resources to
do so. INS and BOP officials emphasized that they have a history of
addressing emergency situations, sometimes involving thousands of
prisoners. Thus, INS and BOP officials believed their components could
address—at least in the short term—the inability of a contractor to operate
its facilities. In our judgment, however, while the components may have
successfully dealt with emergencies at individual facilities in the past, their
lack of plans to address a large-scale disruption of private contractor
services at multiple facilities across the country makes it imperative that
they develop plans to respond to such a possibility.
USMS, INS, and BOP officials acknowledged that they lacked an overall
plan for addressing a long-term loss of private contractor’s services. The
USMS and the BOP are independently working on contingency plans, but
have no definitive time frames for completing these plans. The INS has not
started to develop a contingency plan. According to BOP officials, they are
developing a contingency plan that will address staff and other resources
necessary to carry out emergency functions simultaneously at a contractor’s
facilities across the country should the contracted facilities be unable to
continue operation. The plan will also address options such as relocating
prisoners to other facilities, officials said. USMS officials told us that they
started working on a contingency plan several months ago and are exploring
various options such as operating contract facilities or relocating prisoners to
available jail space across the country.
Because of the cross-cutting nature of the DOJ’s use of private prison
contractors, we believe the components should also coordinate their efforts
in developing contingency plans to prevent conflicts and duplication of effort.
The BOP, the INS, and the USMS rely on the same contractors for prison
space and, in some cases, are competing for the same resources. For
example, CCA provides prison space for USMS prisoners in 17 of its facilities.
INS prisoners are housed in at least 11 CCA facilities and BOP prisoners are
housed in 4 facilities. Eight of the 24 CCA facilities used by the components
are shared by more than one component. Thus, a disruption of service from
a single contractor could affect all three components. Consequently, the

$731 million. The Report of Independent Public Accountants, dated April 16, 2001, notes that
CCA has over $1 billion of outstanding debt. The Accountant’s report also notes that there can
be no assurance that CCA will be able to refinance or renew its $382 million debt obligations
maturing on January 1, 2002.

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components should coordinate the development of their plans to ensure that
they do not conflict with or duplicate one another.
Without coordination and oversight of contingency planning, there is
an increased risk that any disruption of contractor services would affect not
only a single component but all three components, rendering the DOJ’s
reaction to a crisis ineffective. In a worse case scenario, the DOJ could find
itself having to house thousands of offenders throughout the country on a
daily basis without any planning and without the required resources to
address the problem. Such a prospect raises serious public safety concerns,
and we believe that the DOJ should accelerate its contingency planning
efforts accordingly.
In discussing their contingency planning, officials for all three
components expressed concerns about the authority of the federal
government to assume control of private contract facilities beyond the short
term if a contractor goes bankrupt and ceases operation. They stated that
these legal issues need to be addressed at the Departmental level. INS
officials told us that the need for a Departmentwide approach to contingency
planning had been raised with the Detention Planning Committee last
summer.8 JMD officials believed, however, that the responsibility for
detention planning issues should fall under the purview of the Office of
Federal Detention Trustee.9 BOP officials disagreed, stating that the
assignment of a coordination role to either the Detention Planning
Committee or the Office of the Detention Trustee is not appropriate. Both
entities, they said, only have authority to address issues related to the
detention population of the INS and the USMS, not the BOP’s sentenced
prison population. In our judgment, a determination should be made as to
each component’s authority to assume control of a private facility if the
contractor is unable to continue operations. This effort should be based on
the components’ specific legislation, regulations, and contract and IGA
conditions and should be coordinated at the Departmental level.

8

The Detention Planning Committee is chaired by the Deputy Attorney General and consists of
members of various agencies, including the INS, the BOP, and the USMS.
9

The Office of the Federal Detention Trustee is being established consistent with the FY 2001
Justice Appropriation, which provides $1 million to establish a Federal Detention Trustee. The
Detention Trustee will report to the Deputy Attorney General and be responsible for managing
DOJ detention resource allocations, exercising financial oversight of detention operations, and
ensuring the implementation of efficiency and effectiveness improvements in DOJ detention
operations. At the time of our review, the DOJ was in the process of seeking candidates for the
Detention Trustee position.

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Conclusion
The DOJ houses about 18,000 prisoners each day in contractor owned
or managed facilities. The DOJ components appear to have plans in place to
address short-term emergency situations at individual private prison
facilities. However, the increased use of private prison contractors and
financial difficulties of the DOJ’s largest private prison contractor highlight
the need for contingency plans for addressing the potential large scale loss
of private prison services for an extended period of time. Each component
must determine its unique housing requirements (e.g., security level,
proximity to courthouses, etc.) based on its specific needs. In addition,
because the USMS, the INS, and the BOP rely on the same contractors for
prison space and could be competing for the same resources, they need to
coordinate development and implementation of their contingency plans.
Further, the DOJ’s ability and legal authority to assume control of a private
contract facility in the event of contractor nonperformance is an overriding
concern that must be quickly addressed.
###
We provided a draft of this report to the USMS, the INS, the BOP, and
JMD on May 4, 2001 and requested written comments. Each of the
components declined to provide comments.

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APPENDIX I
REVIEW SCOPE AND METHODOLOGY
We performed our review between January and March 2001. During
that period, we obtained background information on CCA, WCC, and Cornell
Corrections. In addition, we reviewed audit reports on CCA and PRT issued
by the Defense Contract Audit Agency and the companies’ independent
auditors. We also reviewed documents related to CCA’s October 2000
reorganization and documents prepared for its December 2000 annual
stockholders meeting. At the USMS, the INS, and the BOP, we obtained
data on the extent to which each component contracted directly, or indirectly
through IGAs, with private contractors for prison services. Information on
the extent that the INS relies on IGAs that are actually operated by private
contractors was not readily available. Therefore, we estimated the number
of prisoners in such facilities by comparing lists of CCA, WCC, and Cornell
facilities to an INS list of its detention facilities. We also obtained
information on the status of each component’s efforts to develop
contingency plans.
Further, we interviewed officials in JMD to discuss the role of the
Detention Planning Committee in coordinating and monitoring the
development of components’ contingency plans. Our work was conducted as
an “other activity of an audit organization” pursuant to section 2.10 of
Government Auditing Standards.

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APPENDIX II
FEDERAL PRISONERS IN PRIVATE FACILITIES

10000
9000
8000
7000
6000
PRISONERS

INS
USMS

5000

BOP

4000
3000
2000
1000
0
CCA

WCC
Cornell
CONTRACTORS

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Other

APPENDIX III
PRIVATELY OWNED OR OPERATED FACILITIES
THAT HOUSE FEDERAL PRISONERS
FACILITY

CONTRACTOR

CATEGORY

COMPONENT

POPULATION

USMS
INS
BOP
BOP
INS
USMS
INS
BOP
INS
BOP
INS
USMS
INS
USMS
USMS
INS
USMS
USMS

1,811
265
1,164
775
532
501
487
470
980
335
262
245
389
235
167
13
139
129

USMS
USMS
INS
USMS

121
70
30
67

USMS
INS
USMS
USMS
USMS
USMS
INS
USMS
USMS
INS
BOP
USMS

54
5
52
41
27
21
85
13
9
162
2,349
623

USMS
INS
INS
USMS
INS

411
324
179
178
156

1.

Pinal County, AZ

CCA

Contract

2.
3.
4.
5.
6.
7.

Eden, TX
California City, CA
San Diego, CA
Leavenworth, KS
Houston, TX
Eloy, AZ

CCA
CCA
CCA
CCA
CCA
CCA

IGA
Contract
Contract
Contract
Contract
Contract

8.
Cibola County, NM
9.
Elizabeth, NJ
10. Laredo, TX

CCA
CCA
CCA

Contract
Contract
Contract

11. East Mesa, CA
12. Liberty County Jail, TX

CCA
CCA

Contract
IGA

13. Torrance County, NM
14. West Tennessee
Detention Facility
15. Odessa Detention Center, TX
16. Hernando County, FL

CCA
CCA

IGA
Contract

CCA
CCA

IGA
IGA

17. Correctional Treatment
Center, DC
18. Marion County, IN

CCA

IGA

CCA

IGA

19.
20.
21.
22.

CCA
CCA
CCA
CCA

IGA
IGA
IGA
IGA

CCA
CCA

Contract
IGA

WCC
WCC

Contract
Contract

WCC
WCC
WCC
WCC

IGA
Contract
Contract
IGA

David Moss Center, OK
Williamson County, TX
Metro-Davidson County, TN
Citrus County, FL

23. Prairie Correctional Facility, MN
24. Bay County Jail, FL
25. Taft, CA
26. Western Region Detention
Facility, CA
27. Central Texas Parole Violators
28. Denver, CO
29. Queens, NY
30. Karnes County Jail, TX

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FACILITY

CONTRACTOR

CATEGORY

COMPONENT

POPULATION

31. San Antonio, TX
32. Big Spring, TX

WCC
Cornell

IGA
IGA

33. Donald W. Wyatt Detention
Center, RI
34. Santa Fe County Juvenile, NM
35. Seattle, WA
36. Frio County Jail, TX
37. Limestone County Jail, TX
38. Ector County, TX
39. Pulaski County, IL
40. Zavala County Jail, TX
41. Garza, TX
TOTAL

Cornell

IGA

INS
BOP
INS
USMS

75
2,273
15
317

Cornell
CSC¤
CSC
CSC
Civegenics
Civegenics
BRG±
MTC*

IGA
Contract
IGA
IGA
IGA
IGA
IGA
IGA

USMS
INS
USMS
USMS
USMS
USMS
USMS
BOP

4
175
148
2
220
32
39
1,044
18,220

_____________________
¤Correctional Services Corporation
±Bobby Ross Group
*Management and Training Corporation

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