To Be Worth One’s Salt

By Outsourcing Center, Kathleen Goolsby, Senior Writer

To Be Worth One’s Salt

In ancient Rome, salt was often difficult to obtain. Roman soldiers received a small allowance so that they could purchase salt for themselves. A soldier whose actions didn’t warrant the allowance was generally thought to be worthless. They were held accountable for the value they added to a Roman legion. It should be no different in the operation of today’s prisons.

“Prisons are one of the most difficult areas to privatize and do it well and safely,” says Adrian Moore, of the Reason Foundation. While the task of taking away an offender’s liberty rightly belongs to the government’s judges and juries, the task of making sure prisoners remain in cells and behave for set periods of time is not something that only a government can do. There is no reason why prisons should not be privatized . . . as long as there is accountability.

When the complexities of the processes being outsourced and the accompanying risks are high, there is a greater need for more accountability. “If you privatize a prison and don’t have good accountability measures,” says Moore, “you can have disastrous outcomes.” It should work the same way for government-operated prisons, but facts clearly show that there is an enormous gap in the accountability measures of private companies compared to the government.

The Extent of Accountability

Two groups in American society express opinion about how to run prisons, and the legislature has responded to both. There is the tough-on-crime crowd who managed to get a law passed that removed all the weights, televisions and air conditioners out of all Florida prisons because it became very unpopular for prisoners to have luxuries at taxpayers’ expense. Other groups fight for prisoners’ rights and privileges. They frequently point to prisoner abuse as an indication of a lack of accountability in prisons and believe privatization will worsen the situation.

When you have a prison that has gone bad and a lot of guards are corrupt and are beating prisoners,” Moore says, “there is not a lot you can do in a government prison. They are all on civil service. You have tons more accountability with a private company because you can fire them.” Americans think their government is somehow more accountable simply because government is accountable to voters. Not true, says Moore. Elected officials have very few levers to pull on government prison management. About all that can be done is to send in investigators – a process that takes years and usually winds up with nothing happening.

Things must be changed from top to bottom, Moore explains. “When a new prison is built and the Department of Corrections hires people to man the prison, it will just be run the same way as all the other prisons are run. But when you build a prison and hire a private company to run it, you write a contract. You get to specify what you want to pay for. Goals affecting inmate-on-inmate violence, cleanliness, better health care, surprise inspections, can be structured in a contract using bonuses and penalties to help achieve the goals.

He says both the UK and Australia have done a lot of prison privatization, and both countries they use performance-based pricing in their contracts. In Australia, private prisons’ performance must be at least as good as the middle level of the government prisons in order to get paid. If they perform above average, they get bonuses.

Positive Results of Accountability

Today, there are about 150 privatized prisons in the U.S. With only a five percent problem rate, the success rate is quite high. Still, there are opponents who believe accountability for private companies goes only as far as shareholder value and never focuses on quality care. They clearly are ignoring recent facts.

When privatization began, the government’s goal was to cut costs. Private companies used the pitch: we can run your prison the same way you are running it, but for less money. But Cornell Companies, Inc. was doing something different. Its approach has been: we can perform more services for less money and, if the government is smart, it will use the savings for some other purpose in government or re-invest it in better programs for inmates. “Cornell was different because it was originally a nonprofit juvenile prison manager, and the juvenile sector is more quality driven and more data oriented,” explains Moore.

Cornell is really the only prison company that has kept data year after year on how its facilities compare to public prisons as well as other private prisons. Moore says that other private prisons just this year have jumped on board and started collecting data like Cornell. “All of the private prisons are starting to put a lot more emphasis on quality differences, on measuring results and on accountability,” he says.

Accountability Develops Reforms

Active in the industry’s efforts to develop standards for corrections management, Moore points to the difference between accountability in private prisons and government prisons. “In one state, there were two prisons where things were terribly wrong,” he says. “People were escaping, people died, bad things happened. One prison is public; one is private. The private prison company’s management was fired, and the company had to bring in new management and spend a boatload of money putting in new security systems. The government prison did a blue ribbon panel. Nobody got fired. Nothing happened. Nothing changed in the government prison, and a lot changed in the private prison. That’s accountability!”

Even so, he does not believe that the entire corrections system should be privatized. “Right now privatization is at about four percent, but as more and more of the system gets privatized, we are going to see the government prisons get their act together. If we end up with 20% – 30% of the system privatized, that’s probably a good place to be. That will make a fairly large, vibrant industry that can continue to innovate, make changes and keep pressure on the public sector to do the same thing.”

Lessons from the Outsourcing Primer

  • Accountability is much stronger in private prisons than in government prisons.
  • To change the system, top to bottom, you need a contract that specifies performance measures as well as incentives and penalties.
  • Although the government places no emphasis on accountability and measuring quality results, even the private prisons have not done as much in this regard as they could.

About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].

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