Posted in Uncategorized on December 3, 2012
Who are the watchdogs supervising America’s private prison industry? And what measures are in place to ensure adequate supervision over these companies?
Under a typical scenario, a private prison company bids to operate a facility. If the bid is awarded, the prison operator and the government generally negotiate the terms of a multi-year contract. These contracts take many forms, but generally include a per diem cost per inmate with accelerators if the population dips below a certain threshold. In other words, the State pays less per inmate as the population increases, thus giving the State an incentive to keep funneling “product” through the operator’s front door.
If that relationship sounds perverse, consider the way some states supervise prison operators. In Oklahoma, for example, the State Department of Corrections has created an entire division that deals exclusively with the State’s privately operated facilities. That division places a contract monitor at each private prison to supervise whether the operator is complying with its contract. In theory, this framework sounds appealing– a supervisory division within the DOC, in combination with an on-site employee to monitor the prison operator. But does this type of supervision contribute to contract compliance and good prison management?
Consider the respective interests of the parties. Without the private prison, the contract monitor would have nothing to monitor, and thus no job. What incentive exists for state employees to accuse the prison operator of breaching its contract? The operator can generally appeal any penalty assessed by the State, which forces a showdown over what is generally a poorly drafted contract. There is little motivation for the state to consume precious time and resources over a penalty, only to loose over a poorly drafted contract that exposes the State’s incompetence.
Finally, the biggest prison operators are publicly traded, and there is no organization to monitor the financial holdings of the state employee who supervise the private prison industry. In other words, the person in Oklahoma charged with supervising the private prison industry is free to purchase a financial interest in those same companies. This problem is magnified when the State hires former employees of the private prison to fill the supervisory positions established to oversee the private operator.
Permitting state employees to invest in the very companies they are charged with supervising creates an inherent conflict of interest, and even assuming that such a conflict does not result in the actual cover-up of abuses (although the more egregious the case, the greater the incentive), the mere appearance of impropriety is sufficient to demand transparency and preclude state employees from freely investing in the private companies they are charged with supervising.