Gabriel Maliha is a senior at the University of Pennsylvania studying criminology.
On August 18, The Department of Justice (DOJ) directed the Bureau of Prisons (BOP) to curtail, or not renew, contracts with private prisons that now provide incarceration services to federal inmates.  This was based on the Inspector General Report that described the private facilities as substandard, unsafe, and financially unbeneficial to the government. 
Private, or for-profit, prisons are confinement facilities operated by a third party contracted for that purpose by state or federal government agencies. This could include an existing facility built by the government and operated privately, or a prison constructed or owned by a private company. The payments made by the government to the private company are usually daily or monthly rates based on prisoner headcount.
Proponents of these facilities dispute the conclusions of the Inspector General’s report. They assert that the private prison population of federal inmates is more demographically homogeneous and has a larger percentage of gang-related offenders than government-run prisons. Therefore, they maintain that the report’s safety conclusions are “severely flawed.”  They also point to favorable parts of the report that did not get as much publicity: private inmates are less likely to use drugs, are less victimized by sexual misconduct, had fewer deaths than in government operated facilities and saved the government over $3,000 per inmate per year. 
Scholars have disputed the constitutionality of private prisons basing their argument on the 5th Amendment’s Due Process Clause that states the impermissibility of delegating discretionary governmental functions to private actors. The United States Supreme Court has never confronted the issue directly, and has actively passed-up multiple opportunities to do so. In fact, its decisions have provided the private prison corporations and their employees with a degree of immunity against inmates’ allegations of federal constitutional violations. In Correctional Services Corp. v. Malesko (2001), the Court ruled that federal inmates housed in private facilities cannot sue private operating companies for constitutional violations (no so-called Bivens remedy). In Minecci v. Pollard (2011), the Court found that federal inmates also cannot sue prison employees for federal constitutional violations. State remedies, however, do remain available to those inmates. 
The DOJ action against contract renewal with private prisons will affect only 13 facilities and about 22,000 inmates over the next 5 years. It does not apply to the U.S. Marshals Service or Immigration and Customs Enforcement (ICE) detainees who are not under the jurisdiction of the Bureau of Prisons. In addition, the directive does not affect private state prisons where the bulk of privately managed inmates are housed. Still, the market reacted with a massive sell-off of stock of private prison corporations. The shares of the Corrections Corporations of America (CCA) stock, the largest company in the sector, dropped 35%. Wall Street was clearly concerned about the long term implications to the multi-billion dollar industry.
The market’s and media reactions seem to suggest that private prison corporations face some peril, even perhaps an existential threat. On that score, however, only time will tell. The DOJ re-evaluation of private prisons stems at least in part from the fact that the federal inmate population has been steadily dropping: a trend that is also seen at the state level. That latter part at least is good news for the country.
 “First Step in Shutting Private Prisons.” Editorial. The New York Times 22 Aug. 2016: A18. http://nyti.ms/2btcW7y.
 “Review of the Federal Bureau of Prison’s Monitoring of Contract Prisons.” Office of the Inspector General U.S. Department of Justice (August 2016). https://www.oig.justice.gov/reports/2016/e1606.pdf.
 Gottschalk, Marie. “Caught: The Prison State and the lockdown of American Politics.” Princeton University press, 2014.
 “Benefits of Private Prisons.” Editorial. The New York Times 12 Sep. 2016 http://nyti.ms/2cHSh59.
 MINNECI ET AL v. POLLARD ET AL,.NO. 10-1104, 565 U.S._ (2012).
 Zapotosky, Matt & Harlan, Chico. “Justice Department says it will end use of Private Prisons.” The Washington post. (august 18, 2016).
 Maahs, J & Pratt, T. “Are Private Prisons More Cost-Effective Than Public Prisons? A meta-Analysis of Evaluation Research Studies.” Crime & Delinquency, Vol. 45, No. 3,1999.
Photo Credit: Flickr User Matthias Müller
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